SPER Committee Meeting

SUB-COMMITTEE ON THE STATUS OF PERSONS WITH DISABILITIES OF THE STANDIND COMMITTEE ON HUMAN RESOURCES DEVELOPMENT AND THE STATUS OF PERSONS WITH DISABILITES

SOUS-COMITÉ SUR LA CONDITION DES PERSONNES HANDICAPÉES DU COMITÉ PERMANENT DU DÉVELOPPEMENT DES RESSOURCES HUMAINES ET DE LA CONDITION DES PERSONNES HANDICAPÉES

EVIDENCE

[Recorded by Electronic Apparatus]

Wednesday, December 15, 1999

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[English]

The Chair (Ms. Carolyn Bennett (St. Paul's, Lib.)): We'll bring together this second meeting of the Subcommittee on the Status of Persons with Disabilities of the Standing Committee on Human Resources Development and the Status of Persons with Disabilities, and hopefully our last committee meeting of the century. We've saved the best until the last, and we hope you will help us find some consensus on this really important topic so that by the end of the afternoon we will be able fire off a little letter to Mr. Martin asking him to do something.

I believe we're starting with Gregory Williams.

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Mr. Gregory Williams (President, Williams Research): Thank you, Dr. Bennett. It's a pleasure to have a chance to speak on this important subject at the last committee meeting of the millennium.

I've been working on this file in different capacities for about five to six years. I'm the president of a private research company in Toronto. I actually began working on it in a capacity doing policy research for the Canadian AIDS Society. I've worked with CACL, which is represented here today by Harry Beatty. I think most of you in the room are very familiar with the issues and realize that it's a fairly small group of experts on the policy research analysis side who have been working on this subject for a number of years. Sherri Torjman wrote the definitive book on income security and disability a number of years ago.

I feel as if we're going at another round of something that has been going for a long time. My observation over the years has been that, while some progress has been made, it seems that every couple of years we stall. Until recently, there was sort of an impression that we'd stalled again, particularly after the last federal task force, from which there were six series of fairly comprehensive recommendations, many of which have never actually been formally addressed and have certainly not been enacted.

This latest chapter I'm very excited by. We again have a group of some of the people who have committed to this work for a long time, including people like Cam Crawford and the Roeher Institute, or Michael Bach. Sherri Torjman has done some excellent work again this year. David Duff, who is a professor of law from the University of Toronto, joined a group that I was asked to put together. That group includes the Roeher Institute, CACL, and some support staff from my organization. They're under David's policy leadership to actually do a review of the tax system and the issue of disability.

We gave David a fairly tall mandate. As a result, he has produced a comprehensive analysis of the subject. I have it in front of me in its final form, and it's about 105 pages long. It's not a light read, but it's very thorough. I think it actually provides a really good starting point for what hopefully is going to be an ambitious but really achievable process of four or five years of serious and comprehensive reform. He's made a lot of contributions, but I'm going to let him address those substantively himself. I will talk a little bit about the process that we went through, though.

David has done a thorough review of the literature and jurisprudence, particularly around the DTC and METC. We conducted a number of interviews with public policy officials in Ottawa earlier this year, including Finance, Human Resources Development, and Treasury Board Secretariat. We have assembled a technical reference group with which we have discussed and shared copies of this work as it has been in progress, and we received some feedback.

Cam Crawford and I have been working on some preliminary economic models to try to anticipate the costs and the uptake of the reforms that get recommended out of this package.

We also made a presentation to CACL's constituency at their annual general meeting in Quebec City. We presented the topic of tax reform and some options to a group of their members, which included parents of disabled children and also some self-advocates.

Without saying anything more, I think one of the things I wanted to do is provide a little bit of perspective on context. In the last couple of weeks, I've taken it upon myself to try to read the incredibly prolific literature that has emerged on tax reform this year, which covers all sorts of subjects. Jack Mintz and Finn Poschmann have written an excellent paper for the C.D. Howe Institute, and there's a series of other works that support it.

