Proceedings of the Standing Senate Committee on
Social Affairs, Science and Technology
Issue No. 12 - Evidence - December 1, 2016
OTTAWA, Thursday, December 1, 2016
The Standing Senate Committee on Social Affairs, Science and Technology met this day at 10:34 a.m. to study the subject matter of Divisions 1 and 2 of Part 4 of Bill C-29, A second Act to implement certain provisions of the budget tabled in Parliament on March 22, 2016 and other measures.
Senator Kelvin Kenneth Ogilvie (Chair) in the chair.
[Translation]
The Chair: I would like to welcome the Standing Senate Committee on Social Affairs, Science and Technology.
[English]
I'm Kelvin Ogilvie, a senator from Nova Scotia and chair of the committee. I will ask my colleagues to introduce themselves, starting on my right.
Senator Neufeld: Senator Neufeld from British Columbia.
Senator Stewart Olsen: Carolyn Stewart Olsen from New Brunswick.
Senator Seidman: Judith Seidman from Montreal, Quebec.
Senator Raine: Nancy Greene Raine from British Columbia.
Senator Merchant: Good morning. Pana Merchant, Saskatchewan.
Senator Eggleton: Art Eggleton, a senator from Toronto and deputy chair of the committee.
The Chair: I remind us that we are dealing with Bill C-29, A second Act to implement certain provisions of the budget tabled in Parliament on March 22, 2016 and other measures. Today, we are continuing the parts of that bill that we are responsible for reporting on, which are Divisions 1 and 2 of Part 4 of the bill. With us today we have officials who are going to present briefly to us and help clarify any questions we have with regard to the meaning, intention and implementation of this legislation.
I will identify them initially. We have two branches from Employment and Social Development Canada. The first branch is Employment Insurance Policy, Skills and Employment Branch. I'm not going any further on these branches here.
We're fortunate in this case to have Annette Ryan, who is Director General. We also have Janique Venne, Director, Policy Analysis and Initiative. And from the Income Security and Social Development Branch, we have the second member of the family to be presenting on the Hill today, Nathalie Martel, Director, Old Age Security Policy.
We welcome you. Ms. Ryan, I understand that you will be presenting.
Annette Ryan, Director General, Employment Insurance Policy, Skills and Employment Branch, Employment and Social Development Canada (ESDC): I will, senator. I will present in respect of the Employment Insurance measure that's proposed in the bill, and my colleague Nathalie will speak to the pension provisions.
If I may, Mr. Chair, I will introduce the Employment Insurance change by describing it as very much a technical legislative change that we're proposing; it is not a change in policy or program operations. This limited technical legislative proposal is intended to strengthen the initial regulatory implementation of an important element of the government's Budget 2016 Employment Insurance commitments, so while it is a limited measure, its explanation is a little bit longer than the actual text itself. In the interests of supporting a good discussion, I will provide a bit more of an involved introduction.
The Employment Insurance Act has had long-standing provisions that create an obligation for an Employment Insurance claimant to actively look for and be willing to accept suitable work. In particular, the concept of not suitable employment was included in the Employment Insurance Act leading up to 2013. Considerable jurisprudence was established around this term over a period of decades to inform how it should be interpreted by our Service Canada agents as well as workers and employers coming to the program.
Under the previous government, Budget 2012 announced an initiative connecting Canadians with available jobs by which provisions would be introduced to specify more clearly in legislation and regulation what is not suitable employment for the purposes of administering the program.
At that time, relevant measures in the EI Act were repealed, and instead the issues of suitable and not suitable employment were established in regulation. So the text was essentially removed from the act, and new text was placed in the regulations in 2013. At the time, the Employment Insurance regulations were amended to prescribe specific criteria to determine what constitutes suitable employment that a claimant is expected to search for and accept during the duration of an EI claim based on new categories that were established to apply to EI claimants.
Those criteria included different treatment for different claimants depending on their work history, while the criteria relating to things like daily commuting time limited the claimant's flexibility in the type of employment and earnings that they were required to search for and accept, as well as the wage and income levels that changed through time.
