Proceedings of the Special Senate Committee on Aging
Issue 4 - Evidence
OTTAWA, Monday, February 19, 2007
The Special Senate Committee on Aging met this day at 12:36 p.m. to examine and report upon the implications of an aging society in Canada.
Senator Sharon Carstairs (Chairman) in the chair.
[English]
The Chairman: Good afternoon, senators. Welcome to this meeting of the Special Senate Committee on Aging. This committee is examining the implications of an aging society in Canada. We have two panels this afternoon on the theme of life-course approaches, which recognizes that aging is a lifelong process important to life transitions such as entering and leaving education, family formation and retirement.
To help the committee better understand these issues, we have with us today Victor Marshall, Professor of Sociology, Institute on Aging, University of North Carolina. He used to be at the University of Toronto, where he directed the Institute for Human Development, Life Course and Aging for seven years.
We also have Terrence Hunsley, Senior Project Director, Policy Research Initiative. The PRI, while conducting independent research projects, is attached to Human Resources and Social Development Canada.
Victor Marshall, Professor of Sociology, Institute on Aging, University of North Carolina, As an individual: I want to thank you for inviting me to address this special committee. I have read the minutes of your previous hearings and it is indeed a special committee. I am happy to be here.
I will make some brief remarks and then I will be happy to answer any questions that you might have. I am a professor, so just press a button because I can talk about anything for too long.
I imagine you might not be clear as to why this person from Chapel Hill, North Carolina, is here to meet with you, so I will give you some background. I am a Canadian born and raised in Calgary. I pursued my bachelor's degree at the University of Alberta, Calgary and graduated in the last class before it became the University of Calgary. I was in the reserve officer training program of the Royal Canadian Naval Reserve, the University Naval Training Division. I was commissioned in the naval reserve but went on the inactive list when I went to the U.S. for my doctorate.
I returned to Canada for an academic career at McMaster University for eight years, then at the University of Toronto for 20 years. During that period I taught the first course at a Canadian university in the sociology of aging and trained several doctoral students in sociology and public health in the field of aging. My first Ph.D. student in fact was Anne Martin-Matthews, who testified at an earlier meeting.
I was a founding member and subsequently a vice-president of the Canadian Association on Gerontology and served, until it was done away with, on the Canada Pension Plan advisory board. Ten years ago I was appointed chair of the Gerontological Advisory Council of Veterans Affairs Canada. In 1999 I moved to the University of North Carolina to direct its Institute on Aging but more importantly to follow my wife, who went there as dean of the School of Information and Library Science.
Veterans Affairs Canada, VAC, has continued to ask me to chair its Gerontological Advisory Council. I will use my presentation time to talk to you about Keeping the Promise, the report just released by the council. Following that, I will be happy to get into discussion. I have a couple of books on the life-course perspective and can talk with you about that.
The Gerontological Advisory Council is about to celebrate its tenth anniversary. Its members include representatives of the three veterans' associations focused on the traditional veterans, those from World War I, World War II and Korea; people from the health care sector who provide services to these veterans or who otherwise have experience with long-term care; and the leading Canadian researchers in aging and health. Veterans Affairs Canada asks us for advice and I am pleased to say our advice has been for the most part taken and has had an impact.
Any recommendation we make has to pass three tests: it has to meet the needs of the veterans' groups who have a direct stake in what Veterans Affairs Canada does; it has to be realistic in terms of the clinical and health care experience of the providers of services for Veterans Affairs Canada; and it has to pass the scientific criteria that are so important for the academic researchers on the council.
The recommendations in Keeping the Promise have passed these three hurdles or tests and therefore are recommendations for reform based on what is known as evidence-based practice.
We are building on the momentum of the Veterans Charter, which focused on the Canadian Forces veterans. We reviewed existing arrangements for the traditional veterans and developed a framework outlining the best ways to support health, wellness and quality of life for the estimated 234,000 war service veterans.
We put forth a number of principles in this report. The first is that all veterans should be eligible. Currently 40 per cent of war service veterans receive Veterans Affairs Canada health benefits. We take the position that all war service veterans who could benefit from VAC services should be eligible. In other words, ``a vet is a vet is a vet.''
We wanted to start from first principles. Veterans Affairs Canada has done a wonderful job, in an incremental way responding to changes in the demographics and the needs of veterans, but we wanted to start from what is known about the best way to provide services for people.
We take a social determinants of health perspective. The major social determinants of well-being in later life are health, wealth, and social integration. This builds on the framework adopted by both Health Canada and the World Health Organization in its active aging framework, which you have heard about in earlier sessions.
We take a life-course perspective. In order to understand people in the later years, you have to understand where they have been earlier in their lives and where they hope to go later. Early life events can produce delayed adverse health outcomes, as the general literature on post-traumatic stress disorder and the Australian research on Korean War veterans attest. This implies that health promotion and disease prevention should be an important component of VAC services, and this would be consistent with the federal health program review recommendations.
It also implies an ecological perspective. We place the veteran in the context of his or her family and community and try to provide care programs that are close to home.
Most important, it is a program based on needs rather than on complex service-based eligibility requirements. We maintain that it is neither feasible nor necessary to relate a current health condition in the later years to a specific war service-related event.
Putting all this together, we saw the need for a new way to organize comprehensive, integrated health and social services and we sketched out a plan based on two well-evaluated service delivery systems from Quebec. This plan includes a single point of entry and referrals as appropriate to one of three levels of care. All of this is with the idea of getting to veterans early, that is, before serious frailty or disability occurs. Already, when we wrote the report almost a year ago, the average age of the World War II veterans was 82 years and of the Korean veterans, 72 years.
It is almost too late to be early with this population. We do have a sense of urgency. Let us get it done while the traditional veterans are still alive and can be helped. However, experts in health promotion and disease prevention stress it is never too late and also never too early to initiative health promotion strategies that will produce positive effects.
I am pleased, in reading minutes of your past meetings, that several other witnesses have strongly recommended a health promotion and disease prevention approach and also the life-course approaches.
I have a lengthy track record going back to 1968 on population aging, the aging of the workforce and the changing nature of the retirement transition. I will be happy to discuss any of those matters or the life-course perspective, but I wanted to focus on the Keeping the Promise report because it is so important in the current initiative to go beyond the New Veterans Charter that was implemented in April 2006. That was targeted at reforms in services for the Canadian Forces veterans. The current initiative, the health care review, will be drawing on this report but wants to cover all veterans.
Every one of the veterans' organizations has endorsed Keeping the Promise. We were so pleased to have every single veterans' organization in the country standing there with us when we released that report. We hope that government will be sympathetic to the recommendations in that report as well.
We give our advice to Veterans Affairs Canada, but to the extent that our recommendations in Keeping the Promise find their way into the current health care review, Veterans Affairs Canada will need your support.
[Translation]
Terrence Hunsley, Senior Project Director, Policy Research Initiative: Madam Chairman, thank you for the invitation to come and meet with you today. This gives me the opportunity to highlight some of the research that the Policy Research Initiative has carried out, collaboratively with several federal departments, on population aging and labour market issues.
I will highlight the main issues in my presentation and I will be pleased to take part in the discussions to follow.
[English]
There are four basic points to make. The first is that demographics are important but may be exaggerated if they are viewed in isolation. The big drivers from policy perspective come from the combinations of demographic trends with social and economic behaviour.
The second is that Canada is comparatively well positioned to deal with population aging. Nonetheless, the total supply of labour, relative to the total size of the population, will soon begin a period of decline, and this will create pressures on the economy and on government fiscal management. There will be challenges. How great the challenges are will depend on our overall policy response, on the social and economic response of the population, and on productivity and cyclical factors in the economy. There will also be opportunities, not only to improve the effectiveness of social policy and labour market policy, but also the economy in general as certain incentives improve, for example, including people marginalized in the population now.
The third point is that the impacts of aging will differ from province to province and undoubtedly within provinces as well.
The fourth point is that a wide range of policy options influence the outcomes. Obviously not all of these are federal and not all of them are government. There are many private-sector institutions whose activities will influence the outcomes of population aging.
The Policy Research Initiative, PRI, has been working not only with a range of federal departments but also with Statistics Canada in the development and use of a special program called LifePaths. We have derived data from that and will present it to you in the PowerPoint presentation. Geoff Rowe will be appearing later on and he will explain more about the technical aspects of LifePaths, I am sure, but I want to present some of the results we have.
The first point is that the fertility rate rose dramatically after the Second World War. Canada had the largest per capita baby boom in the Western world and probably had the most precipitous fall-off rates after that.
When you look at our old-age dependency ratios in international comparison, we are in a middle range of Western countries. If we look closely at those graphs, we will see that Canada currently is slightly younger in its population than either the U.K. or the U.S., but by the year 2025, our old-age dependency ratio will be slightly higher. We will have a period of fairly rapid aging during that time frame.
There is a lot of discussion about old-age dependency ratios and total dependency ratios. Some of you may object to using terms such as dependency when we think about the role of seniors in society and I would agree with you. I do not think it is a very good term. Nonetheless, it is a standard term that is used by demographers.
We feel that dependency ratios can be rather misleading in isolation. We developed, with Statistics Canada and other departments, a better measure of the capability of the economy to sustain the population. We took the total number of hours provided of work in the economy in each and every year since 1971 and divided that by the total number of people in the population. Then using LifePaths, we projected that into the future.
