Proceedings of the Standing Senate Committee on
National Finance
Issue No. 21- Evidence - December 6, 2016
OTTAWA, Tuesday, December 6, 2016
The Standing Senate Committee on National Finance met this day at 9:31 a.m., in public, to give consideration to the subject matter of all of Bill C-29, A second Act to implement certain provisions of the budget tabled in Parliament on March 22, 2016 and other measures; and in camera, for the consideration of a draft report on the expenditures set out in Supplementary Estimates (B) for the fiscal year ending March 31, 2017.
Senator Larry W. Smith (Chair) in the chair.
[English]
The Chair: Welcome to the Standing Senate Committee on National Finance.
Colleagues and members of the viewing public, the mandate of this committee is to examine matters relating to federal estimates generally, as well as government finance.
My name is Larry Smith, senator from Quebec, and I chair the committee. Let me briefly introduce the other members of the committee, including our new members.
We are welcoming Senator Marc Gold. Beside him is Senator André Pratte.
[Translation]
The committee also has a new member: Senator Renée Dupuis. Thank you for being here.
[English]
To my right, from British Columbia, is Senator Richard Neufeld and, of course, to his right, Senator Beth Marshall from Newfoundland.
Today we continue our consideration of the subject matter of Bill C-29, A second Act to implement certain provisions of the budget tabled in Parliament on March 22, 2016 and other measures.
Last Friday, with officials from the Department of Finance, we began our study of this bill, also referred to as the budget implementation act, 2016, No. 2.
[Translation]
In the context of our study on the contents of Bill C-29, we have with us this morning Ms. Angella MacEwen, Senior Economist, from the Social and Economic Policy Department of the Canadian Labour Congress.
[English]
Angela, we've seen you so many times it's like you are part of the family. We're going to spend the first half hour or so with you. I gather you have an opening statement; please go ahead and it will be followed by questions from the members of our committee.
Angella MacEwen, Senior Economist, Social and Economic Policy Department, Canadian Labour Congress: Thank you very much. It's lovely to be back with you. You guys always have very interesting conversations.
I'm here on behalf of the 3.3 million members of the Canadian Labour Congress. We want to thank you for this opportunity to present our views on this bill.
The CLC brings together Canada's national and international unions, along with the provincial and territorial federations of labour and 130 district labour councils whose members work in virtually all sectors of the Canadian economy, in all occupations and in all parts of Canada.
I'm going confine my remarks to three elements of this bill because it is fairly broad-ranging. These are the three that affect our members the most.
With regard to employment insurance, Division 1 of Part 4 of Bill C-29 moves the definition of "suitable employment'' into the Employment Insurance Act. Previously, the definition was spelled out in EI Regulations 9.002, and the implications of this definition were further explained in the Digest of Benefit Entitlement Principles, which guides decisions by Service Canada.
The definition in Bill C-29 moves the EI regulation 9.002, paragraphs 2 and 3, into the EI Act, but missing in the new definition is EI regulation 9.002, paragraph 1, which states that the criteria for determining suitable employment are: (a) the claimant's health and physical capabilities allow them to commute to their place of work and to perform the work; (b) that the hours of work are not incompatible with the claimant's family obligations or religious beliefs; and (c), that the nature of the work is not contrary to the claimant's moral convictions or religious beliefs.
It is not clear if it's the government's intention to maintain this part of the definition in EI regulations and why they would have moved one part into the act and maintain the other in regulations. We wanted to note that we think these three factors are crucial to determining if work is suitable for workers, and we would hope that this definition remains in place.
With respect to Old Age Security, Division 2 of Part 4 of Bill C-29 amends the Old Age Security Act with respect to the allowance benefit. The changes permit individuals to have their allowance benefit calculated on the basis of individual rather than joint incomes for periods in which they were living apart from their spouse or common-law partner for reasons beyond their control. This would give the recipient a higher monthly allowance benefit.
The amendment follows up on a promise that was set out in Budget 2016 to address the situation of women whose monthly allowance benefits are reduced on the basis of the couple's combined annual income despite the fact that their husbands or partners have entered long-term care and the woman is living alone.
We welcome this step and applaud the government's decision to repeal the planned increase in the eligibility age for the allowance and the allowance for the survivor.