As part of the Budget 2016 initiative under the current government, proposals were made to simplify job search responsibilities for EI claimants, and most specifically the approach followed at the time was to reverse the criteria, the new specific criteria that were introduced in regulation in 2013, by essentially removing from the regulations those provisions that were considered not to be in the claimant's interests. They took effect July 3, 2016.
At the time, the criteria relating to the length of commuting time, the offered earnings and the type of work were repealed and replaced by provisions specifying what is not suitable employment as had appeared in the EI Act prior to 2012.
Other references, such as to long-tenured workers, frequent claimants and occasional claimants and specifying what wages people had to accept through an EI claim, were removed at that time from the regulations. Different criteria that were in favour of the claimants remain in regulations.
Since that time, different parties have raised the question of whether one of the concepts that currently remains in regulation, that is the same text that had appeared in the legislation prior to 2012, would be best placed in the legislation rather than in the regulation, where it stands as of July 3, 2016.
That, senators, is what we're proposing to do with this bill. We would like to remove the text regarding the issue of not suitable employment from the regulations where it now stands and have that text returned to legislation with the same wording that appeared prior to the changes, so leading up to 2012. The motivation for doing this is to have greater clarity for all parties involved that the previous jurisprudence that was established when this text appeared in legislation should apply going forward.
I hope that's helpful, Mr. Chair, and strikes a balance between detail and —
The Chair: Before I go to Ms. Martel, perhaps we might try to make certain we understand your clarity, as Senator Eggleton sought clarification of this very point yesterday.
We thought we understood the response to his question, and to put it in common parlance, I appreciate how you have to describe this. However, if we understand it correctly, the practice and language that will now be inscribed in legislation is actually how it has been operating in recent times, and this is to take it from a purely regulation- implementation form into a legislative form that makes it solid and sound in the great text of legislation of the country sort of thing. But in terms of real change and what's happening, there is no change.
Ms. Ryan: I would agree with both of those descriptions.
The Chair: Thank you very much. I wanted to make sure we got it clear in that sense.
I will turn to Ms. Martel.
Nathalie Martel, Director, Old Age Security Policy, Income Security and Social Development Branch, Employment and Social Development Canada (ESDC): Good morning. Division 2 of Part 4 amends the Old Age Security Act to allow more low-income couples to receive higher benefits when they must live apart for reasons beyond their control. Senior couples who must live apart for reasons beyond their control, and the best example is when one member of the couple must live in a nursing home, face higher costs of living and are more at risk of living in poverty. In the case of low-income couples where both spouses receive the Guaranteed Income Supplement and must live apart for reasons beyond their control, the legislation already allows the Guaranteed Income Supplement to be paid at the higher single rate based on the individual income of each member of the couple.
This generates higher benefits. However, for other low-income couples, where one spouse receives the Guaranteed Income Supplement and the other spouse receives the allowance, the act is silent and does not permit the same advantage.
By the way, the allowance is paid to low-income individuals aged 60 to 64 whose spouse or partner receives the Guaranteed Income Supplement.
[Translation]
The amendment would give this same right to couples in which one person receives the Guaranteed Income Supplement and the other receives the allowance. It is estimated that 750 couples will benefit from this amendment, which will cost $2.6 million per year. The amendment will take effect in January 2017.
The Chair: That's all? Thank you.
[English]
I will now open it up to my colleagues for questions, starting with Senator Eggleton to be followed by Senator Stewart Olsen.
Senator Eggleton: I think I understand both amendments and except them as good moves forward. I want to ask about EI in particular. I asked questions yesterday of the witnesses on this point. It's relevant to this section, these changes, but it's probably more relevant overall. We are in a period where we say that precarious employment is in fact gaining people part-time jobs or contract jobs or they work for themselves, and in effect that's just their way of trying to cope with living with probably two or three jobs, and in some cases those two or three jobs aren't sufficient to make ends meet.
It's not the work world that we knew in the past when these EI programs were created. The labour market is changing quite significantly. Are these amendments plus EI overall keeping pace with those changes in the workplace?
Ms. Ryan: That is a question we do spend quite a lot of time thinking about, how the labour market is changing and how it aligns to the program. If I may, I would speak to a number of changes made to the program recently that are most pertinent for the precarious workers.