One of my casual observations is that there seems to be some convergence and consensus evolving around the need especially for tax reform on the personal income tax side. What I've noticed as seemingly almost missing from all the analysis, however, is any comprehensive, rigorous assessment of the cost of disability from the perspective of a personal income tax or family tax issue. In many ways, I think that's where both Sherri's and David's work helps. In my mind, it's quite consistent with a lot of the work that's being done, but it becomes a subset and a very comprehensive analysis of a particular set of problems dealing with a very vulnerable group of people.

So I think I've said enough, and I'll pass it over to the experts. Thank you.

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Professor David Duff (Faculty of Law, University of Toronto): I should introduce myself first. My name is David Duff, and I teach tax law and tax policy at the University of Toronto's Faculty of Law.

As Greg said, I actually didn't know much about this area until this summer, when I was approached to do this. Originally it was going to be a short paper, but it obviously got out of control. For most of the past term, while teaching a course, I spent the weekends writing this piece. I come at this from the perspective of somebody who teaches tax law and does tax policy. There's a close connection, obviously, between tax policy and social policy, which is the primary mandate of this committee and subcommittee.

One of the things I try to do in the paper is distinguish between the tax policy issues, narrowly defined, and the social policy issues. I think one of the problems in this area has been often that these separate conceptual issues get blended a lot. Before talking about some of the areas that I talk about in the paper, then, I just want to try to set out the way in which I would distinguish the tax policy issues from the social policy issues.

Social policy, broadly defined, involves questions about the allocation and distribution of resources in society. For people with disabilities, one immediate question dealing with the costs of disability, for example, is who pays for these costs. Are they privately borne or are they publicly borne? To me, that is a social policy issue: the question of the extent to which society as a whole should pick up a larger share of the costs of disabilities. I think we all have our opinions on the extent to which these costs should be privately borne or publicly borne, but that's a social policy issue.

The tax policy issue, more narrowly defined, is that whatever the social policy decision is, to the extent there remain privately borne costs, how should these costs be taken into account for tax purposes? To me, that issue then becomes one of what tax policy theorists call horizontal equity. How do you compare one person with a disability and a certain amount of income to another person without a disability and a certain amount of income? My view on that issue—and I think it's the view of a lot of people who think and write in the area of tax policy—is that they're not similarly situated. Somebody with a $100,000 income who is disabled does not have the same ability to pay income tax as somebody who has a $100,000 income but is not disabled. That needs to be taken into account.

It used to be that we took this into account through a deduction, and in 1988 these were converted into non-refundable credits. It's my view—and I make this point in the paper—that the appropriate way to recognize these horizontal equity issues is through deductions. In fact, the normative, appropriate base for an income tax is something called taxable income, after you take into account non-discretionary expenses. A deduction is an appropriate way to recognize these things.

I would say the same thing—and this is coming up in a lot of this other literature that Greg referred to—with respect to dependent children and with respect to personal exemptions. A lot of these things were converted from exemptions or deductions into non-refundable credits in 1988. My view was that this was not the right move. Now, you might say that's ancient history, to let that one go, to forget it. We can make that decision, but there are still a whole lot of things in the system that could be cleaned up.

With that point in mind about the general distinction that I would draw between tax and social policy, let me talk about some of the things in the system aside from that general recommendation that I think could be cleaned up.

In the paper, I talk about three broad areas. One takes into account the cost of disability for tax purposes. The second is a section on labour market integration and the role the tax system could play in recognizing additional costs, but also in creating incentives for the hiring of disabled people and making the workplace more accessible. And the third is in the area of income support, both in the taxation of income support for people with disabilities and also with a proposal at the end for considering—and it would require some consideration—some kind of a refundable tax credit along the lines of the Canada child tax benefit, but for Canadians with disabilities. It's a form of guaranteed annual income delivered through income tax.

Obviously, to spend time talking about all those things would take a fair bit of time, so I'd be happy to give members of the committee the paper. I really want to focus primarily on the first part of this, the costs of disability. In particular, there are three main aspects of the Income Tax Act: the disability tax credit, what's currently the medical expenses tax credit, and various personal tax credits.

Let me start with the medical expense tax credit, which has an old history. I think it has evolved over time to add on a lot of disability-related expenses. A number of amendments over the last twenty years have added on things such as the cost of converting a van or buying a van to make it a wheelchair-accessible van—things that traditionally wouldn't have been considered medical expenses but are clearly disability-related expenses. Over the last fifteen to twenty years, more and more of those have been added on to the medical expense—what was originally a deduction, now a credit.