That data shows that for the past 30 years or so, the amount of work per capita in the population has been increasing. It went from about 740 hours per year to nearly 1,000 hours per year per capita of the population. That trend will reverse itself over the next two to five years, roughly, and that number will start to drop off again in the future.
However, if we compare the reduction in the future, our reduction based on our hours per capita projection and the dependency ratios, we will see a substantial difference. What we are projecting does not drop off nearly as quickly as do the dependency ratios, and the reason is that we get effectively more work out of the working age population than we used to. The two main reasons are increased participation of women in the labour market and increased levels of education. More highly educated people work substantially more hours in their lifetime. We get more labour out of the current working population and we will continue to do so.
The ratio of hours of work to the population varies considerably across the country. The impact of aging will also vary from province to province. As we look ahead, the Atlantic provinces and Quebec will have a greater relative impact of aging. The reduction of hours of work — of labour supply, if you like — will be more marked in those provinces. The projection also shows a similar large drop in the territories, but I wish to qualify that: because the population of the territories is so small, that very small changes could make large differences in the projection. We have a limited level of confidence in the projections for those small areas.
In general, we can predict that economic growth will clearly be constrained by a decline in relative labour supply, resulting in increases in income security and health costs. These increases will be partially offset by decreased pressure on children's programs or other programs of government, but there will still be increases. We will have wealthier seniors in the future who will pay more taxes, and that will have a beneficial effect on the fiscal burden. They may also and probably will demand more services in the future.
There should be higher returns to human capital in future. We should see some upward pressure on wages and increased outsourcing of employment. There could possibly be increases in income inequality in the future related to aging, for two reasons. First, as more and more families become two-earner families, we notice a phenomenon that John Myles has labelled educational marital homogeny, which means more highly educated people marry more highly educated people, and that can influence the degree of inequality. Second, there is the issue of intergenerational transfers in the future, particularly when the baby boom generation is passing its wealth and assets onto subsequent generations.
One thing that we can do and should be doing right away is encouraging older workers to stay in the labour market in order to keep the supply of labour up for as long as possible. There are other things we can do as well. We can ensure that secondary school completion rates are increased. That would have a positive effect. We can reduce unemployment, which would have a positive effect, and we can encourage overall increases in participation rate and work intensity or overall hours of work that people provide to the economy. All of these measures will have a positive effect on the capacity of the economy to sustain the population.
We do know from Statistics Canada surveys that older workers in general would prefer to keep working. Many of those who have retired would have kept working if they had had more flexibility, either in work hours, in working part time, or in some cases if their health had been better. Indeed, there is some desire out there among the older workers to stay longer working in the economy and there are a wide range of policy measures that we could be considering to encourage older workers to continue to work.
The last slide in the presentation provides a diagram of some of the influences on retirement decisions. You can see that not only government programs, whether they are income security programs for seniors or whether they are pension programs or regulation of private pensions or activities of employers, there are a wide range of influences on the retirement decisions of individuals and consequently a wide range of areas of potential intervention of public policy.
I will stop there and be happy to take part in discussions.
The Chairman: Thank you very much. Mr. Marshall, when you were talking about benefits to veterans, you said that all veterans should be eligible, but only 40 per cent are. Why is that?
Mr. Marshall: Those veterans are receiving benefits.
Senator Murray: You said that there are 122,000 war service veterans who did not have eligibility to the Veterans Affairs current suite of health care programs. The same question that Senator Carstairs just asked occurred to me.
Mr. Marshall: When the Gerontological Advisory Council was first established, all of the academics on the council were totally dumbfounded when we were shown the table of eligibility. That is the issue. There is a poverty criterion, the means test, but the major criterion is being able to tie a current health issue to something that happened to you during your war service. It is a complex process. Some veterans in certain classes are able to get certain kind of benefits and others can get more benefits.
There is an intensive screening program for eligibility, which discourages people from applying and keeps some people out. However, some people just cannot qualify because they cannot link a current health condition to something that happened back in 1944.
The Chairman: You would suggest that they should automatically be eligible because they are veterans, that there should not be any eligibility based on, for example, ``I have bad hearing because I was on the line of bombs and they destroyed my hearing.''
Mr. Marshall: That is correct. We do not mean that anyone who ever did war service will get something, because it should be based on need; however, if they have the need, we believe they should get it.
We think it is not feasible, in many cases, to link a hearing problem back to war service. We have data in our Keeping the Promise report about musculoskeletal problems, which are elevated among veterans, but to link something that might not really surface as a problem until you are in your 60s or 70s back to something that happened when you were marching around Italy in 1944 is very difficult to do it. Nevertheless, there is a probable linkage there.
In terms of operational stress injuries such as post-traumatic stress disorder, PTSD, there is increasing evidence from international studies of the late appearance of these injuries. The Australian study, which we cite in the report, is a very thorough research project based on Australian Korean War veterans, who literally served side by side with Canadian veterans in Korea. This late-onset information is found throughout the PTSD literature. People will come back and have problems adjusting. They will adjust, but then 30 or 40 years later problems resurface again.
The Chairman: Did you do any cost benefit analysis? What would be the cost associated with expanding the availability of the benefits on a needs basis to every veteran?
Mr. Marshall: We did not do that. In the council, we consider it beyond our mandate. We give advice. We were actually told to give our advice about what would work the best, what would be the best way to organize services, without consideration of cost constraints. The costs are the department's problem.
While we did not do that cost benefit analysis, we are very confident, based on the general literature in health and health services, that a number of our recommendations will save money. A health promotions strategy will save money. It will save money because you increase the years living in good health and delay the onset of health problems. We know that most of the medical expenses incurred by the elderly are in the six months prior to death. That internationally famous landmark research was done by a member of the council, Evelyn Shapiro. It is her research, together with Noralou Roos.
We believe that a single point of entry and a more coordinated system with the cross referrals that we recommend will save a lot of money. You spend so much money just administering the system with these incredible screening conditions and a lack of integration. We have not costed it out, but we do believe that when the department costs it out, it will prove to be a savings.
The Chairman: Mr. Hunsley, I am particularly interested in your last slide — the retirement influences on older workers. You mention early retirement incentives in the Canada Pension Plan. Do you think that should be changed? Do you think we should be suggesting that people should not be eligible to take early retirement at age 60 or that there should be greater penalties involved in that? What is the Policy Research Initiative's thought on that aspect?
Mr. Hunsley: When we look at programs like the Canada Pension Plan and the Old Age Security and so on, we should make a distinction between when and how people get the benefit and whether or not they retire. Many people who access the CPP nowadays — and there has been a tremendous increase in the number who access the CPP at age 60 — are not retiring. They are accessing the CPP at that age because there is a financial incentive for them to do that.
In the report we did on this, we indicated that there are a couple of things that could be considered as a way to provide a more equal balance without necessarily changing the age. Actuarially, there is an incentive to take the CPP early. If we were to increase the incentive to delay the CPP — for example, instead of its being 6 per cent per year to delay it after the age of 65, if it were 8 per cent per year — that would probably be a little fairer as a balance and should be able to be offered without a net increase in liability on the part of the CPP by people who delay their decisions.
Similarly, people who are at the age of 60 now, if they draw their CPP, also stop contributing to it. That may seem obvious, but it might be worth taking a look at. On the one hand, that is a fairly substantial incentive there because if you were contributing a couple thousand dollars a year toward the CPP, from age 60 to age 65, you have a fairly substantial incentive to take your CPP early.
As well, when someone takes their CPP early and stops contributing, their employer also stops contributing to the CPP. It would be useful to look at the possibility that maybe people could continue to draw their CPP on the same flexible basis, but allow them to continue contributing to it — maybe drawing it, but continue to build up their credits. If you are drawing your CPP at the age of 60, chances are you have not maximized your benefits. Why not continue to contribute even though you are drawing down, and allow your employer to continue to contribute as well?
We suggest those changes are worth looking at, to consider whether that kind of change might induce more labour force participation just by giving people more flexibility in what they do.
The Chairman: What about the age of 70? You can defer until the age of 70, but my understanding is that the actuarial evidence between age 65 and age 70 does not benefit the person who waits until he collects at age 70.
Mr. Hunsley: Yes, I agree with you. It seems better to draw early. Why not increase the incentive to delay?
As well, I think it is now at the age of 71 when people have to start withdrawing their RRSPs. We may need some flexibility in those areas as well.
The Chairman: The age when you have to start taking money out of your RRSPs has been lowered to 69. I know that because I have a 73-year-old in the family.
Senator Keon: Mr. Marshall, I want to take you back to some of the people who have had difficulty in coverage, like the merchant marines, who had a hero in Senator Marshall in the Senate. He kept pleading their case for a number of years. Are they now fully in, or are they still having problems?
Mr. Marshall: They are in. Because of the complexities, I cannot keep up with the table of eligibility; but the merchant marines are in for at least some benefits. I think they are in for the same benefits as those who did overseas service.
Senator Keon: I understand.
Mr. Marshall: Someone from Veterans Affairs Canada is here today and could probably answer that question.
Senator Keon: You also talked about the social determinants of health. I find it interesting that we can keep people from climbing that exponential curve prematurely.
Mr. Marshall: That is correct.
Senator Keon: We can flatten it out and, as you said, get them up to unfortunately six months before they die when the big expenses occur in the system. Your area likely knows more about this than does any other area. What kind of success are you having? Have you been able to flatten the curve?