Just to provide a little bit of context for the allowance, it's paid to low-income spouses who are 60 to 64 years old and are partners of someone who is receiving Old Age Security and the Guaranteed Income Supplement. In October 2016, there were approximately 73,000 beneficiaries of the allowance, and they are overwhelmingly female. Ninety per cent of the recipients of the allowance are women.
For decades, the labour movement has criticized the allowance for the fact that it discriminates based on marital status. Eligible women must be married or in a common law relationship with a low-income pensioner or be widows who have not remarried or entered into a new common-law relationship. Low-income single, divorced or separated women aged 60 to 64 are not eligible. We called for reform to eliminate this discrimination.
Finally, we want to point out the irony that, with the amendments to the allowance, the Government of Canada is adding what is effectively a dropout provision designed to improve the retirement benefits of women at the same time that Bill C-26 will not extend the child-rearing dropout to the enhanced Canada Pension Plan benefit. Like the 1977 child-rearing dropout, the allowance, which was known as the Spouse's Allowance when it was introduced in 1975, originated in partial acknowledgment of the unpaid work and specific labour market experience of women.
In effect, Bill C-29 amends rules for calculating the allowance to allow a dropout period while living apart while, at the same time, not recognizing that dropout period for the CPP benefit enhancement.
Finally, on the Canada Child Benefit, the original benefit, when it was introduced, was not indexed to inflation even though two of the three programs that it replaced were indexed to inflation. Only the Universal Child Care Benefit was not. This bill remedies that situation, but not before much of the advantage in the child care benefit will be eroded by inflation.
The Parliamentary Budget Officer undertook an excellent comparison of the CCB to the three programs that it replaced and showed how failing to index the CCB dramatically reduced its costs over time.
Not only does the actual value of the payment reduce in real money terms but the brackets themselves were not indexed, so some families will move out of the lowest income bracket even if their wages are only keeping pace with inflation.
When the CCB was introduced, there was a lot made of the fact that it was a benefit to low-income families and that it was much improved over the previous plans. For example, a family with one child under six could receive up to $650 more annually under the new plan. The benefit was introduced in July 2016, and it will not be indexed to inflation until July 2020. Over this time period, as much as two-thirds of that advantage will be lost, leaving this low-income family with maybe $200 more if they manage to stay in that lower bracket.
We find it surprising that the government would allow this pro-poor advantage of this centrepiece program that they have made such a showpiece of to erode so much over a few short years.
The Chair: Thank you very much, Ms. MacEwen.
Senator Marshall: I didn't have any specific questions on your specific comments, but the theme that seems to run through your comments is focused on women. Have you ever done any encompassing analysis to focus on changes to legislation and their impact on women?
You made comments with regard to the Old Age Security, and there were some improvements there, but it seems like it's the women who are impacted primarily. Then, of course, you talked about the Canada Child Benefit. We did have witnesses from the Department of Finance last week who indicated that inflation wasn't taken into consideration until 2020, and then it wasn't going to be retroactive to 2015 or 2016. It was just going to start that specific year.
It seems like all of these changes, whether they're for the better or the worse, have the biggest impact on women. Are you able to make a comment on that aspect?
Ms. MacEwen: Absolutely. I'm involved with the Canadian Centre for Policy Alternatives. We do an alternative federal budget and alternative provincial budgets. We recommend doing a gender budget analysis, and we've published on the benefits of doing so.
Sometimes you will see that out of the federal government, or Quebec has its own gender budget analysis of legislation of budgets. We think that that's critically important and that it's not done enough, not done thoroughly and not taken very seriously, because, as you say, these impacts can very seriously impact women. And we're talking about women here that are taking care of children or that are taking care of spouses, potentially.
They're doing work that sustains our communities. We need to take the value of that work into consideration and support it and understand how our budgets affect the decisions and the efforts that those women are making.
So we do often talk about a gender analysis. When you're talking about the Canada Pension Plan or Old Age Security, we know that a lot more women are living in low income now. It had improved over a period of time but is getting worse again. We know that part of that is because women do more unpaid labour over their lifetimes still. So, for they're paid labour, they end up working part time. They don't have pensions that are as solid as a pension if they had worked full time. They don't advance in their careers if they're doing this unpaid work, so they end up, basically, with less money in retirement.