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My view is—and this is the view also of several committees that have studied the subject—it would make a lot more sense to pull out the disability-related expenses and put them in a separate provision. One of the problems with the medical expense tax credit in the old deduction is it was designed to take account of extraordinary medical expenses. The whole purpose of what was originally a deduction and now a credit.... Really the paradigmatic case it was attempting to deal with was somebody who's generally healthy but has a major health problem in one particular year and has a significant cost associated with that, and then is basically fine again after the significant cost. So the whole structure of the deduction and then credit was to take that into account.

Therefore there was no recognition for medical expenses below a certain threshold. There's a 3% net income threshold or dollar amount now. But for people with disabilities, that's not their reality. Their reality is constant, ongoing additional costs. So a medical expense tax credit structured that way is simply an inappropriate instrument to recognize the costs to people with disabilities.

So I would suggest a lot of the disability-related expenses be pulled out of the medical expense tax credit and put into a separate disability expenses tax credit—ideally I would say turn all these into deductions, but even short of that, a separate disability expenses tax credit—with no threshold, so that you don't need to pass a certain percentage amount to get recognition for these ongoing expenses. That could easily be done by pulling out most of these disability-related expenses from the medical expense tax credit.

Then one question arises. If you do that, is there a separate need for a disability tax credit? We have a separate disability tax credit that doesn't require you to itemize expenses. Well, I make the argument in the paper that yes, there's still a need for something like this, because there are a lot of expenses that aren't easily itemized—additional expenses, clothing expenses, furniture repairs, additional transportation expenses—a variety of additional costs disabled people incur that aren't taken into account in the current medical expenses tax credit, and even if we were to separate it out and probably even add on some other itemized expenses to a disability expenses tax credit.

So the purpose of this disability tax credit is to take into account these less tangible and difficult-to-itemize amounts. There's still a rationale for that.

I also make the argument—I won't go into details—about the statutory language. It's a highly restrictive test. In fact I've gone through a lot of the jurisprudence on this, and it's amazing; the courts are constantly emphasizing how restrictive the test is. They're constantly saying “We have sympathy for you taxpayers trying to claim the credit, but it's an incredibly strict test for this.” In fact sometimes judges have said it would be nice if Parliament amended the legislation to make the test more relaxed, which is a rare thing for judges to do in decisions. But that's what's going on in the jurisprudence.

So the next recommendation would be to maintain a separate disability tax credit or deduction, and in a variety of ways that I can't go into here but that are laid out in the paper, amend the language of the credit or deduction.

The final piece here has to do with personal credits. A variety of personal credits have evolved over time. Again, once upon a time they were deductions; then they got converted into credits. There has been a lot of discussion about children and taking into account the costs of dependent children through personal credits. I'm actually in favour of most of that literature saying the cost of supporting dependent children should be seen as a non-discretionary expense that should be taken into account for tax purposes.

Whether you would need to top that up for disabled children is something I've talked about to Connie a fair bit. Ultimately I'm not sure I'm convinced there's a need for that, provided that parents can claim the disability expenses or the disability tax credit on behalf of a child. Those costs are recognized in that way, so there's no need to top up that amount for disabled children.

However, there's a question of supporting disabled adults. There are pieces of this in the current system, but it's not very coherent. There's an infirm dependants' credit for adults, of a certain dollar amount. And there's also now this caregiver credit, again for infirm dependants or for the elderly. It seems to me—this again is laid out in the paper—these things could be rationalized and put together and recognized more explicitly as the costs of supporting a dependent adult, whether the person is disabled or elderly. We could have one piece that takes that into account.

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I've probably used up my six to eight minutes. Those are the key recommendations that deal with the costs of disabilities.

I'm sure Sherri may talk about income support, and we can get into discussion about that. I talk about that later in the paper too.

Thanks.

The Chair: Thank you.

Sherri.

Ms. Sherri Torjman (Vice-President, Caledon Institute of Social Policy): Thank you very much for the opportunity to come today to talk about disability and taxes.