Mr. Marshall: First, there is the compression of mortality phenomenon, in that more people are living longer, and then it drops off more and more. It is called the compression of morbidity debate. As mortality becomes more like a straight edge with everyone living and dropping off the end, is morbidity also being pushed further along? The answer is yes.
Does that have to do with health promotion initiatives? Increasingly, there is evidence that it does.
In the report, we draw on work from the Healthy Aging Research Network, which is an American network. The University of North Carolina is one of eight universities in the U.S. that participate in this network. We review the evidence-based practice, particularly around issues such as nutrition and physical activity. I do not mean exercise, necessarily, but rather physical activity such as a half-hour walk three times per week, as recommended by the U.S. Surgeon General to significantly reduce cardiovascular risk. There is pretty good evidence that that kind of regular activity also reduces many other risks.
There is increasing evidence, although it is still a work in progress, that more specific health promotion intervention programs, such as fairly low-intensity programs delivered through seniors centres, maintain people's health longer. For example, mall-walking programs are certainly low cost and easy to organize at a community level and are found to maintain people's health longer.
Much progress is being made. Of course, smoking cessation is another obvious candidate.
Senator Keon: Have you any relevant, up-to-date data that you could provide to the committee?
Mr. Marshall: Yes, I have some and I could send a report to the committee that summarizes this information.
Senator Keon: Thank you. Mr. Hunsley, one of the major problems for employers is the old ``freedom 55'' slogan, which suits everyone. The higher-priced employee has the pleasure of early retirement and the employer can hire two people for the price of that one retiring employee. Are there any incentives to escape that or will this continue for some time?
Mr. Hunsley: There are incentives in the system for people to leave when they have accumulated enough private pension credits. As well, there are disincentives in the system to move against that. For example, the Income Tax Act would not allow you to continue to contribute to a private pension plan while you were drawing the plan down. When someone who is working becomes eligible to draw pension amounts, they have to quit working in order to do so.
As long as those disincentives stay in place, there will be a continuing tendency for those people who have pension credits to leave their jobs in their late 50s. Many of those people are coming back into the labour force with different employers. It is unfortunate that they have to leave their employer but, to some extent, a kind of equilibrium phenomenon is taking place because the employer might be losing a highly paid employee while replacing them with someone who is more lowly paid. The retired person might be able to find part time work, such as consulting, with other employers.
We are recommending that we make this process of flexibility easier by removing some of the existing disincentives. They can be in the form of legislation affecting private pension plans or some of the ways in which the benefits are calculated. For example, many private pension plans calculate the benefits based on the best five years of the employee's salary. The best five years are usually the last five years and the next year is usually a little bit better than last year. You have an incentive to build up your credit as much as possible. However, if a person starts to work part- time, his salary goes down, creating an incentive to get out rather than to continue working part-time.
These are examples of what tend to be small measures, in a sense. The devil is in the details, but in looking at those details we can find many areas where we could be increasing the flexibility that both employers and individuals have in making decisions to work, to retire, to combine work and retirement and different kinds of activities at that stage of their lives.
Senator Keon: My next question might seem unfair because perhaps I should ask it of immigration people rather than you. We are all ringing our hands about what we are going to do with the baby boomers. It seems that one of the solutions lies in an immigration boom. I am not suggesting that we simply bring large numbers of people into the country. Rather, I am suggesting a very carefully planned immigration boom to fill in the blanks. Indeed, it would be somewhat similar to what we had after the Second World War when many highly intelligent people emigrated to Canada, benefiting our economy a great deal. Today, the emphasis is on humanitarianism, which is wonderful, and we have an obligation to do that. However, from an economic point of view and planning for the aging of baby boomers, we should have a plan that ties our immigration to what we are losing the baby boomers aging and retiring.
Mr. Hunsley: We took a look at immigration trends. You are right that immigration is important in general for growth in the economy and in the population. However, if we were to continue with the current profile of immigration, we would not make a significant change in the age structure of the population because that profile is not much different from the general profile of Canadians. To achieve what you are suggesting would require a significant change in the immigration policy, specifically targeting a much younger population.
Mr. Marshall: I agree, but compared to American immigration policies, Canadian immigration policies have actually put Canada in an advantaged position because our immigration policy puts a premium on recruiting or receiving skilled immigrants, much more so than does U.S. policy. Your idea is interesting, Senator Keon. Several months ago I attended a conference in Mexico City of a North American economic advisory council set up by NAFTA as an inter-governmental think-tank. This conference dealt with issues like those but even more complex in terms of the different demographics of the three countries. The example that was prominently made at the conference was that the United States has many old people and they need health care workers, while Mexico has a surplus of young nurses who need jobs. Could we not make NAFTA-like arrangements around immigration, not necessarily permanent arrangements, to allow for freer flows of labour around these demographic imbalances to allow for supply and demand for different kinds of workers? Some policy thought is being given to that.
[Translation]
Senator Chaput: My first question is for Mr. Marshall. There are insurance programs within the Department of Veteran Affairs. You offer assistance to veterans in order to cover the cost of prosthetic devices, of prescription drugs, of dental care, et cetera. Are these programs now available to veterans' spouses, because six or seven years ago, they were not entitled? Have there been changes in this regard, and what changes would you recommend as far as this insurer role is concerned?
[English]
Mr. Marshall: We have recommended those changes. Changes have been implemented in the Veterans Independence Program component, not in the treatment component.
[Translation]
Senator Chaput: Would the spouse have access to this assistance, in the same way as the veteran himself, if she for example wished to purchase glasses?
[English]
Mr. Marshall: I am not sure about glasses; groundskeeping, yes. I am not sure of these details as they are so complex. Certainly, it used to be that if the veteran had such Veterans Independence Program services as groundskeeping and the veteran died, the spouse would get the benefits for one year and then be cut off. That has now changed. The spouse will get the benefits on a continuous basis as long as they are needed. That is progress.
[Translation]
Senator Chaput: The report that you have provided does therefore not deal in any detailed way with the insurer role, if I understand correctly?
[English]
Mr. Marshall: That is correct. We did not go into all those details. We just noted the complexity of it and the unequal treatment of different classes of veterans, based on this table of eligibilities.
[Translation]
Senator Chaput: I am certain that you would agree with me that if the wife of a veteran with limited financial means had access to these small reimbursements, in the same way that her spouse would be entitled to them, that would reduce their burden.
[English]
Mr. Marshall: Everyone on the council feels that way. The typical veteran is a male, although some are women. A woman might have spent, since 1945, 60 years caring for a disabled veteran. This person has done a wonderful service not only to her husband, the veteran, but also to the people of Canada. We feel in justice that those benefits should continue. We place the veteran in a family context. The family should be the unit of analysis rather than just the one person who was actually in uniform.
The people on the Canadian Forces Advisory Council take the same view as well.
[Translation]
Senator Chaput: My next question is for Mr. Hunsley. You stated that a lot of retirees wish to work. Are these the less well-off retirees or is there no difference between them, depending on how rich they are?
[English]
Mr. Hunsley: There are some differences. There are some general profiles that would differ depending on what level of income the person had previously and the pension benefits and so on that they had. People who indicate that they would have continued to work had there been the possibility to work part-time or in more flexible work arrangements are very likely people who have reasonably substantive pension benefits who would like to continue to work part-time but if they do, they are penalized by their pension program.
People who have been working at a lower income level may be able, for example, at age 60 to take their CPP and find another job and continue working, but if they have been working for a low income the chances are they are not, at that age, looking to go to part-time work and decrease their income even more. Lower-income workers, when they reach the age of 65, stop working because the combination of the Old Age Security and the Guaranteed Income Supplement effectively do put a wall there for them. In fact, over a quarter of lower-income workers when they reach age 65 have a net increase in their income. Their pension income is better than their income was all the time they were working. Thus, the profiles of the kinds of choices that people wish to make differ.
Senator Murray: Mr. Marshall, do you happen to know how we stack up internationally in terms of veterans' benefits, health programs for veterans and so forth?
Mr. Marshall: We stack up quite well internationally. There is a lot of liaison going on. There is a meeting at a high level that brings together the U.K., Australia, the United States and Canada to discuss how best to handle benefits. There are different experiences for the U.S., especially with the Vietnam situation. Their veterans' services are different and the U.S. still has a much more elaborate basic hospital system, with big VA hospitals and so forth and a much stronger research base underlying what they do.
It is hard to compare, because the countries are so different, but in general I think we do well in that context.
Senator Murray: There were a number of veterans of the Canadian Forces in World War II whose only mistake was to have fallen in love with a British girl, married her and stayed in that country. Those veterans were able to demonstrate that the benefits they were receiving through a reciprocal agreement that we have with the British were considerably inferior to those that they would be receiving had they instead fallen in love with a Canadian girl back home. Are you familiar with that issue?
Mr. Marshall: In a general sense, I am. I have only sat in on one of those comparative meetings, but I had the distinct sense that the British approach has been, as much as possible, to contain the benefits that they offer, whereas the approach of Australia and Canada, at least, has been to start from what is needed rather than from a containment approach.
Senator Murray: These Canadians who stayed in the United Kingdom were making representations to the effect that they ought to get Canadian benefits. I gather there was some reciprocal arrangement. British veterans who were here were receiving Canadian benefits, and Canadian veterans there were receiving British benefits. The Canadians in the U.K. were making strong representations to the effect that they ought to receive the same benefits that other Canadians were receiving.
