HUMA Committee Report

 

THE GUARANTEED INCOME SUPPLEMENT:

THE DUTY TO REACH ALL

 

INTRODUCTION

For the past two decades, Canada has used its income support system for seniors to dramatically reduce the percentage of seniors living in poverty.  One reason for the government’s success in assisting low-income seniors has been the creation of the Guaranteed Income Supplement (GIS), a means-tested supplemental entitlement for low-income recipients of the Old Age Security Pension (OAS).  The Standing Committee on Human Resources Development and the Status of Persons with Disabilities became aware that a significant number of seniors eligible for the GIS are not receiving it.  As a result, we decided to investigate and prepare a report on the reasons for this state of affairs.  The questions that this report will address are:

·        Who are the seniors that are entitled to the GIS?

·        Why are eligible seniors not applying for, or not receiving, the GIS?

·        What is Human Resources Development Canada doing to ensure all eligible seniors receive the GIS?

·        Are these measures sufficient?       

In order to find answers to these questions, the Committee held hearings in October 2001. We received testimony from a policy analyst who initiated public coverage of the situation, seniors’ organizations that have had to deal with the GIS under-subscription problem, relevant government departments and the Privacy Commissioner of Canada.

 

BACKGROUND

1.  Old Age Security and Guaranteed Income Supplement

Human Resources Development Canada (HRDC) administers three income support programs that provide benefits to seniors:  OAS, GIS and the Canada Pension Plan (CPP).

The OAS is provided to most Canadians 65 years of age or older.  It must be applied for, ideally six months before the recipient turns 65.  The full OAS is paid to Canadians who have lived in Canada for at least 40 years after turning 18, although partial benefits may be available to other seniors.  The OAS is income tested to the extent that seniors who are eligible for the OAS and have an annual net income above $55,309 (in 2001) have to repay part or all of their OAS pension benefits.  The OAS pension is fully clawed back when a pensioner’s annual net income reaches $90,195.  Only about five percent of seniors receive reduced OAS pensions and only two percent lose the entire amount.   The OAS is taxable income and must be reported for income tax purposes.  As of June 2001, 3,847,816 people were receiving the OAS.  According to the 2001-2002 Main Estimates, OAS transfers in the current fiscal year are expected to total $19.5 billion.

The GIS provides an additional monthly benefit, on top of the OAS, to low-income pensioners living in Canada.  The monthly amount for each pensioner is calculated on a sliding scale according to marital status and net family income.  It should be noted that an Allowance is also paid to low-income people between the ages of 60 and 64.  The Allowance is provided for the spouses or common-law partners of OAS pensioners and survivors to help bridge the gap until they become entitled to OAS.   The GIS is clawed back as family income rises and payments stop when family income reaches a predetermined maximum level.  Individuals must apply for the GIS and Allowance each year and application renewals are usually done by filing an income tax return. The GIS and Allowance are not taxable but must be reported on a tax return.  As of June 2001, there were 852,673 recipients of the GIS.  According to 2001-2002 Main Estimates, GIS and Allowance transfers are expected to total $5.24 billion and $412 million respectively.

2.  Outline of the Problem

A Toronto survey conducted in early 2001 by social statistician and policy analyst, Richard Shillington, found that only 15% of seniors who were using food banks were getting the GIS, though nearly all were eligible for it.  The survey also found that one-quarter of seniors (i.e. food bank users) polled, almost all of who were eligible, were not receiving the Canada Pension Plan payments that they were entitled to.

Based on this survey, a news report in the August 23, 2001 edition of The Toronto Star stated that more than 380,000 Canadians 65 years of age and over are eligible for, but not receiving, hundreds of millions of dollars a year in GIS benefits.  This information was gathered through individuals’ tax returns filed with the Canada Customs and Revenue Agency (CCRA).  David Miller, Assistant Commissioner, Assessment and Collections Branch, CCRA,  estimates that 220,000 eligible seniors receive the OAS but not the GIS and another 50,000 are eligible but receive neither benefit.[1]  The Committee suspects that these numbers are based only on those who file tax returns and therefore do not capture the unknown number of individuals who do not.