I'd like to focus my remarks today primarily upon families whose children are disabled, and I would like to do that because we're talking about the possibility of a children's budget coming down in the year 2000. I hope it will still be a children's budget and that the focus will be primarily upon children.

Our concern has been that we're not sure children with disabilities will be included explicitly in the so-called children's budget, or at least we haven't seen many indications of that. We want to ensure that some provisions are made for these children and their families, because of the costs they incur, which can be very high in many cases.

There are three major areas where families incur costs with respect to their children who are disabled. The first is technical aids and equipment. The second is specialized services that families require for either health-related or communication- or education-related needs. The third is respite care for the parents themselves, because many are engaged in very, very heavy caregiving responsibilities, as you can imagine, and would require some additional respite care. I guess all parents require respite care—I'm speaking from experience—but parents who are caring for children with disabilities have extra caregiving responsibilities, and we're concerned about respite care in particular.

I'd like to talk about some of the ways in which we can use the tax system and some of the current provisions to help parents and to offset these costs, but I just want to say a word first about services. I know we're not here today to talk about services, so I'll just be very brief.

I would like to point out that it's really difficult to talk about taxes alone without looking at the broader context in the children's agenda of support for services for families. Often, unless there is something to purchase, it won't really help you if you have a provision for offsetting your costs. Many of the services people need are certified or require people with accreditation, and you have to have an adequate supply of these services to purchase.

I just want to put that out. Any provisions that are made in a children's budget to make sure any money going into services—including federal-only money that may go into a demonstration project or even already existing in demonstration projects—should have an accessibility criterion, and I define that really broadly in terms of accessibility.

Moving more specifically into the tax system, several measures are currently in place that we can use to provide some additional assistance to families to help them offset these costs for technical aids, for services, and for respite care.

I'd like to point out to you that we just put out a paper called “Will the `Children's Budget' Include Kids With Disabilities?”, and there is a chart in there on page 7, for anybody who would like to see some of the summary provisions in there. I don't want to go over those in great detail now, but I'd just point out they are there.

If we look, for example, at the medical expense tax credit, some work can be done here, primarily with respect to recognition of care provided at home or care not of an institutional nature. You could argue that goes against the whole purpose of the medical expense tax credit, which essentially is to offset professionally provided and medical and nursing types of care. To argue for a broader definition of care, you may say, goes fundamentally against the provisions of the medical expense tax credit. That may be true, but there's very little other place to make provision for the additional care parents are providing for their children.

So we can look at the medical expense tax credit, look at the list of allowable goods and services, and possibly consider expansion of that list.

Another area where we could make some constructive changes is the disability tax credit. In contrast to the medical expense tax credit, which itemizes a certain list of goods and services, the disability tax credit is a lump sum. It's available to people who have a severe and prolonged disability for a continuous period of at least 12 months.

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Parents can claim this credit in respect of their children, although you wouldn't know it if you read the income tax guide. The provisions explaining who is eligible and who may claim that provision in respect of a dependant are very complex. I wouldn't be surprised if there are many families who are not claiming that provision simply because they don't understand.

One of the problems with the disability tax credit is that the eligibility criteria have become so narrow that they exclude many people who have severe and prolonged disabilities. For example, you have to have a disability that interferes with one of the defined activities of daily living. Breathing, by the way, is not considered an activity of daily living according to the Income Tax Act. Any problems related to that sort of disability would not be included. Anybody who has a degenerative condition or who may have periods of remission during which they're functioning well but then don't function very well at certain points would not be considered eligible within the definition of the disability tax credit.

The provisions really expect the world to be black and white; there's no grey. The world of disability is very complex and very grey. We can look at expanding the eligibility criteria.

We can also look at the amount in both relative and absolute terms. By absolute terms, I mean the actual amount that people can claim. By relative terms, I mean relative to the cost of living; none of these provisions has been indexed since the income tax system was partially de-indexed in 1986.

We can look at the refundability of the disability tax credit, which is a problem for people who are too poor to pay any taxes and don't get any benefit.

There are two other tax credits we may want to look at. Those are the infirm dependant tax credit and the caregiver tax credit. That is really in respect of caregiving, some recognition of the fact that there are people who are caring for dependants at home either because of their age or because they are infirm. The tax system does provide some recognition of that.