Mr. Hunsley, is the Policy Research Initiative still an offshoot of Privy Council?
Mr. Hunsley: The Policy Research Initiative was moved administratively by the new clerk from the Privy Council to be housed at Human Resources and Social Development Canada.
Senator Murray: Why is that?
Mr. Hunsley: At the same time, however, we were given a new reporting relationship, and we now report to a committee of deputy ministers who represent a range of departmental issues.
Senator Murray: When you say that there is an opportunity for significant gains if older workers were to be employed longer, I say in parentheses that we will not be able to say a few years from now that we did not see this coming. Therefore we, you and your friends in the public service are, as we speak, planning for this.
I presume that you and others are developing options for the consideration of the policy-makers as to how to employ older workers longer in both the public service and the private sector. Are you?
Mr. Hunsley: It is fair to say yes in a general sense. The role of the Policy Research Initiative is to be involved with issues at the front end, when we are doing the initial research on issues and the implications and policy possibilities. When that work is done, in essence, we hand it over to the line departments who are responsible for looking more in depth at policy issues and coming up with policy recommendations. I believe that kind of work is being done within the departments involved. Indeed, the work that we did implicated several departments, not just human resources, but also the Finance Canada, the Canada Revenue Agency, Health Canada and Citizenship and Immigration Canada.
Senator Murray: How could this committee get a handle on the range of policy possibilities that are before the government? We are not seeking to know confidential advice that is given by various public servants or departments to ministers — we do not need that — but if we could look at the range of possibilities in these various departments, perhaps we could offer a view on them ourselves.
Mr. Hunsley: The report that we did on this issue is available and does identify a range of policy issues. That would be a starting point. It does identify possible measures that could be looked at, such as the example the chairman raised earlier having to do with the regulations affecting the Canada Pension Plan. It identifies issues related to the Old Age Security program and to the Income Tax Act.
Senator Murray: Are these options?
Mr. Hunsley: Yes, these are options. Then it would be appropriate to call on the various ministries that have the responsibility for those policy areas to determine what they are doing and what work is under way.
Senator Murray: I think I asked something along these lines earlier in our meetings. One of the documents before us points out that the average World War II veteran is now 82 years of age and that the average Korean War veteran is 72 years of age.
Mr. Marshall: We wrote that about a year ago.
Senator Murray: Fair enough. Are those members of the Canadian Forces who took part in peacekeeping operations considered veterans?
Mr. Marshall: Yes, they are considered veterans. There is a distinction, which was hard for me to fathom, as it is for a number of people if they are not involved. A notion has been adopted that a veteran is a veteran. However, there is a distinction made between the Canadian Forces veterans and the traditional veterans. The New Veterans Charter that came out in 2006 contained reforms aimed at providing better services for the Canadian Forces veterans. They are not the traditional veterans. The traditional veterans are the three World War I veterans — I do not know whether there are still three alive or two by now — the World War II veterans and the Korea veterans.
Senator Murray: I do not see any reference in any of these documents to traditional versus non-traditional veterans.
Mr. Marshall: The Gerontological Advisory Council has a mandate to advise Veterans Affairs Canada on the services it provides for these three groups of traditional veterans.
Senator Murray: We will be out of business with those people, ultimately.
Mr. Marshall: Ultimately, you will. The youngest of them, of course, is the Korean War group.
Senator Murray: The first of the peacekeeping operations were members of the Canadian Armed Forces, albeit under United Nations command. The first of them was 1956, the Sinai, and since then we have had the Golan Heights, the Congo, other parts of Africa and the Balkans. Are these veterans?
Mr. Marshall: Yes, they are.
Senator Murray: Those fellows who were out in Sinai in 1956 are not much younger than those who fought in Korea.
Mr. Marshall: I am so glad you asked this question. The Gerontological Advisory Council is constrained. It would be beyond our mandate to give the broader advice. Frankly, the average age of the Canadian Forces veteran clients — that is the peacekeepers, the peace enforcers who were in Bosnia and Somalia — is 47 years now. These are not kids. As you say, they are aging.
Senator Murray: The population is growing.
Mr. Marshall: It is a growing population.
Senator Murray: People in Afghanistan today will be veterans when they get out, one assumes.
Mr. Marshall: That is right. In fashioning our recommendations, we are constrained to say what we think is good for the veterans about whom we are supposed to be giving advice — the World War I, World War II and Korean veterans. Yet we are very much aware that if you get a good system in place now that deals with aging veterans, it will be in place for the Canadian Forces veterans as well. They are not that young. We make a strong suggestion about that at the end of the paper.
Senator Murray: In principle, tell me there is no difference in the benefits that are available to the different groups of veterans.
Mr. Marshall: In principle, there ought not to be; but in practice, there is. A Canadian Forces veteran cannot get the Veterans Independence Program, for example.
Senator Murray: Which veterans cannot get the VIP?
Mr. Marshall: A peacekeeper or peace enforcer is not eligible for the Veterans Independence Program. It is bizarre. I believe that officials in Veterans Affairs Canada recognize that we need a program that will serve them.
Senator Murray: The pressure will be on the government as these fellows — they are mostly fellows — get to the age where they would otherwise be eligible for those programs.
Mr. Marshall: Absolutely. I know that members of the council, certainly I can speak for myself, would be very happy if there were programs in place for them, because they are not young.
Senator Murray: There is a lot to be said for more coherence in the program.
Mr. Marshall: Absolutely.
The Chairman: Mr. Hunsley, I would like to bring you back to the topic of flexibility in terms of working hours. Personally, I think that is the greatest incentive to those over 60 or over 65 years of age. As far as pension plans are concerned, we could make a recommendation that it would be their best five years or best seven years, depending on which statistic is used, of their full-time employment, and any part-time employment would therefore not count as an eligibility factor.
However, it seems to me that there is also the issue that both public and private employers do not necessarily like part-time employees. It is a disincentive; they need more space, and it is more people they have to keep track of.
What do we have to do to change the attitude around flexibility in the number of hours a person works?
Mr. Hunsley: Let me respond to two points that you made. The first had to do with the calculation of pension benefits. The Quebec Pension Plan has been looking at and may even have adopted — if not, there is a proposal to adopt — a change in the calculation of benefits. Rather than take the best five or some other number of years of full- time employment, they will take lifetime earnings, contributions over the lifetime, and use that as the base to calculate the pension benefits. That seems to make a lot more sense than arbitrary definitions of time span.
The other point is that many employers have not been particularly open to part-time workers. That is true. Obviously, though, a large number of employers are very open to part-time workers, and a significant proportion of the labour force works in various kinds of part-time or non-traditional ways.
Employers will probably become much more sensitive to this issue as they begin to encounter labour shortages. These issues are being discussed now among industry associations, among some of the sector councils that the federal government sponsors in various industrial sectors. They are being discussed at the level of the association, but they are not yet on the radar screen of the individual company or firm because companies tend to be more short-term-oriented in their planning. As long as they can work with the group that they have or the method that they have, in many cases they will.
There will be changes, I believe. The market will certainly encourage employers to change in that regard.
More education programs that promote the idea of planning for an aging workforce will, I think, help employers a great deal. I should say that planning for an aging workforce is not just planning for those workers in the last few years before they retire, but it is realizing that the whole population of employees will be older at all stages. We delayed our period of youth. We extended our period of youth. People are not entering the labour market in substantial career ways now until around their late 20s or in some cases their early 30s. People are beginning their working careers later, and they will be ending them later as well. It means that the whole structure of the working population is changing, and not just the oldest of the workers. Employers do need to become much more sensitive to that.
The Chairman: Are there disincentives with respect to payroll taxes for employers who have to have two part-time workers? For example, I am thinking of the payments that an employer would have to make to EI and to CPP because they are hiring two people to do what one person did. Can something be done to change that?
Mr. Hunsley: Over recent years, some of those breaking points have been changed, particularly in the EI program, where you still have to work a certain number of hours in order to accumulate benefits for EI. I do not think there are great savings for employers on such programs as EI or CPP, nor are there extra costs, to have one full-time versus two part-time positions. I would think that where there is a discrepancy, that should be made equal. It should be that there is not a disincentive based on the number of hours in a week that someone works.
There are limits. The EI program has certain limits and things they have to guard against in relation to expenditures out of their program. I think that employers can work with more part-time people and not necessarily experience an increase in inefficiency or an increase in costs.
Mr. Marshall: This is my main are of research, I cannot resist telling you. There are a couple of other points in support of this. Much of this is a retention issue. It is getting people to remain in the labour force longer. The action is mostly between the ages of 60 and 65 years, and getting those people to stay longer instead of retiring earlier.
If you are doing costing of this, one point is recruitment. If you lose employees, recruitment is an expensive proposition now, especially of higher-level employees.
A second point has to do with what is called lost knowledge. There is a wonderful book by David DeLong on the business school hit parade right now called Lost Knowledge. The concern in this book is that with the baby boomers aging out of the labour force, we are losing a lot of knowledge. Many things are not written down but are in people's heads. This is tacit knowledge. The book is full of disaster stories of companies that downsized their workforce, got rid of all the older workers and then lost their institutional memory. The book is all about trying to keep at least some employees around as a strategy.