You wouldn't necessarily, without kind of taking a step back and looking at what was going on, the overall picture, understand what was behind that and how you might address that in your budget.
Senator Marshall: You're saying we were improving to a certain point, and now it's not that we're levelling off, we're going down.
Ms. MacEwen: For seniors' poverty, we are.
Senator Marshall: I recall seeing somewhere, and I hope I'm not speaking incorrectly, that the Auditor General might have looked at whether policy decisions are made with a gender based analysis. I think he recommended that they could improve. Have you looked at what the provinces are doing? Is there one jurisdiction that seems to stand out, to be doing a good job, or is everybody mediocre?
Ms. MacEwen: Nobody is doing a particularly good job of this. Nobody is devoting the resources required to actually implement it in a way that would effectively address the problem.
Kathleen Lahey at Queen's University does some really good gender analysis of legislation in budgets.
Senator Marshall: Policy initiatives?
Ms. MacEwen: Yes.
Senator Marshall: It is discouraging to hear that. Instead of levelling off, we're going up or down, but thank you very much.
Senator Pratte: Good morning. As far as the definition of "suitable employment,'' is there any impact simply from the fact of moving it into the act itself from regulation? Does that change anything?
Ms. MacEwen: The only thing it changes is who can change the definition or how you can change the definition. Under the previous government, the definition of "suitable employment'' was changed, and it was easy to do that because it was in regulations. It didn't have to go before Parliament. Now, if you've put it in the legislation, it has to go before Parliament and go through a certain process before you can change the definition again. I feel that probably the purpose for putting it into legislation is to return it to its original definition and to make it harder for a future government to change it.
Senator Pratte: Are you satisfied with the definition as it will stand in the act?
Ms. MacEwen: The paragraphs that were moved are identical to what was there before. It's just missing that one piece. I'm worried about that piece that's missing; I'm not worried about what was moved from regulations into the act. It's exactly what was there before, and we have lots of jurisprudence on that definition and how to apply it.
Senator Pratte: About indexation of the Canada Child Benefit, I should know this, I suppose, but the only reason the government has delayed indexation is a matter of cost. What would be the cost of indexation if it began right away?
Ms. MacEwen: That's a really good question. I think that's in the Parliamentary Budget Officer's report. If they were worried about costs, just like the middle class tax cut goes quite far out to families with $200,000 of income, the Canada Child Benefit actually goes quite far out as well. They could have amended that and brought it in if they wanted to keep costs down because the point of it was to target low-income families.
The Chair: Could you just walk through the dropout provision in terms of "designed to improve the retirement benefits to women?'' Excuse my ignorance. I have no idea of the dropout provision. Could you give us a little explanation on what the dropout provision is, and how does that affect women in terms of their status?
Ms. MacEwen: The dropout provision for the Canada Pension Plan?
The Chair: Yes.
Ms. MacEwen: The Canada Pension Plan averages your earnings over time. It takes in every year that you've worked. It was introduced for women because, at the time, it was mostly women, but it would apply to men as well now. If you take time out of the labour force to care for a child or a parent, it will allow you to drop your six years of low earnings or no earnings from that average calculation. So your average ends up being higher for determining your monthly benefit from the Canada Pension Plan. It allows you to drop out that time where, presumably, you were undertaking caretaking work, but you could have been sick as well. It doesn't matter why you weren't in the labour force. The intention of it was to recognize caretaking work, but it could recognize disability as well.
Senator Neufeld: I want to ask some questions around Senator Pratte's question about them not moving paragraph 1 into legislation. Have you had any contact with Finance as to the reasoning for not wanting to do that?
Ms. MacEwen: We haven't. We were surprised when we saw that part of the definition was moved but the whole definition wasn't moved. We haven't had a chance to ask anyone why. I was at the House finance committee and asked them, but I didn't get an answer there.
Senator Neufeld: You didn't get an answer. Would that leave you suspicious that this is going to be regulation? I know how regulations work. Would it leave you suspicious that it will be moved out by order-in-council?
Ms. MacEwen: It does make me suspicious.
Senator Neufeld: I wanted to get that on the record so we know.
Ms. MacEwen: Which is why I raised it. We think, for example, that having hours of work being compatible with your family obligations is important. Your employer, if you're employed, has to take into account your family situation. It's the same with your moral convictions or religious beliefs.