One of the problems is that “infirm” is not defined in the tax provisions, so it's very unclear as to who might qualify. I think a more serious problem from our perspective has to do with the fact that this is intended for people with dependants age 18 and over. People with dependants under that age would not be eligible for claiming the infirm dependant or the caregiver tax credit, even though again they would be putting in many hours of at-home care, around-the-clock care sometimes.

Oftentimes as well, people cannot go out and earn a second income because they have to be home taking care of a relative with a disability. People often give up an income or, if they have a partner, they share their work so that they can provide the at-home care. They are actually losing in many ways because they can't go and earn the income, and yet they can't deduct any of the time in respect of the care at home.

Finally, there's the child care expense deduction. There are some possibilities there, although that really is a deduction intended for people who are going out to work. It is intended to compensate for the costs of people who incur child care expenses because they work.

There are some possibilities for making special allowance for parents caring for children with disabilities, possibly allowing a higher amount than is currently allowed. There is a provision allowing an extra amount for parents whose children are disabled. You do need receipts. This is formal, out-of-the-home care we're talking about with respect to the child care expense deduction. What we're really looking for is some way to recognize the at-home care that's being provided.

If we can either work on one of these areas or find some combination of changes to help offset those goods, those technical aids and equipment, those services, and the respite care, or at least recognition of the extra care at home, that's really what we're looking for here. We've also proposed the possibility of an expanded disability tax credit that would, as David was proposing, pull out some of the provisions from the medical expense tax credit and consolidate that.

I just want say before concluding that at the very least, if nothing else is done, if it would be possible to clarify some of the provisions of the income tax guide, that would be very helpful to parents. I don't think it should be necessary to have an accountant or a tax lawyer to make sure you have access to the benefits for which you're eligible. I think anybody going through this and trying to figure it out really gets caught in an incredible morass of regulations that are very difficult to understand.

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At the very least, it would be nice to have one single entry point where all the information is consolidated. That would then refer you to line 318 or 316 or 305, whatever it is. Right now you have to figure it out by yourself.

Finally, I think it would be very helpful to have some kind of ongoing process with the disability community and with the Department of Finance. I know there have been these kinds of dialogues in the past, but I guess the concern is that this shouldn't be an exercise that we do pre-budget every year, where we see what's available and we put in a few provisions here and there.

I think there really should be an overall strategic framework toward which we're working as a country. We may have to move incrementally toward that framework. Clearly you have to move along bit by bit, but at least we'll know where we're going. I think that kind of ongoing dialogue would be very helpful.

Thanks for your time.

The Chair: Thanks, Sherri.

Harry Beatty.

Mr. Harry Beatty (Legal Counsel, Council of Canadians with Disabilities): Thank you, Madam Chair.

I'm appearing today on behalf of the Council of Canadians with Disabilities, a national disability group that is really a coalition of provincial and national consumer-based organizations. Unfortunately, because of the relatively short notice, no board member or staff person is available from CCD today. I was the researcher on the paper I'm going to speak to on the tax reform positions of the CCD. As you can see from the cover, these were approved by the CCD council, so they are organizational positions.

I am a lawyer at ARCH, a specialized disability law centre in Toronto. I just noticed in reviewing these recommendations for today that our office is in fact litigating. It has cases against the federal government involving at least three of the recommendations. But I'm not here today for our individual clients. On the other hand, if the recommendations were resolved, our clients wouldn't mind.

This was written before the 1999 budget. I think recommendation 19 may have been addressed by Mr. Martin in the 1999 budget, although there's still some uncertainty, or maybe I don't have current information. I'll return to that when I get there.

CCD being a consumer organization, these recommendations largely come from people calling up CCD's member organizations or calling the CCD office directly or calling places like our office directly and complaining that they can't make certain claims that they think it should be fair to make. A lot of these recommendations are quite specific. In many cases they may relate to a sort of underinclusiveness or an unfairness that individuals or families have identified.

Finally, to return to the social policy issues raised by Professor Duff, on behalf of the CCD I should say that with regard to the costs of disabilities, the CCD really believes that disability costs by and large should be met fully by society so that persons with disabilities would truly be on an equal footing with other individuals. There was a considerable debate within the organization about the effort that should be put into advocating tax solutions to these costs or allowing people to make a tax claim. It is only a very partial contribution by government. It doesn't always achieve full equality.