We did research years ago with Nova Corporation, when I was still at the University of Toronto. Nova has changed totally now, but at the time it was an integrated company of gas pipeline utility and petrochemical manufacturing. They were in a big downsizing operation and we did the study there. They were very clever and forward-looking in their human resources approaches. They had a lot of contract employees; they had contracted out services. They were doing what many companies are doing now. However, they also defined about a quarter of their workforce as core. What they were doing was essential for the core mission of Nova Corporation. These were employees on the old model — employees for life. There would be a little more continuing education than would otherwise be the case, but they kept their core employees.
There is a danger of losing this institutionalized knowledge and having a real crisis occur. That is another argument for flexible workplace policies, such as phased retirement. If you can get someone to stay on even two or three years longer as a half-time employee, you get 100 per cent of their knowledge. All of that institutionalized knowledge is there 100 per cent and you are only paying for half of it. It is hard to cost the savings, but I am sure there are real savings.
The Chairman: My final question has to do with an area that was raised the last time we had witnesses before us, and that is the whole issue of older people not retiring, not wanting the mandatory retirement, and the issue of safety and competency. Would either one of you like to add your views to that?
Mr. Marshall: When the U.S. did away with mandatory retirement several years ago, a new field emerged looking at competencies, particularly for airline pilots or firefighters or special occupational areas.
The Chairman: Cardiology especially.
Mr. Marshall: A lot of research was done. Basically they found that there are declines associated with age on many functions for most people, but these different functions do not decline at the same rate.
I have a hearing problem that is actually service-related. It was caused by gunnery practice when I was an officer cadet in the navy, an almost service-related injury. That was early, but with aging many people will lose their hearing although everything else works just fine. You have to base it on competencies rather than just age.
Cognitive function is important in the digital era we are now in. It would be folly to deny that with age there are declines in cognitive function, but in fact most people are so far above the bar that is required for satisfactory work performance that it does not matter. They will die of a heart attack or something else before the slowness with which they are doing cognitive processing of information would fall below a bar necessary for adequate performance.
Mr. Hunsley: A number of the recent court decisions that have been in favour of doing away with mandatory retirement have tended to put the burden of proof on the other side. They say that rather than have a general principle that at a certain age you are no longer competent to do a range of things, the burden of proof should be put on the other side. There may well be a number of occupations where it is appropriate to have mandatory retirement at a specific point in time, but that point may be determined not by an arbitrary number of years but by an overall measure of ability to perform the functions involved.
That is not inconsistent with what is happening in general, particularly in professions. We constantly increase the number of professions in the world. We develop new kinds of specializations, new areas in which we are competent. We have not only computer programmers now, but we have a variety of sub-professions within that, and in any number of areas. In general, those professions define themselves by their competencies, and they are more and more requiring such things as annual updating and continuing education and so on within their field in order to prove continuing levels of competency.
I expect that trend to continue in the future and it will be more common to have to prove that you are competent within your general area of work. I do not see that as being a particularly bad thing.
Mr. Marshall: Two days ago I was called by a lawyer in Toronto who wanted to discuss a case that may be coming before the courts. A man had been just hired by a company in Toronto and they had a very thorough hiring process. He passed all sorts of tests. They did not want to hire someone without making sure this person had all the required competencies. It was only after they hired him and he was filling out the paperwork that he told them he was 65 years old, and they fired him. I hope this comes before the courts. That is competency versus age right there.
The Chairman: On that note, Mr. Marshall and Mr. Hunsley, we thank you very much.
Honourable senators, we will now hear from our second panel of witnesses on the human life-course approach. Susan Kirkland is a professor with the Canadian Longitudinal Study on Aging from Dalhousie University. Professor Kirkland has various research interests including women's health, aging, health services utilization and longitudinal studies. From Statistics Canada we have Geoff Rowe, Senior Advisor, Microsimulation. Mr. Rowe has written on integrated life-course data and older workers.
Susan Kirkland, Professor, Canadian Longitudinal Study on Aging, Dalhousie University, as an individual: I would like to thank the Special Senate Committee on Aging for inviting me to appear before you today. The issue of aging in Canadian society has enormous implications for government, and I applaud you for your very timely work.
Given the list of earlier speakers and your own previous work in aging, I know that you are well aware of the shifting demographics in our country and the dramatic changes in the age structure of our population over time. In particular, as the baby boomers approach their senior years, and the first of them reach age 65 in 2011, there will be increasing pressures in health, social and economic spheres. In order to make informed decisions regarding programs and policies that reflect the changing nature of society, we will require evidence to guide our decision making and, in turn, evidence to evaluate whether the programs and policies we implement have their intended effect.
My presentation to you today revolves around the central tenet that we must put in place ongoing, longitudinal research that can be utilized for informed decision making, evaluating outcomes and creating new knowledge to increase our understanding of the complex processes of aging. In particular, I would like to tell you about an initiative I have been working on since 2001, a study known as the Canadian Longitudinal Study on Aging, or the CLSA.
I am one of three principal investigators on this study and, along with my colleagues Dr. Parminder Raina from McMaster University and Dr. Christina Wolfson from McGill University, have led a team of approximately 200 collaborators from 26 universities over the last five years to lay the groundwork for this innovative study.
You have already heard about the CLSA from Dr. Anne Martin-Matthews, who is the scientific director of the Institute of Aging, but I would like the take the opportunity to speak about the study in more detail and, in particular, to talk about the benefits to Canadians from undertaking such longitudinal research on aging.
I will begin by putting research on aging in context. We know that the aging process entails multifaceted changes during an individual's lifetime occurring simultaneously at the level of the cell, the level of the individual, and the broader social-societal level. In recent years, our ability to understand the complexity of aging has been enhanced through biological and technological advances such as the sequencing of the human genome. However, a clear picture of the combined effects of biological, physical, psychological and social changes in aging has not yet emerged.
There is a growing body of research on the aged, yet there is a need for studies that examine aging as a process incorporating adult development and life-course perspectives. In the literature, the concept of life pathways plays a central role. As individuals move along life pathways, they may modify their roles, behaviours or social relationships to meet the demands of changing environments and employ novel strategies or technologies to respond to these changes.
We know that the socio-demographic characteristics of baby boomers are very different than those of their predecessors, especially for women. As a result, the choices — or sometimes they are not choices — made regarding paid and unpaid work, preparation for retirement and retirement itself will have major implications not only for those people as individuals, but also for Canadian society as a whole. New and diverse pathways from work to retirement have been created for many families. In some cases, retirement will be prompted by adverse health conditions. In other cases, retirement itself may be associated with declining health and well-being as a result of economic or social deprivation. In still other cases, retirement may be followed by a significant period of good health with no decline for many years.
The transition to retirement may also be indirect, via care giving, or involuntary, via difficulties in getting back into the workforce after a period of being away. Thus, an understanding of retirement must be set within its broader social context, and the analysis of behaviour related to retirement must become more sophisticated to take into account this multiplicity of factors.
We also know that chronic diseases have an impact on aging. While the CLSA incorporates chronic disease as an important element of aging, the investigation of a number of specific diseases will also be possible. The greatest potential for advancement in terms of understanding the development and management of disease will be with respect to relatively common chronic conditions such as arthritis, osteoporosis, cardiovascular disease, cardiorespiratory disease, cerebrovascular disease, diabetes and hypertension. These diseases have been well studied in terms of prevalence, but very limited information exists at a population level on their incidence and on the progression of disease over time. Surprisingly, we know very little about the way in which disease influences physical, social and psychological functioning and how individuals adapt to live with chronic disease.
As individuals age, the likelihood that they will develop more than one chronic disease also increases. The development and management of comorbidities has not been well studied, in part because the predominant model of studying chronic disease is to focus on the in-depth measurement of one disease outcome at a time.
A key aspect to the Canadian Longitudinal Study on Aging, and one that makes it unique in contrast to previous studies, is a paradigm shift away from viewing aging as simply the accumulation of disease, deficits and disabilities to a view that incorporates the notion of healthy and successful aging. Simply put, while chronic diseases play a part in aging, the study of individual diseases alone does not further our understanding of aging.
An operational definition of healthy aging includes not only physical, psychological and social functioning, but also the elements of adaptation, context and the perception of the individual themselves. The full spectrum of aging trajectories is of interest, acknowledging that not all outcomes are negative and that many individuals feel that they can and do age well, even when faced with decline and adverse circumstances. Ultimately, we hope to identify the factors that have the greatest impact on successful aging and to better understand how they exert their effects.
Let me give you a bit of detail about the Canadian Longitudinal Study on Aging. It is a proposed study of 50,000 individuals to be followed over 20 years. These are Canadian men and women who are over the age of 40 years. While all 50,000 people will provide information via questionnaires on physical, social and psychological aspects of health, a subset of 30,000 will also provide much more detailed information, including a physical assessment and the provision of a blood sample. These 30,000 men and women will be centred around 10 Canadian cities or towns across the country. Those who are under 80 years of age will be followed every three years, and those over the age of 80 will be followed annually.
For all 50,000 participants, this information will, with informed consent, be linked to existing information such as healthcare administrative databases, mortality files, disease registries and environmental databases.