Senator Neufeld: I, at least, would think that with as much talk as has been given to middle-income families, something like this would have actually resonated with the present administration. Would you agree with me on that?
Ms. MacEwen: Yes. Again, I am skeptical, but there may be a good reason for it. None has been given yet.
Senator Neufeld: If you find the good reason, would you forward that to our clerk?
Ms. MacEwen: Sure.
Senator Neufeld: So she could actually provide that to everyone on the committee, and we can see what —
Ms. MacEwen: What the good reason is?
Senator Neufeld: If there is a good reason.
Ms. MacEwen: Evaluate it? Sure.
[Translation]
Senator Mockler: I would like to benefit from Ms. MacEwen's expertise in the field of employee benefits, particularly as it concerns single-parent families.
[English]
I have two little questions, but I'd like to have your opinion first, or have you elaborate. When you talked about the Canada Child Benefit, you said that families will move out of the lowest income bracket even if their wages just keep pace with inflation. Could you expand on that and give us maybe an example, even though you have not been consulted by the government on some aspects of finance? As we all know, provincial, territorial and the federal governments are faced with single mothers who are basically living on welfare.
Ms. MacEwen: The bracket to get the most from the Canada Child Benefit is families that earn less than $30,000 in a year. Minimum wage full time would get you to about $20,000 a year right now. Let's imagine that you're making a little bit more than minimum wage. You're a single mom and earning $25,000 a year right now in 2016. Over time, the minimum wage goes up and your wages go up. In four years from now, you could expect that maybe you'd be earning $32,000 a year. Now you're no longer in that low bracket, so you don't get that maximum benefit.
There are two brackets: from zero to 30 and then from 30 to about 65. It starts to get clawed back after 30.
As your wages are increasing — and that's just with inflation, such as keeping up with the cost of food increases and gas, and all of that. You don't actually have more disposable income at the end of the day, but now you're out of that bracket so you're getting less support from this program.
Senator Mockler: I was at a meeting this morning, and I've been following the subject very closely, even when I was in another legislative assembly: What's your opinion on an annual guaranteed income?
Ms. MacEwen: That's a really good question. A lot of progressive economists or union researchers are skeptical of a guaranteed annual income because they see that we could be doing more about poverty right now if we were really interested. If we really wanted to solve poverty, we could be marshalling more resources. So they're skeptical that there's a will to put enough money toward a substantial guaranteed income that would keep people basically able to live with dignity.
But the idea of a guaranteed income, I think, is admirable. We should expand on the guaranteed incomes we already have, like the Canada Child Benefit and the Guaranteed Income Supplement. At the same time, we should improve on labour law at the provincial level and employment enforcement to make sure that workers aren't exploited. Those two acts together, full employment-type policies and making sure that the safety net is there for those who need it, would be good.
We also need to reform social assistance at the provincial level, again, to allow people to live in dignity. There are a lot of problems with that.
I would like to evolve to a situation where we have that guaranteed annual income, where no one lives in poverty.
Senator Eaton: You talked about the idea that instead of guaranteed annual income, we should be putting other kinds of resources in place. I just wanted you to elaborate, but did you just elaborate by saying —.
Ms. MacEwen: Exactly. Expand the Guaranteed Income Supplement so that seniors aren't living in poverty, because even though we've expanded it and improved the allowance, there are still seniors that are below the poverty line. We ought to make sure we have that in place. We ought to expand the Canada Child Benefit so that families aren't below the poverty line. We could expand the working income tax benefit so that people who are working and who want to work to make sure that work pays, to help them get that experience and be able to afford to work part time or at low wages. Those are the types of programs.
There are also public services. Public services are very important, but making sure people have enough money can help solve a lot of problems. There are doctors who are recommending that we treat our health care crisis with money, making sure that no one is in poverty so they can afford to take care of themselves before the problem becomes acute.
Senator Mockler: I know right now some provinces are looking to embrace pilot projects in certain areas across Canada to determine if an annual guaranteed income would be the right way to go. I'm curious, when you mentioned there are certain economists who say that we could do more, do you have any opinions on that? What is "more''? We can do more about what?