Where there's a sharing between the individual and the state, so to speak, individuals who have a low income just aren't able to participate. This includes a significant majority of those in the disability community, as I'm sure you're aware. If government is putting in 20% or 30% of the costs or refunding them through the tax system after people have incurred them, it isn't very much help to people who weren't able to make the expenditures in the first place.

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With that introduction, I'll just touch on a few of the short-term recommendations. This paper is largely focused on recommendations we believe could be implemented within one or perhaps two years.

Other speakers have already focused on the disability tax credit. Like other disability groups, the CCD believes it is defined very narrowly. Here are a couple of examples.

When people are assessed for hearing loss, according to the form they're assessed for hearing or speaking loss as if they were speaking to one other individual whom they know in a quiet setting. Unfortunately, people with hearing loss sometimes have to be in settings where there's more than one person and it isn't all that quiet. In a way, it's felt that it's not a fair test.

One that I take particular exception to is under walking. The test stated for the doctor on the form is 50 metres on level ground. If you can walk 50 metres on level ground, with the aid of assistive devices, such as crutches even, you are not considered to have a marked restriction. Well, unfortunately, the world isn't flat. In the real world, somebody can meet that test even though clearly they have a very significant disability.

Recommendation 3, on page 3, states that the CCD believes the disability tax credit should be turned into a refundable credit so that low-income people will benefit. As a first step, that could be done for people with disabilities who are working, a test to be defined, perhaps, in terms of employment income. One particular group in the community that people are concerned about is people who are entering the workforce who have a disability. The refundable medical expense supplement was a first step toward helping to assist that group—in effect, the working poor among people with disabilities—but this would be an additional step.

Number 4, on page 4, unfortunately has a typo. The words “claimed as medical expenses” should be at the end rather than the beginning. What happens here is that the disability tax credit claim is taken away if the taxpayer or the taxpayer's dependant has attendant care claims of more than $10,000. Again, it's hard for us to see the rationale for that, because in effect it takes the disability tax credit away from some of the people with the most significant disabilities. I guess it might be argued that if someone has attendant care to that extent maybe they don't have other disability-related costs, but that is simply not true. People who have these high attendant care costs tend to have very significant other costs as well.

Support indexation of the value of the credit and also, number 6, allow it to be transferred to any supporting person. At present there are the complex roles that Sherri referred to in terms of family relationship and so on. CCD believes that as long as, say, the person is clearly providing support.... Under the current rules, if you have your aunt living with you, even if she's living with you all year round and you're clearly the supporting person, you can't get a transfer of that claim because the family relationship isn't close enough.

Attendant care: We have already mentioned disability tax credit. This is a complex issue, but right now, generally you can employ family members as attendants, again assuming it's a legitimate relationship and receipts are provided, except where it's the spouse. In the opinion of CCD, to allow this claim as well, while it's a somewhat artificial way of approaching the family caregiver problem, is something worth considering. We would note that in Ontario, Workers' Compensation, now the Workplace Safety and Insurance Board, and the no-fault auto insurance scheme both do allow payment of the spouse as a caregiver. That essentially brings the caregiver into the workforce, where she—it's usually a woman, but not invariably—can then qualify for Canada Pension, employment insurance, and so on.

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Turning to the medical expense credit, basically the concerns here relate to the under-inclusiveness. Recommendation 10 on page 6 is sort of a give-back, which is I guess unusual for organizations, but right now the deduction from the medical expense credit is capped at $1,614. So it's 3%, except for higher-income earners, where it's less. It's a provision that's sort of the reverse, it's regressive effectively, and there would be some money to fund other claims if it were 3% all the way up.

Items 11 and 12 are really specific items that have been suggested that could be added to the medical expense claim. The ones in number 12 are interesting because that's one of the cases we're involved in. Our client, Fred Weeks, has a son with profound disability. He had a number of medical expense claims disallowed. We unfortunately lost the case on his behalf in the Tax Court and are now awaiting a hearing in Federal Court of Appeal on judicial review. But in the context of that case, a number of claims were allowed to the Weeks family that are not ordinarily allowed to other taxpayers and that are not in the interpretation bulletins, and so on. We believe those claims specifically should be allowed generally.