Some analysts believe that seniors do not apply because they often cannot understand eligibility requirements, tax returns or educational pamphlets due to functional illiteracy, language barriers or failing eyesight. Others suspect that part of the explanation lies in peoples’ changing income circumstances, or some may be opposed to this form of income support or is simply due to a lack of awareness that they must apply for the GIS annually. Of those who apply late and are deemed eligible for GIS benefits, the Old Age Security Act states that these benefits are retroactive to a maximum of 11 months.

While the direct result of not receiving the GIS is a lower income, there are secondary effects as well.  Many provinces have programs such as prescription drug plans, income supplements, heating oil subsidies and home care assistance programs, with eligibility based on receipt of the GIS.  Eligible seniors who do not receive the GIS may also be eligible for, but not receiving, a variety of other supports, which could significantly improve their quality of life and standard of living.

WHAT THE COMMITTEE HEARD

1.  Causes of the GIS Under-subscription Problem

The primary system for screening those who qualify for the GIS and the most common method for re-applying for the entitlement is the income tax system.  However, there are a significant number of seniors who do not file income tax returns.  The reasons for not filing can be as simple as having no taxable income to report, but in the case of seniors can also be due to health problems, mental or physical limitations, or literacy and language barriers.  Identifying and contacting these seniors to inform them of their entitlement and assisting them in applying for the GIS is the responsibility of HRDC.  This is more difficult in the case of those who do not file income tax returns, for those who do not receive the OAS and for those who do not have stable residences, particularly homeless seniors.

The Committee was surprised to learn that HRDC has been aware of the under-subscription of GIS since at least 1993.  HRDC officials informed the Committee that it has been taking active measures to reach eligible non-recipients of the GIS and that the number of eligible non-recipients is lower than it was in 1994.   Among the actions undertaken by HRDC are the production of brochures, fact sheets, inserts, use of outreach staff who speak to seniors groups and service providers, and presentations to financial advisers and financial planning organizations.[2]

According to a study produced by HRDC in January 2001,  the number of GIS eligible non-recipients fell between 1994  and 1997. However, this downward trend ended in 1998 with a dramatic increase in the number of GIS eligible non-recipients.[3]   Unfortunately, no analysis was provided to explain this increase.   The number of eligible non-recipients was highest in Ontario, Quebec and British Columbia and among those between the ages of 70-74 in all regions of the country.  As well, the HRDC study indicated that women accounted for a higher proportion of eligible non-recipients than men and that the dollar value of women’s potential entitlement was also higher than men’s.[4]

In addressing the under-subscription problem, HRDC must deal with two groups:  those who file a tax return and those who do not.  Obviously, the latter group is more difficult to identify and contact.

In the case of seniors who file tax returns, we were told that HRDC has refrained from using the information obtained by the CCRA for fear of violating the Income Tax Act provisions that protect the use of taxpayer information.   In his assessment, however, the Privacy Commissioner, George Radwanski, minimized these concerns when he told the Committee that:

First, I have already mentioned that Section 241 of the Income Tax Act specifically authorizes CCRA to disclose taxpayer information for the purposes of administering the Old Age Security Act.  Section 33 of the Old Age Security Act has a reciprocal provision.  It’s not my role to interpret the Income Tax Act or the Old Age Security Act, but I think a case can be made that the Guaranteed Income Supplement is simply a component of the OAS.  The Old Age Security Act specifically mentions the GIS.  As Privacy Commissioner, I would not take the view that this is an interpretation of the law that somehow abuses the privacy rights of Canadians.[5]  

The Committee agrees with the Privacy Commissioner’s interpretation of the Old Age Security Act and the Income Tax Act and we do not believe that privacy issues present a legitimate argument for not addressing the GIS under-subscription problem. Rather, we believe that HRDC’s  overly cautious concern for taxpayer privacy is simply a bureaucratic excuse for inaction.  Department officials have stated that awareness of the under-subscription problem has existed for at least the past eight years.  The Committee feels that eight years is more than sufficient time to find a solution to what appears to be an easily resolved issue.  Moreover, the Committee is frustrated that this has not been dealt with sooner, given the large number of Canadians affected.