The design of the CLSA is unique in that it will be useful both to inform policy and to advance our understanding of the complex interrelationships involved in aging. The inclusion of study participants as young as 40 years of age is motivated by the desire to capture mid-life experiences prospectively, since important changes known to influence outcomes later in life will occur during this period. It stands to reason that people do not instantly become old overnight once they reach the age of 65. The lower age limit will permit the inclusion and long-term follow-up of individuals who are part of the baby boom cohort, whereas the older age groups will allow us to follow those who are making the transition into retirement or who are already retired. One of our interests in studying this latter group prospectively is the opportunity to follow the oldest old into their final years of life.
How can the CLSA have a direct impact on policy? One of the key ways is by tracking key life-course information and events leading up to the transition from work to retirement and transitions post retirement. As an example, many policies with respect to work and retirement are based on the model of an individual, typically male, holding a job in one organization for a long period of time. However, the reality today is that many people work job to job or engage in periods of unemployment, particularly as they move toward retirement. The rise in the prevalence of women in the paid work force and the increase in the number of dual-income families have also created new issues for balancing work and life demands, as have the growth of non-standard paid work — for example self-employment, contract work or consulting — and casual employee status — a recent phenomenon that has important implications for forecasting retirement and that has not been well studied.
The pending withdrawal of the large baby boom cohort from the workforce also has implications for policies with respect to age at retirement, labour force shortages and the loss of experienced workers. A more complete understanding of the impact of these changes will allow policy-makers to develop and implement policies with the greatest opportunity of increasing health and productivity of the labour force.
As a nation, Canada has unique features that make it an excellent setting for the study of aging. In addition to having a large baby boom cohort, the oldest of whom are about to enter into their senior years, we have unique structural aspects that add value to such a study. These include, first, a publicly funded healthcare system and associated administrative databases that capture the health service utilization of the whole population and, second, the ability to link, at the individual level, these existing sources of information.
Equally important, we have a critical mass of Canadian researchers prepared to cooperate and contribute their expertise to a collective resource, and this has been clearly demonstrated over the last five years. The CLSA has the potential to enhance research capacity, to build a legacy for future generations of researchers and to place Canada at the forefront of research on aging internationally.
Last, but certainly not least, health and aging are issues of great interest and importance to the Canadian public. Indeed, through focus groups we have conducted across the country over the last year, healthy aging is consistently found to be an important and timely focus for research in this country.
In closing, I hope I have conveyed to you the benefit of longitudinal research for the study of aging. While considerable effort and development work on the CLSA has already been undertaken, the funding for this long-term initiative is not yet in place. To date, the CLSA has been supported as a strategic initiative of the Canadian Institutes of Health Research, CIHR, and approximately $4.5 million has been invested in its development. However, a study of this magnitude is extremely expensive, and there are no existing funds to support its full-scale implementation. We are currently working with CIHR, Statistics Canada, the Public Health Agency of Canada, Health Canada, and Human Resources and social Development Canada to try to make this important study a reality. In order to meet the demands and the needs of today's and tomorrow's seniors, there is an urgent need to invest in longitudinal research. I thank you for your time.
Geoff Rowe, Senior Advisor — Microsimulation, Statistics Canada: Thank you for giving me the opportunity to make this presentation today.
In the previous session, Terrence Hunsley gave you some examples of research that has been supported through the use of the LifePaths simulation model. I intend to give you some background on that model.
Diversity among individuals is a fact all too often overlooked in policy analysis that usually focuses on averages or on the typical individual. As an example, women aged 45 in the 1991 census can be grouped into 8,021 categories on the basis of just a few factors that are of long-term significance in their lives — the number of children they have born, years of education, marital status, migration and disability. Twenty-nine per cent of these women were in the least common 7,000 categories. Thirteen per cent of them were in a category by themselves. If such diversity is evident for a single year of age, it is even more pronounced when we consider people's circumstances over their life course.
As Terrence Hunsley has just illustrated, there are a number of important policy domains — including those that are the focus of this committee, such as population aging — where a life course perspective reflecting people's diverse situations is clearly important.
Unfortunately, life course data for a representative sample of the Canadian population are generally either unavailable or incomplete. If we want a broad understanding of the life courses of Canadians over the past several decades, as well as how they are likely to unfold into the future, the only recourse is to reconstruct life-course data by integrating data sources and draw on recently observed patterns of behaviour for projections. For this, we need a model, more specifically a computer simulation model.
LifePaths is such a model. It facilitates analysis of the life course by synthetically but realistically generating a sample of life histories of individuals and families from birth to death. LifePaths represents diversity, for example, by reproducing detailed distributions of annual earnings by educational background, age and sex. The simulated life histories add up not only to the obvious broad aggregates, like total population and average income, but also to more detailed benchmarks, such as the number of employed women by age group and calendar year.
I want to give three further examples of recent studies that we have conducted over and above those Mr. Hunsley described earlier. These are all studies that illustrate new areas into which we are extending the model.
To begin, here are three main observations drawn from a new, soon-to-be-published examination of inter- generational fairness from the perspective of lifetime income taxes and transfers as experienced by successive Canadian birth cohorts.
First, based on ranges that have been observed in the past decade, the pace of economic growth is likely to have more influence on lifetime transfers minus taxes than improvements on life expectancy. Second, the way that the major cash transfers to the elderly — CPP, QPP, OAS and GIS — are indexed over the coming decades is likely more important than whether the age of entitlement remains at age 65 or is increased to age 70. Third, the baby boom generation could end up benefiting less from taxes and transfers than their parent's generation did.
The model has also been used in a number of published studies involving disability, aging and home care. One of the concerns here is the extent to which future elderly might be able to draw on informal support from their close family.
We have found, first, that marriage and divorce trends may imply that in the future fewer disabled senior haves a spouse who could care for them. Second, current low levels of fertility may imply that in the future fewer disabled senior will have an adult child to help with their care.
The LifePaths model provides a unique capacity in Canada to help identify factors that will influence seniors' ability to have informal care and support.
LifePaths also makes it possible to explore different factors that may be important in the context of an aging population, such as the future of family formation and dissolution and future fertility trends.
The past two decades have shown remarkable increases in the level of labour market activity among women. All else equal, these increases should translate into increases in their future public and private pension entitlements, but if current levels of marriage breakdown continue, in the future, an increased proportion of seniors may be living alone, though common law unions may become increasingly prevalent among seniors. Still, two pension couples will be better insulated from risks to their pensions than would the single pension couple of the past.
This final example illustrates that LifePaths can address issues that cut across economic and social boundaries such as labour market and the family.
LifePaths is a tool designed to increase the usefulness of the data we have by means of data integration and by enabling us to pose and answer ``what if'' questions. It also allows us to broaden the scope of policy analysis, and though the model has a steep learning curve, it is intended to be widely available.
The Chairman: Thank you very much. How do LifePaths and the Canadian Longitudinal Study on Aging work cooperatively together, or do they? Are they two different vehicles?
Mr. Rowe: I do not think that they are alternatives at all. I am in the business of modeling, but modeling is only a second best. Primary data is what one wants ideally, but there are always limitations to that data. Only so many questions can be asked on a survey; only so many measures can be taken, and you can follow individuals in a longitudinal survey only for a limited period of time. Eventually you run out of information, and that is the point at which models should take over.
If LifePaths had the data from a longitudinal survey such as this available to it, it would be improved, but you would still need that model both to fill in the past, for which we have no longitudinal surveys, and to enhance the model for projection into the future.
Ms. Kirkland: I would agree with that. I think they are entirely complimentary approaches. You need prospective information over time in order to deal with issues that come forward and issues that we cannot get from existing information. That is the crux of the matter in terms of using modeling approaches with data that exists. What we really need is information from a variety of sources and particularly from a variety of different approaches in order to understand the full range of what it means to age.
For instance, in a database somewhere we have a lot of information on economic circumstances, and we have a lot of information on diseases or visits to hospitals in another database. However, there is other important information that revolves around how individuals adapt or that has to do with the psychological and social integration aspects of health, which really you only can get from an individual. Having that information will really help us to piece together the puzzle, because we have such limited pieces of information at the moment and we have never been able to put them together effectively.
The Chairman: Dr. Kirkland, you mentioned that this study is still at the proposal stage and that you hope to launch it in 2008. What kind of money are we looking at in order to have this study conducted?
Ms. Kirkland: That is a very good question. I cannot tell you which version of the budget to report, but I would say that the most accurate figure is $55 million per five-year cycle, which is two cycles of complete data collection.
We can, of course, lower the budget by taking certain aspects out, by following people not as frequently or by not including as great numbers. All of those measures, however, have very real implications. A benefit of the CLSA to date is that we have been able to develop a design that includes a large enough number of people and covers a large enough number of elements that have not previously been collected on the same individuals into one package. It is the integration of that information, along with the power of having large numbers, that will allow us to answer some of these questions that we have around the process of aging. That is why this study has the opportunity of being unique.
There have been a number of studies on aging in other countries. We have had the Canadian Study of Health and Aging, which focused on Alzheimer's disease and other forms of dementia. Typically, past studies have been of between 10,000 and 20,000 people. They have followed people who are aged 65 and older. They have run into problems, because when you have a small number of people and you start at an age range where people are dying off, you lose numbers. You start off asking the right questions but you end up being limited in providing answers because you simply do not have the resources, in both numbers and complexity, to answer those questions. That is why we feel a study the size of the Canadian Longitudinal Study on Aging, with 50,000 people, 30,000 of whom are followed with very detailed information, will allow us to get at those issues.