Recommendation 13: As you probably are aware, the costs of renovating your home for accessibility are claimable. We believe equally, if people choose to build a new home that has extra features for accessibility, expenses should allowed on the same basis. For blind persons, readers and persons to assist with scanning and editing should be a claim. Moving expense claims we feel are interpreted too narrowly.

Number 16, the taxability of the special opportunity grants, is another case we have just started. Essentially the argument here is that the special opportunities grants given to students with disabilities are specifically to meet disability-related costs; they are not general income. While other bursaries and grants to students are taxable because they're in the nature of income, we believe these are not in the same category and should be exempt from taxation, as recommended by the Scott task force.

On number 17, vocational rehabilitation expenses, again there should be a claim there.

Finally, on tax treatment of disability income, the taxability of long-term disability insurance is a major problem for many people who become disabled, together with the fact that it usually isn't indexed. In most cases, long-term disability insurance is 60%, or two-thirds of the person's previous income. In the private sector generally it's not indexed, and to have it taxable as well is a very unfortunate outcome. So we're suggesting at least to move somewhat toward resolving it by having a better tax treatment where the premiums are shared.

Finally, number 19 I said was perhaps addressed in the 1999 budget. What happens here is that it's a lump sum, and when LTD payments are paid retroactively in a lump sum it is usually because the person had to sue the insurer or retain a lawyer, in any event, to negotiate it. So the person is denied benefits for some years; then a court says, “No, you were eligible”, and they get five years of payments, say; and then Revenue Canada comes in and says, “That's all taxable in one year. Give us half.” I actually have a client—this is the third case—to whom this has occurred.

In the 1999 federal budget, Minister Martin announced that a range of these lump-sum payments would be allocated year to year. Unfortunately, I haven't seen or had a chance to review the actual legislation to see if these LTD payments are actually included. But we think it's quite unfair that someone who is in this position would pay a much bigger tax bill than if he or she had earned the income in the first place.

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For example, if someone was earning $25,000 a year and then they get $100,000 after five years, they should be really treated as a $25,000 earner rather than a $100,000 earner. The government has already recognized this in the CPP system, and we think it should be recognized and hope it is for LTD as well.

Thank you.

The Chair: Thank you.

Connie.

Ms. Connie Laurin-Bowie (Director, Policy and Programs, Canadian Association of Community Living): I'm neither a tax expert nor a lawyer. I apologize also for the fact that I'm a staff person and not a board member.

With all of those disclaimers, I would like to give you a small contribution to this discussion in terms of what I think is important both in the long term and in the short term for families who have a child with a disability or a family member with a disability.

Maybe I can give a little bit of context in terms of the reason we have taken another run at this issue yet again. I think after the task force report, which had a number of recommendations particularly on the issue of tax and disability, we began to think maybe this file wasn't going to go very much further on the tax side. Likewise, on the children's agenda, we were quite frustrated by the fact that disability had not been really addressed as a part of the children's agenda more broadly.

And partly I think because of our own lack of attention to the issue, we realized that one of the ways in which we had not been looking at the tax system was from the perspective of families. Until probably the last year or so, we had been thinking about the tax system quite strictly in terms of the provisions that are allowable for individuals who themselves have a disability, and like our other work, we were thinking about it in terms of employment for the most part.

Recently there's been quite a bit of research around the impact on families who have a child with a disability in terms of their attachment to the labour market. Even more broadly than that, their income status is often lower. Many families who have a child with a disability report higher incidence of family violence, family split-up, breakdowns. We are only beginning to get a picture of the situation that families who have a child with a disability are in. And we are trying to understand what the reasons for that situation—in many cases an increasingly desperate situation—are.

We are trying to put our issues related to the development of a national disability strategy together with the emerging discussion around a national children's agenda, also taking note of Minister Martin's appearance before your committee, where he was reporting on the progress of his department on the issue of disability. He put the questions back to the committee, which he is wont to do, essentially asking the committee what would be possible within the tax system around the issue of disability, and furthermore, what needed to be done outside of the tax system and what would have potentially provincial implications. What could you do solely federally, starting with the tax system, and then going to a policy and program area?