The reasons underlying the under-subscription problem are varied and include seniors who speak neither official language, who live in remote regions, who have physical or mental impairments, have low literacy skills, or are homeless.  As well, a survey conducted by HRDC revealed that some seniors do not wish to subscribe to the GIS for religious or moral reasons, perceiving the GIS as a welfare program.[6]  Some may not apply simply because they believe they do not qualify, as material describing the GIS states that eligibility is based on having “little or no income.” 

2.  The Application Process

During our hearings, the Committee received evidence that the process for applying for the GIS is, itself, a barrier for many seniors.  Bill Gleberzon, Associate Executive Director for Canada’s Association of the Fifty-Plus, outlined the problems as:

It is not only not being aware, it’s not knowing the process, and the process is very cumbersome.  The way the process works, it’s incumbent on the individual to take the initiative, and a lot of people are intimidated, and if they’re not intimidated, they don’t know what to do and they don’t know where to go.  Where I work, we get lots of phone calls from people, and all they want us to do is give them a telephone number.  They don’t want us to do it for them, they ask who they should call about this, and we give them the hotline-- there’s a OAS-CPP hotline that we give them, a telephone number. That’s the sort of information people want when they find out about it.[7]        

As previously noted, to receive the GIS, individuals must be eligible for OAS and demonstrate that their income is low enough to be entitled.[8] The application process cannot currently be avoided.  Since the GIS is a means-tested payment, all individuals must apply by requesting an application form from HRDC. GIS recipients must also      re-apply annually either by filing a tax return or by submitting a renewal application.

According to our testimony, the initial application form is too long, too complex and ill suited to the population it is intended to serve.  “This is a system that should be simplified, and it should be based on the premise that if the government is committed to providing this support to people, it should provide it with an open hand.” noted Bill Gleberzon.[9]  Paul Migus, Assistant Deputy Minister, ISP, HRDC, commented that:

With respect to complexity of the application forms, I do agree with you. I have gone through the application forms. I’ve gone through some of the evidentiary requirements and I am sympathetic and realize that some of these processes were put in place and developed over 30 years and need a serious re-look. [10]

Given today’s technology, some of our witnesses wondered why HRDC requires individuals to wade through a complex application form for the GIS. It was suggested that individuals need not apply, as the government already possesses enough information to determine eligibility. As Richard Shillington of Tristat Resources told the Committee:

You could change the mind set to say, as long as you file a tax return, we will send you the money automatically … If you do it automatically, based on a tax return, I think you will have a system much better than the current one, but it won’t be complete, because some people don’t file tax returns[11].

The Committee recognizes that the government possesses a great deal of information on potential GIS applicants.  This information, however, is collected by a number of government departments and, in many instances, cannot be shared to protect the privacy of individuals. Moreover, this information is not always current and, as noted above, not everyone files a tax return. The Committee also was told that a small number of eligible individuals do not want to receive the GIS for religious reasons or they do not support income transfer programs like the GIS.

We believe that the application process for the GIS (and OAS) can, and must be, simplified as well as better designed to meet the needs of the older population it is intended to serve. For example, GIS eligibility depends on two basic pieces of information -- income and marital status.[12] There is no need for a detailed application form. In addition, printed material about the GIS and other programs for seniors should be simple and easy to read. Given today’s technology, the Committee thinks that HRDC should be moving toward an automatic application process, especially in terms of renewal applications.

[1] Standing Committee on Human Resources Development and the Status of Persons with Disabilities (HRDP), Evidence (11:25), 23 October 2001.

[2] HRDP, Evidence (11:10), 23 October 2001.

[3] Forecasting, Information, and Results Measurement – Program Policy and Planning – ISP, January 2001, HRDC, p. 4.

[4] Ibid., p. 3.

[5] HRDP, Evidence (12:46), 23 October 2001.

[6] HRDP, Evidence (11:30), 23 October 2001.

[7] HRDP, Evidence (11:35), 18 October 2001.

[8] For the period October to December 2001, OAS recipients with income less than or equal to: $12,648, single person; $30,624, spouse/common-law partner of a non-pensioner or an allowance recipient; and $16,464, spouse/common-law partner of a pensioner, were eligible.

[9] HRDP, Evidence (11:35), 18 October 2001.

[10] HRPD, Evidence (12:25), 23 October 2001.

[11] Ibid., (11:55).

[12] Residency information is also required for those who are eligible for, but not receiving, OAS.