First of all, it's a question of eligibility for EI. According to the rules of the program, you can gain access to EI with 420 to 700 hours of employment. If you think of a minimum wage as just being above $10 an hour, that amounts to just over $4,000 to $7,000 in earnings over a 52-week period, so a year, which then essentially unlocks EI benefits.
I think that those amounts of hours are relevant for the precarious workers. I think they are now more relevant given that Budget 2016 introduced a change to eliminate the new entrant and re-entrant threshold that had previously applied. According to that rule, a person needed to have 910 hours the first time they were able to claim EI.
When you put that into standard work weeks of 35 or 40 hours a week, for some people it equates to six months of full-time work. I think that change, in particular, would be of direct benefit to the precarious workers that you've described.
That, essentially, is a positive change for that group, to help them get on EI in the first place.
There are also provisions that have been tested and remain in a pilot status within the EI program to allow and encourage people to work while they are on an EI claim. The current government, also in the 2016 Budget, renewed and expanded the working while on claim rules essentially to test two streams of incentives for people to work while on claim.
The baseline rule lets people work and keep 50 cents on the dollar of what they earn. If you are a precarious employee and can pick up work while you are on claim, there is that flexibility to take whatever work is available and move on and off claim with that amount of flexibility.
There's a secondary rule that then applies for people who typically would work only up to one day a week. That rule lets them keep roughly 100 cents on the dollar up to a day a week.
These rules are well used by EI claimants. In a given year, we pay regular benefits to roughly 1.3 million Canadians, just 50 per cent of whom work while on claim. This aspect of Canadians working, then being unemployed and then taking whatever work is available has had a response within the EI program, particularly through those types of measures.
Other measures, such as the decrease in the waiting period from two weeks to one week, will decrease the amount of time at the start of a claim when people, in particular low-income people, would have to cover living expenses through savings or whatnot before their EI payments would begin.
I would respond, sir, by saying it is an aspect of the labour market that we are trying to track and understand and that those types of measures are those that we see as relevant and pertinent for this group.
Senator Eggleton: As I said, there are some people that have two or three jobs and even then struggle to make ends meet. If they lose one or two of those jobs, they're even worse off. Would they still qualify at that point for EI, even while they still have a little bit of a part-time job that pays a little bit but not enough?
Ms. Ryan: There is always the unsatisfying need to say that rules are adjudicated and applied on a case-by-case basis. That said, one aspect of the EI program is that a person does have to be without earnings for at least a seven-day period before they can begin a new claim. To that effect, if a person goes from having three jobs to two jobs, then they would not have that portion of their work insured.
Senator Eggleton: But you're trying to keep up with the changing labour market in terms of the needs of people and the EI program.
Ms. Ryan: We are, and the working while on claim provision speaks to that.
The Chair: Before I turn to Senator Stewart Olsen, I want to see if we can clarify the OAS issue a little bit further.
What we're dealing with here in the language of the legislation is a partner who is receiving OAS, which we understand, plus the Guaranteed Income Supplement. In such a situation, if their partner is between 60 and 64, they receive what is called an "allowance.''
That allowance is not technically an OAS payment. It is a separate payment based on that definition of the situation. Is that correct?
Ms. Martel: The allowance is part of the OAS program. The OAS program includes the basic pension, which is paid to almost everyone, then the Guaranteed Income Supplement for low-income seniors who receive the pension, and you have the allowance which is paid to just a few individuals between the ages of 60 and 64, who are either the spouse or the common law partner of a GIS recipient or who are a survivor, a low-income 60- to 64-year-old individual, a widow or widower and never remarried.
The Chair: It clarifies that even though it's called an allowance, it is within the OAS complement of budgetary issues.
Ms. Martel: It is.
The Chair: The second part of that, if I understand it, is that in this particular legislation, if those two people are forced to live apart, Division 2 now says that the allowance portion will be calculated solely on the basis of the partner receiving the allowance. Is that correct?
Ms. Martel: That is correct. In the GIS section, we don't need to amend because the GIS section already allows a GIS recipient who is involuntarily separated to have their GIS benefit calculated at the single rate.