The Chairman: My concern about long-term studies is that politicians look for the quick fix. When the first report comes down politicians say we now have the answers to all the questions we asked. Meanwhile, of course, the study is still going on. How do we prevent that from happening, so that the quick fix is not taken before we have any idea what the solutions really are?
Ms. Kirkland: That is an interesting question. Usually we have been thinking about it from the other perspective. How do we give politicians the quick fix so that they feel they are getting benefit for their dollars?
The Canadian Longitudinal Study on Aging has been designed so that we enter people aged 40 up to age 80 and follow those people for 20 years. That allows us at the outset to get a broad spectrum of the Canadian population and to follow those age groups so that we can make some quick, informed decisions around various aspects of health.
Also, the CLSA has been designed so that all 50,000 participants can provide information at a provincial level to address issues around provincial policy. The 30,000 will provide more detailed information, but only at a national level.
The challenges are to be able to present information on an ongoing basis that is new and that highlights the value of this kind of work and also for us to be able to articulate what the long-term values are.
Mr. Rowe: One way you can address the problem of the quick fix is by highlighting in the first instance the diversity of outcomes that we observe in policy in the social and economic domains generally. One reason that I emphasized diversity in my talk is that I think that too much emphasis has been placed on averages that give the impression that quick fixes are real.
I do not imagine this is not a real challenge. If we were able to emphasize diversity of outcomes to a greater degree than we have in the past, I think that that would improve matters, though it is difficult.
The Chairman: I think back to 15 years ago when we were actually cutting placements in medical schools because we were going to have too many doctors, only to find in the last five years that we have not had nearly as many doctors as we need, and we have had to reverse it. We took away places and now we have restored those places. My overall concern about studies of this nature is that we make these decisions based on part data which is what we would have after five years and then more part data after another five years.
Let me pass you on to my colleagues. Senator Murray seemed quite surprised.
Senator Murray: I have always been incredulous about what we did as a society in terms of health care professionals, doctors and nurses, only a few years ago. You cannot convince me that we did not know better. It was driven by fiscal considerations. I am glad to have that confirmation from a distinguished medical practitioner, our colleague Senator Keon.
I can see how these two studies will complement each other, because Dr. Kirkland's study seems to be concentrating on health. Your introduction is a more macro introduction about multifaceted changes during an individual lifetime. Essentially it seems to me you are talking about health here.
Ms. Kirkland: Yes, I am talking about health but in the broadest sense. I consider health to be social, emotional, physical health, not simply whether one develops a disease or cannot lift a box.
Senator Murray: I will have to let someone else pursue that. Like Senator Carstairs, my familiarity with this kind of project is largely from the field of politics. You draw a good sample of the population, and then you go out and ask questions and try to get answers.
Tell me that 50,000 Canadian women and men over the age of 40 will be a valid sample.
Ms. Kirkland: I can tell you that it will allow us to look at a number of estimates for a number of different things.
Senator Murray: Does anyone know approximately how many Canadians there are who are over age 40? Mr. Rowe, do you know?
Mr. Rowe: I could only guess.
Senator Murray: You do not carry that sort of information?
Mr. Rowe: No, I do not.
Senator Murray: Neither do I.
Ms. Kirkland: There are a lot of them.
Senator Murray: That is why I wonder if 50,000 is a valid sample.
I will leave questionnaire-based information on physical, social and psychological aspects of health to you.
I presume that there will be a valid breakdown of the 50,000 study participants into men and women, age groups like 40 to 50 years and 50 to 60 years, socio-economic status, incomes, ethnic origins and so on. Am I right about that or does it matter for the purposes of this study?
Ms. Kirkland: It matters, yes. However, you cannot start to divide the population too many times before you do not have adequate numbers. There is a very real challenge here as to how to study the Canadian population adequately. For instance, when we were trying to determine the design of this study, we were very concerned about studying both urban and rural populations.
Senator Murray: I see that.
Ms. Kirkland: We were concerned about studying different ethnic groups. However, if you design a study statistically to have adequate representation of different ethnic groups to answer all of the questions that you want to answer, you quickly run into big problems.
We have resolved that to a certain extent in the Canadian Longitudinal Study on Aging by taking a random sample of the Canadian population. It is random within province. There would be the same number of people within a province, so we can make provincial-level estimates. Those people would come from across the province so they can reflect different ethnicities and socio-economic levels.
Senator Murray: The number of Nova Scotians in that sample of 50,000 people will correspond to the proportion of Canada's population accounted for by Nova Scotia, presumably.
Ms. Kirkland: Not necessarily. If we did that, we would not be able to make estimates for Nova Scotia.
Senator Murray: In other words, you will have to over-sample in Nova Scotia.
Ms. Kirkland: Yes.
Senator Murray: Senator Carstairs and others can correct me if I am wrong. I think in terms of public opinion research, which is an entirely different thing, I acknowledge. A typical national sample on public opinion is far fewer than 50,000 people, more like 2,000 or fewer.
The Chairman: It is typically 1,200.
Senator Murray: It is typically 1,200. Why is the subset of 30,000 people, for whom you want a physical assessment and a blood sample, centred around 10 Canadian cities and towns? Is that just for the convenience of the researchers?
Ms. Kirkland: It is not just for the convenience of the researchers, but it is a logistical and financial issue. This is an extremely expensive study to begin with. Ideally, it would be nice to take a random sample of the Canadian population and go into their homes and have blood drawn there and have a portable system where you could take a number of different physical measures. However, financially, it is just not feasible to do a study like that on 50,000 people.
The individuals will come from a 100-kilometre radius around each of 10 centres located across the country. They will come to the centres to provide both physical assessments and blood samples. The intent is that over time we may be able to do similar things with the remaining 20,000 people who are not coming into a centre. As technology changes, it is possible to do things like do a finger prick and put blood on filter paper and that kind of thing. As a result, we may be able to get more detailed physical information from those people.
Senator Murray: How long will this study go on?
Ms. Kirkland: It is proposed for 20 years.
Senator Murray: You said that for all 50,000 CLSA participants, this information will also, ``with informed consent, be linked to existing information such as health care administrative databases, mortality files, disease registries, and environmental databases.''
When you recruit a person to be part of the sample, do you say, ``How about giving your consent to let us look into your medical records?'' Is that it?
Ms. Kirkland: Yes.
Senator Murray: Why are you doing that? Are you afraid they will not tell you the truth?
Ms. Kirkland: No, but it provides a useful way of accessing information that people might not remember or know themselves.
Senator Murray: What is most important? Is the questionnaire supplemental to what you will find out by reading their medical records, or is the information from the medical records supplemental to what you will get from the questionnaire?
Ms. Kirkland: What we get from individuals will be the primary source of information.
Senator Murray: The questionnaire.
Ms. Kirkland: Yes. Anything else we collect from other data sources will be supplementary, but it will provide a broad and useful picture — a more expanded picture.
Senator Murray: Has the questionnaire been prepared yet?
Ms. Kirkland: There are various versions of the questionnaire prepared, yes.
Senator Murray: Could we perhaps see an early draft?
Ms. Kirkland: Certainly.
Senator Murray: I would be interested, thank you. That is quite fascinating.
I do not know quite what to ask Mr. Rowe. I followed him, like Senator Carstairs. This business of marriage and divorce rates and the prospect of being disabled without someone to look after one has an awful fascination.
The main question is not one that you can answer — or that it would be fair to ask you — which is what are the implications of this for public policy-makers. You feed this information to cabinet and Parliament and others. It is what we do with it, I suppose.
Mr. Rowe: The standard line, of course, is that we are Statistics Canada: we do not cross the boundary into policy and we do not do forecasting. We make projections based on a range of assumptions. Those are all the stock answers.
Part of the reason we felt there was a need to put together a model like this is that there are some simple truths. As policy analysts or people involved in policy generally, we cannot answer simple questions like, ``What are the normal patterns that an employment career takes?'' No one has ever been followed for that long, and the data we have is all fragmentary. The best we can do is to try to put those pieces of information together to make the maximum use of the data that we have for a range.
Senator Murray: Why should the baby boom generation end up benefiting less from taxes and transfers than their parents did? They will have more political clout.
Mr. Rowe: True enough, but there are maturation effects.
Senator Murray: What are they?
Mr. Rowe: At the start-up, any program, like CPP, will almost inevitably tend to be more generous for the people recruited at the outset than it will be when the program matures. The baby boom generation is the beneficiary of mature programs, by and large. It is not that they are getting second best in any sense, but the parents received very generous treatment from the social welfare programs generally.
Senator Murray: For a long time there have been fewer younger people looking after their parents and grandparents than there were a few generations ago. That has a lot to do with attitudes, I think, and with social changes in the country.
Why do you say that economic growth has more influence on lifetime transfers minus taxes than improvements in life expectancy?
Mr. Rowe: This was simply an observation that was made after mechanically working through the differences between —
Senator Murray: The call on the federal treasury, for example, is greater as a result of economic growth — in other words, we have the money to spend — than as a result of the fact that people are living longer.
Mr. Rowe: Yes.
Senator Murray: It is economic growth.
Mr. Rowe: It is economic growth; it is not demographics. That seemed to be the message that came out of this particular study.
Senator Murray: Future indexing provisions are more important than age of entitlement for CPP and OAS. What do you mean by ``more important``?