Ms. MacEwen: At the provincial level, social assistance rates are set at really low levels. If you're a single person, it's absolutely not enough to live on. If you're a family, sometimes the whole amount that you get for food, shelter and other basics like clothing is just enough to pay for shelter. Right now, there are huge waiting lists for affordable and subsidized housing. There are families living on couches and in shelters for which we could be building houses.
If we wanted to allow people to live in dignity, we could be marshalling those resources right now, and we aren't, so people are skeptical the will is in place to marshal the resources for a guaranteed annual income.
This is just the skeptical opinion and not necessarily my opinion. I definitely have a soft spot for guaranteed annual income. One of the things I researched was the famous pilot project in Dauphin, Manitoba. We found that kids were more likely to graduate from high school and that there were even fewer accidents when they had a guaranteed annual income. Knowing that you have that security there makes a big difference in people's lives. I do think there's value to that idea.
However, I also understand the skepticism that the guaranteed annual income that we put in place would be marginal — maybe $10,000 a year — and then it would be an excuse to cut services like subsidized housing or affordable childcare, the types of things that families would still also need.
Senator Mockler: With all due respect, I'm not challenging you, Ms. MacEwen, but I'm surprised that you did not come with that idea of guaranteed annual income and give us more details. If you can, I would appreciate that through the clerk.
Yes, in Dauphin, Manitoba, when they did that pilot project, you had a lot more children going to school and finishing high school. You had fewer car accidents. It's through education, I believe. The next step, there was approximately a 28 per cent reduction in the costs of health.
Ms. MacEwen: Exactly, yes. I did a publication called The Cost of Poverty for Nova Scotia, New Brunswick and Prince Edward Island. If you reduce poverty, it doesn't have to be via a guaranteed annual income; you can reduce poverty and get those same outcomes. You get fewer incarcerations as well, so there are all kinds of benefits to addressing poverty. I would absolutely love to present a brief around poverty-reduction strategies.
Senator Andreychuk: Years ago, I was very much involved in "the working poor,'' as we called them, and it was single mothers who had problems with child care and making ends meet. The problem was if you gave them additional training courses, they would get a job and it would be deducted from social assistance, and then we would top it off and say that you can make X number of dollars and your social assistance won't be cut back. We found out that if you go off welfare and you're in that other category, your children don't get their dental care or all the issues we have now built into social assistance. We were trying to help women in Saskatchewan out of social assistance and into a job for a lot of reasons, for her long-term welfare and the care of the children, but the disincentive was you had better stay on social assistance because you get more benefits. It was so spread around. Is that what you're getting at? We cannot just talk guaranteed income and stick a figure on it, because there are extra effects. You said housing, but there are a lot more. Is the Dauphin project being followed up on?
Ms. MacEwen: Yes, Dr. Evelyn Forget has done a lot of research on it, and Ontario is now implementing some pilot projects on a guaranteed annual income.
I grew up in rural Saskatchewan, in Elrose, a little after the Dauphin project, but one thing about the Dauphin project was it was a rural community; so people would farm and still work, but if the crop didn't pay out, they knew they had that guaranteed income support. The dynamics of that might be different now and in an urban setting, so it's good that Ontario is doing some pilot projects. Guy Standing is involved in pilot projects all over the world.
Part of the reason there is so much attention is that people are worried about automation taking jobs and there not being enough well-paying jobs for people to support the economy, which is one concern, but there is also just the matter of people living in dignity.
When I was in Saskatchewan, everyone had dental at the schools, so if we had those universal programs in place, there wouldn't be that steep cut-off when you were leaving welfare.
Senator Andreychuk: To respond to Senator Mockler, those are the issues that are important, because we have this idea of guaranteed income that would solve the problems, but it's the unintended consequences that go right through the system, and that's what I think we continue to struggle with. What do we really mean by "Guaranteed Income Supplement''? A lot of people say just give them X number of dollars and everyone will be better. It doesn't work that way.
Senator Gold: Thank you for your presence. In addition to the three issues that you raised and the issue that we have been discussing recently, are there other issues in this bill to which you would like to bring our attention or you are concerned about?
Ms. MacEwen: No. This bill makes some effort toward closing some loopholes in terms of the tax system, and I think that's a good thing. We should continue having a good conversation. The Canadian Centre for Policy Alternatives released a report yesterday around tax expenditures. That would be useful work going forward. A lot are targeted toward the top end of the income spectrum, and so how can we address that to return our system to being more of a progressive tax.