Right now, without this amendment, the GIS recipient could receive the GIS at the single rate. But if he — I will say "he'' because in most of the cases, the pensioner is the man and the allowance recipient is the woman. Currently, with a GIS allowance couple, the GIS recipient can ask to have the GIS based on his own individual income, but if he does that, the other spouse will not be entitled to the allowance because in the system and based on the legislation right now, if the pensioner receives the GIS at the single rate, he's not supposed to have a spouse. Right now the legislation doesn't allow the younger spouse to receive the benefit if he chooses to receive it at the single rate.
The Chair: We need to focus on exactly what Division 2 is changing.
Am I correct that the Division 2 change simply means that when the two people are living apart, the amount of the allowance that the person receiving the allowance gets is calculated solely on their income?
Ms. Martel: That's correct.
The Chair: That part is correct. Let's make sure we understand what happens to the partner who was receiving OAS plus GIS. Is there any change in their income?
Ms. Martel: Yes, because for this partner, the GIS will be based on their own income as well.
The Chair: Their unique income.
Ms. Martel: Yes, at the single rate.
The Chair: Previously, it might have been based on the average of their two incomes. Is that correct?
Ms. Martel: Currently, the GIS and the allowance are based on the combined income of both spouses even if they don't live together.
The Chair: It's divided in two for the amount of the calculation. Is that correct?
Ms. Martel: Could you ask your question again, please?
The Chair: You have two incomes: the person with the allowance and the person receiving OAS. You're saying those two incomes are added together.
Ms. Martel: Yes.
The Chair: Now, we've got a larger number than any of them individually, so according to some of the language in here, it implies that that total sum is divided by two to get a number that is used for calculating the amount of a benefit.
Ms. Martel: It's not necessarily divided. It would be divided by two if both spouses had the same income. It depends on the way the income is allocated between the couple.
This provision allows the GIS recipient to have his GIS calculated based on only his own income and her allowance based on her own income.
The Chair: Okay.
Senator Eggleton: She'll get the single rate. Instead of a couple rate, they will both get the single rate of OAS.
Ms. Martel: I'm glad you're asking the question, because there is a nuance here. The pensioner will get the GIS at the single rate, which is higher, but there's no single rate for the allowance. The allowance will be paid on her own income, which should generate higher benefits, but the maximum amount of the allowance does not change.
The single rate of the allowance is the allowance for the survivor, and we're not going to go into that.
I think I know where you're going with your question. It is possible that some couples are better off not taking advantage of this provision. It always depends on the way the income is distributed between the two spouses.
The Chair: That is where I was going, because in the act it allows for division and calculation. So let's come back to make sure, because we have to report purely on what Division 2 changes. Based on your summary, it now allows this partnership to make a decision when they're living apart.
Ms. Martel: Correct.
The Chair: The person receiving the allowance can have their allowance calculated purely on the basis of their income.
Ms. Martel: Correct.
The Chair: And the person who was receiving OAS and GIS will have their amount calculated as if they were a single person; is that correct?
Ms. Martel: That's correct.
The Chair: Thank you. We don't need to know any more, right?
Senator Stewart Olsen: Thank you. I have a question for you on the OAS and GIS. Does your department do any outreach at all to assist seniors who may have no clue what they should be getting? In your last answer to that question, would you tell them that this probably wouldn't be the best for you guys?
Ms. Martel: That's a good question. Making sure that people are aware of the benefits to which they are entitled is the big challenge.
This provision, which we call the "involuntary separation provision'' in our jargon, has been in existence for a long time. It was introduced shortly after the introduction of the GIS in 1967. Nursing homes are aware of this provision, and they are the ones who encourage their patients to notify Service Canada that they live apart. They can fill in the form — it's one page, a very simple form — and then get higher benefits based on the single income. That's the case for GIS couples.
In the case of GIS allowance couples, the nursing homes are already encouraging these couples to notify Service Canada that they live apart, for reasons beyond their control. Some GIS allowance recipients are not yet entitled to this new provision because it's not in force yet. However, they have already told Service Canada that one of them lives in a nursing home. As soon as this comes into effect on January 1, if it does, Service Canada will be able to recalculate their benefits to give them a higher rate.