Mr. Rowe: More important in that it made a greater difference to individuals if we were to substitute indexing provisions that would maintain the relative standard of living, relative to the average wage, rather than maintaining purchasing power in terms of cost-of-living adjustments.
Senator Murray: Does it not speak to something we were discussing earlier, which is the possibility of encouraging people to stay on the job longer?
Mr. Rowe: To some extent.
Senator Murray: The indexing provisions down the road will be more generous, which is an incentive to start taking one's pension later.
Mr. Rowe: The indexing provisions simply maintain a certain level of purchasing power. Inevitably, if there is economic growth, the standard of living will rise, and the comparative standard of living of the working population compared to the retired population would diverge. If we adjust it so that the working population and the retired population stay in sync, it would be wonderful; but those are all political decisions.
Senator Murray: That is not a political choice, please God.
Mr. Rowe: Perhaps not.
Senator Keon: This is fascinating stuff. Ms. Kirkland, it seems to me that you are doing five-year cohorts or tranches for 20 years. Then what will happen? Is it not terribly important to follow them for the next 20 years?
Ms. Kirkland: You mean after the first 20 years?
Senator Keon: Yes.
Ms. Kirkland: Absolutely. I will worry about the second 20 years when I get there. I am concerned about the first five years. It is extremely important to get this study off the ground. Once it is off the ground, the value of the information that comes out will allow for its longevity.
Once any study has been running for a certain length of time, there is added value to continuing; and the added value is more evident. From my perspective, the first 20 years is the focus. By then I will be close to retirement age so I will be able to hand it down to someone else to worry about the next 20 years' of funding.
Senator Keon: It will not happen because with the new rules, you will be working until the age of 90.
Ms. Kirkland: That is a good point.
Senator Keon: Mr. Rowe, I am fascinated by what you are doing. During my research, I had the great privilege of an experience with an aeronautics company to help us with computer simulation; it was tremendous. It is interesting that the first time the pilot of a 747 gets that plane off the ground it is full of passengers because all of his training is done on a simulator. I must admit that I crashed a 747 on the simulator in Montreal.
Senator Murray: How old were you then?
Senator Keon: It was only a few years ago. Needless to say, I went back to heart surgery. There is tremendous potential for cross-fertilization and collaboration between the two of you. Perhaps I would suggest that you see what you can do in your applications to come together because all kinds of hypotheses can be raised with simulation to solve many problems.
I have concerns, which the chairman raised, about the comments of the last witnesses who said that we seem to be discarding a tremendous body of historical and anecdotal knowledge. For example, the traditional university retirements at age 65 did not happen by accident; they were done for good reason. Universities found that their professors became non-productive at age 65 and that some of them truly were not competent to continue teaching. This was one solution to dealing with that situation.
It concerns me now when people talk about non-mandatory retirement at age 65 that they have nothing in place to substitute for that tradition. The measurements are very soft. Having lived the experience of interviewing people aged 65 and older to allow them to continue in some capacity after that age, I know that there is a very soft science.
Mr. Rowe, you might be able to make a tremendous contribution to that area. I would be interested to hear your thoughts and those of Ms. Kirkland on how to integrate some of this.
Simulators can accelerate tremendously the possibilities. For example, when I developed an interest in simulation, we built a simulated patient. It enabled us to teach the students how to handle a cardiac arrest in one afternoon instead of taking one year to do it. Previously, the system was hit and miss.
How do both of you think you could integrate such a tool? We have a great deal to learn about aging and about this critical time in aging when competence will be extremely important in many areas and it is all being treated with soft methodologies.
Mr. Rowe: I will return to my theme of diversity of outcomes. You raised the question of work past age 65, yet it seems that only about 10 per cent of the population continue to work past 65 years of age. Somehow or other work ends for large numbers of people before age 65, starting perhaps around age 50 or age 55, and then it begins to taper off. No matter the age, it is labelled ``retirement'' one way or another. Yet, the data on self-reported retirement for males in recent birth cohorts indicates that only about 50 per cent of them will ever report having had a retirement event and that 10 per cent simply seem to continue, one way or another.
A good number of them might die on the job. We do not know. Many of them have careers that simply peter out. We know that permanent layoffs are not a rare phenomenon among the older working population. They are as common among the older population as they are among the youth. There seem to be many different ways in which careers end. It is difficult to categorize them, and it is enormously difficult to define the major influences in determining the outcome in any given case.
By and large, we do not have data for precisely these kinds of things. We do not have any general source of data that allows us to observe easily the lead-up to a retirement. The best example that I can think of is the Statistics Canada Survey of Labour and Income Dynamics, SLID, that follows people over a six-year period, at most. It is representative of the entire population. There is too small a sample for events such as retirement and the problems that were described before are present in spades.
We have to plead ignorance because we simply do not know about the issues you are raising.
Ms. Kirkland: I would agree with Mr. Rowe, who has repeatedly spoken to the notion of diversity, that it applies in this case as well. We know that age 65 is simply a number; it is not a magic number. It does not mean you are fine to work one day and you are not fine to work the next day. That is why it is so important that we understand health and aging over the life-course and that we are able to put together these pieces of various aspects of a person's life and to understand the impact.
For instance, in the Canadian Longitudinal Study on Aging, we would have information over time about various psychomotor processing speeds, various illnesses, attitudes about work and retirement, et cetera, and be able to piece it together over time. It is complicated and complex. Even the data sets, such as those produced by SLID, have a great deal of information on some of the social and work aspects but no information on the health aspects. Therefore, you cannot put that into the picture, although it is a big piece of the picture when it comes to understanding retirement or competency to continue working and so on. We simply do not have the information we need.
Senator Keon: I agree completely. Do you think that Mr. Rowe can help you with some of the simulation models?
Ms. Kirkland: If you mean in terms of the CLSA, I would say, yes, definitely. Using the Canadian Longitudinal Study on Aging as a tool for simulation would be useful. Without that data, you cannot utilize it. Much data currently in existence can be utilized to project things that may occur in the population in the CLSA. We can then test out some of these things or make sure we have the information we need to observe them in the population over time. They are definitely integrated and possibly parallel processes but very complementary at the same time.
Mr. Rowe: I would say that things are a little more one-sided than that. I can benefit from Ms. Kirkland's work more than she can benefit from mine.
The Chairman: Mr. Rowe, I was particularly interested in your comments on disability and aging and on two-earner couples becoming two-pension couples. I assume that what you fed into the simulation in order to come up with these projections is the fact that we in Canada have a 40 per cent divorce rate. Following divorce, according to the statistics in the Maclean's article to which I referred, many women choose not to re-enter into any form of partnership. ``I am now single and I am enjoying it'' seems to be their attitude, which means that they will not have anyone to look after them. As well, the spouse they left will have no one.
Is that the kind of data you collect and model?
Mr. Rowe: That is the kind of data we collect. We have made use of a number of retrospective surveys where information is collected from individuals who report when and how many marriages or common-law unions they have had in the past. Such surveys have been conducted since about 1984. We have pooled all of the information from all of the surveys together in order to get a more comprehensive picture.
We looked not just at the marriage breakdown but at the fact that there are changes, as you have suggested, in the proportion of people who choose to remain single and changes in the proportion who enter common-law unions and remain in common-law unions. Moreover, there have been changes in the prevalence of common-law unions after legal marriage breakdown.
We have had over a 20-year period a remarkable trend in marital status. Some of it may be a shift in the name only; common-law unions may represent the equivalent of marriage in the future and they are no different from traditional marriages except in name. However, common-law unions that have formed after a marriage breakdown and that persist into older age perhaps have behavioural consequences that we have not seen in the population to date. There seems to be much uncertainty about what the future could hold. We have some dramatic differences in patterns across the country, principally between Quebec and the rest of the native-born population, and the foreign-born population as well seems to represent a group that by and large holds closer to what we traditionally think of as marriage.
The way in which marriage will work out in the future is, to my mind, a large unknown. There are some rather important considerations for the senior population that depend on how that works out in the future.
The Chairman: In discussions with some seniors, it has become clear that they are not even entering into common- law unions because they think it is to their economic advantage to stay separate and apart. That does not mean that they do not get together on a fairly regular basis; they just do not live together, because one or both of them will lose the Guaranteed Income Supplement, so they just maintain their separateness in terms of income level.
Is that borne out in the modelling that you do?
Mr. Rowe: We cannot address that. Other grey areas in national statistics are things that cross household boundaries. We do not know what kind of connections there might be between different households and we do not know the reasons or how common the situation that you have described might be.
We do know that the incentives exist for that kind of an outcome, but we do not really know about the prevalence.
Ms. Kirkland: Those are particularly the kinds of things that studies like the Canadian Longitudinal Study on Aging can get at because studies ask people particularly about these things. They have the opportunity, when certain situations arise, to ask why. That is the important question, because sometimes we can see these things happening but we do not know why. We can tell you that a certain proportion of people live in their own home or cohabit, but we do not know why. Having the opportunity to go directly to people and question them on their beliefs, attitudes and the reasons behind why they do things can be very helpful in this circumstance.
The Chairman: Thank you both very much. This has been very informative. I put my own bias here: I hope you get the funding for your longitudinal study and I hope you keep modelling, Mr. Rowe, so that we can have interesting data such as what you presented to us this afternoon.
The committee adjourned.