Senator Gold: I don't want to put words in your mouth, but how would you evaluate, from your perspective, the overall intent and effect of this bill?
Ms. MacEwen: Overall, the bill follows through on the promises that were made in the budget in March. It seems to be consistent. We didn't find anything that was incredibly surprising to us, other than the points that we mentioned.
[Translation]
Senator Dupuis: Ms. MacEwen, my question follows up on those of senators Andreychuk and Mockler. I would like to make a link between what you said about the guaranteed minimum wage and gender-based analysis.
It seems to me that we could make significant clarifications to each of the following categories: employment, insurance, the Canada Child Benefit and the Old Age Security pension. These are all categories within which we find women in need, educated or not educated, women who are single parents or not, who earn a low income. During your discussions on the guaranteed minimum wage, do you intend to raise the issue of gender-based analysis?
You have identified three components, but in my opinion, there is another which is important, and that is consumer protection. In this regard, I was wondering if you had any comments on the link that exists between this concept of guaranteed income and the gender or the social circumstances of the people who earn this income. When the budget refers to the middle class, it always seems to refer to the concept of "two parents, two children,'' and preferably one boy and one girl. I'm surprised to find that, even with young couples, people seem to still think in those terms, whereas in reality, a couple with two children, one boy and one girl, is not so common.
[English]
Ms. MacEwen: That's a great point, and there are working families where both parents are working and they're still below the poverty line, especially in areas where housing costs are incredibly high, like Toronto or Vancouver, or places where it's difficult to find rental housing at all.
Yes, there are definitely children living in working families who are below the poverty line who would benefit from increased support. That support could be either through cash transfers or public services. In Saskatchewan, when we were growing up, there was dental care in the school. Your parents do not have to ever pay for the dentist, and we know it's very expensive. In Ontario, it's free for kids to the go to eye doctor. Those types of supports for families are very meaningful as well, as are the cash transfers.
I thought it was interesting that you brought up consumer protection when you say, "We need to increase social assistance,'' the minister of finance in Nova Scotia would tell us that the landlords are just going to increase rents and whoever is selling to those captive audiences of low-income families — the grocery stores in low-income communities — will just raise their prices. We know that grocery stores in low-income communities have higher prices than grocery stores in others.
I met with some individuals from the European Economic and Social Committee regarding civil society. One of them was the president of the European consumer protection group, and she said there was no similar group in Canada. It's interesting that we apparently don't have an advocacy group for that side.
The Chair: Ms. MacEwen, following Senator Gold's question, if you had a magic wand and had the capability of making a decision to improve the budget, what would be your number one priority? It's tough, but that's why we call it the "magic wand'' question.
Ms. MacEwen: In the whole budget?
The Chair: From the areas of interest that you have specifically, as you look at it. You're a well-known individual who comments on different economic issues. For the issues that affect the types of work you do, what's the number one thing? If you had that authority, reaching over everything, what would you do?
Ms. MacEwen: I would have left EI premiums where they were. EI premiums are dropping January 1 from $1.88 per $100 of earnings to $1.63. I would have left them at $1.88 and used those funds for skills training, opening up access to people who don't have access to EI and to improve parental leave in the rest of Canada to mirror what they have in Quebec.
[Translation]
Senator Dupuis: I would like to add a comment in connection with what you have just said. It is most interesting that you made reference to the Quebec parental system which, despite everything, leaves some women without any compensation although they may have carried and given birth to a child.
In that sense, I would like for a moment to come back to the issue of a guaranteed minimum wage. In my opinion, there is no reason why we cannot have a system that would allow any woman who has a child to receive some income replacement, or a subsidy to economic growth — call it what you will — that is some amount, as they do in Norway, that is tied to the fact of having a child.
[English]
Ms. MacEwen: Pierre Fortin has written on that, I believe, and I would support that. It would make sense to have a universal benefit for parents of children for the first year.
The Chair: Ms. MacEwen, thank you very much. You were all by yourself with all these senators asking questions, and our room filled up as you began talking. We really appreciate your input.
One of the issues that is becoming more of a topic of importance is the focus on evaluation of treatment of women and gender equality. I appreciate the comments you made on that particular subject.
We look forward to having you back again, and we thank you for your time.
(The committee continued in camera.)