To respond to your second question, if this generates a lower overall payment for the couple, Service Canada will tell them it is not to their advantage to do that.
Senator Stewart Olsen: Thank you. Is it the responsibility of the nursing homes to let you know or to tell people? How does that work? I can see that slipping through.
Ms. Martel: We cannot force anyone. However, nursing homes do encourage clients to contact Service Canada. The clients must contact Service Canada themselves, unless they have a power of attorney or somebody else acting on their behalf, but it has to be the clients contacting Service Canada. I hear from my colleagues at Service Canada that nursing homes are generally doing a good job of encouraging their patients to contact Service Canada to inform them.
The Chair: You have to remember, senator, that nursing homes get remunerated on the basis of the income, so they have a motivation.
Senator Stewart Olsen: That's true. That's their encouragement.
Senator Seidman: Indeed, the point that Senator Stewart Olsen made was very much a question that was brought forward yesterday by the deputy director of Canada Without Poverty when she expressed a certain degree of concern about how people would be notified about this change and that the process is critical.
So you are reassuring us that indeed there is a process that takes over after there's a change in a regulation or in a piece of legislation?
Ms. Martel: That's correct. I've already seen the draft of booklets, pamphlets and websites of changes — special notes that will be put on websites.
Senator Seidman: The other issue that was brought up yesterday is a more general one about the fact that seniors, and especially single seniors in this country, suffer disproportionately living at the poverty level. In fact, CARP submitted to us a statement that, while they applaud the government for this proposed amendment, they put forward that single seniors in Canada with no other income receive $13,184 annually in OAS and GIS payments, and that the poverty line is $13,310, as estimated by the Fraser Institute for 2014.
So, in fact, a single senior, despite everything, whatever best intentions there are in this piece of legislation, is still living below the poverty level if they have only OAS and GIS payments.
Ms. Martel: I can comment on that. It is true that the incidence of poverty is much more pronounced among single seniors than it is among couples. When we look at couples, the OAS pension and the GIS is sufficient, depending on the poverty measures you're using. We usually use the low-income cut-off, which is the most commonly used measure of poverty in Canada.
For couples, the OAS pension and the GIS are sufficient to lift all couples above the low-income cut-off, but it's not true for all single seniors. It is particularly problematic for single seniors who live in large cities. The low-income cut-off is different. It's based on the size of your household and the size of the city where you live. It is more expensive to live in Toronto than it is to live in Saint-Pamphile.
If I take the pension plus the GIS, I get a different number from the witness yesterday. I get more towards $17,000, the maximum, with no other income. It's still under the low-income cut-off in large cities, so it's true; it is the reason why the government chose to target the GIS increase that was put in place on July 1, to target this increase to single seniors.
Senator Raine: Thank you very much. You have actually made this much clearer. As CARP said in their presentation to us, the proposed amendments to the Old Age Security Act contained within Bill C-29 will ensure that low-income couples living apart will receive a combined OAS and GIS payment of $2,885 rather than $2,197. That's a substantial change. Is that correct? If so, I think it's very good.
Ms. Martel: The financial advantage for separated couples arising from this change depends on the way the income is allocated between the two spouses. So the numbers that were provided yesterday are based on the particular example.
We calculated that on average GIS allowance couples will benefit by about $3,500 per year. We calculated about 750 couples will benefit from the measure. It will cost $2.6 million per year, so it means about $3,500 per couple.
It could be several thousand dollars, depending on the way the income is allocated between the two spouses.
Senator Raine: Thank you very much.
The Chair: You have helped us a great deal this morning in clarifying specifically the language, because we go from general language of allowance and actual payments, and those are two different concepts in their own right — they appear together in this section — and the manner in which it can be calculated and the issue that the partnership has a choice as to how they will see the incomes calculated.
Seeing no further questions from the committee, I'm going to thank you very much for appearing before us this morning and helping us with this to make sure we understand it. I will suspend the meeting for a few minutes and have the room cleared, except those who should be here, for the purposes of us deciding how we will report on this issue.
(The committee continued in camera.)