With that as a sort of task set for us, we realized that probably a good place to start on the issues of children and disability strategies as an in point into emerging discussions would be to look at the tax system yet again, but from the perspective of children, and children who have a disability in particular, and their families. That's when we began to work with Williams Research and David Duff, and we quickly realized that many of the provisions in the tax system are hard to limit to implications for kids, but we also recognized that what you could do is perhaps a sort of strategic incrementalism.

With a view to this next budget—and I also hope it will still be focused on children and actually have some substantial items in it for children—CACL has taken a look at what's on the table in the long term and has tried to cherry-pick—that's probably the best word—about what would be possible in the short term, drawing on Sherri's work as well. And we have been thinking very practically about what would be our wish list for this federal budget, particularly thinking about children and families who have a family member with a disability.

• 1620

We know that families who have a child with a disability are much less likely to stay in the labour market. One or both members of the family often end up having to quit their jobs as a result of the care requirements their children have, or they give up promotions and therefore end up in lower income brackets, and it's a sort of downward spiral. The lower-income-level kinds of jobs often end up having less flexibility, and therefore there is this sort of downward spiral and a decreasing attachment to the labour market.

That's one element of the issue. The other element is the same issue that many families face, which is related to the finding and keeping of good child care. For many families who have a child with a disability, their neighbourhood child care is not going to work. They're going to need some kind of formalized care. In many cases, what it translates into for families is either using formal institutional child care settings, which are generally more expensive, or simply not working.

We've put together a list of three possible things that we think could be done in the short term around this budget, which we think will be focused on children. The first, as Sherri mentioned and also as contained in David's paper, is that you could look at the child care expense deduction and up the amount.

I'm not going to speak about any of the technicalities of this, because it's in all of Sherri's work and David's, but as Sherri mentioned, there is currently a provision under which the increased amount is allowable from ages 7 to 16, I believe, if your child has a disability. Is that correct?

Ms. Sherri Torjman: No, there is no age limit if the child qualifies for the disability tax credit.

Ms. Connie Laurin-Bowie: What Sherri outlined was recognizing the costs associated with care as a parent. I would go further and say, in fact, one of the issues is that if you're going to retain attachment to the labour market and you have a child with a disability, your costs for child care are going to be higher. We've been asked the question by the Department of Finance, how much higher? We don't have a very clear answer about that, but what we're proposing is that there's a strong rationale to say it is more expensive because you have more formal care, and we could up the amount from $7,000, which I think is the current amount per child, to $10,000 for a child who is eligible for the DTC.

We propose that. We would also like to explore some of the other recommendations in terms of eligibility for the child care expense, but I think those are longer-term reforms. Something very simple to do, and probably very politically sellable for Minister Martin and Minister Stewart, would be to look at the issue of simply upping the amount for families who have a child with a disability.

The second thing, on which our membership has been pushing us for a long time and on which we've been actually dragging our feet, to be fairly frank, is the issue of RSPs and savings vehicles for families who have a child with a disability or an adult member with a disability. To be honest, the reason we've dragged our feet on this is that we think it's probably very politically sellable, but we're uncomfortable moving it forward all by itself. We really believe you need to have a package of things that would address families from different income levels. This is really something that would benefit families who had some resources to put aside in the first place.

So there are two things there. There's the potential to create a new investment tool, and the other is simply to clean it up by allowing—help me out with the term on this—a tax-free rollover of an RSP on the death of a person who owns the RSP. Correct?

Prof. David Duff: Yes.

Ms. Connie Laurin-Bowie: The third thing we've put on the table in terms of tax reform that could be done in this budget isn't specific to children, but we think it's a simple thing to do. It's related to the attendant care expense deduction. We think it could be amended to allow people who are in educational pursuits or who are self-employed to be able to use the deduction. It's consistent with the rationale we're building around families that have a member with a disability, in the sense that it improves attachment to the labour market for people who have a disability, as well as their family members.

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What we've thrown into the last page of this is a non-tax item that I think is also doable at this budget. That is, given that the parental leave extension to a year has been committed to in the throne speech, our belief is that it's actually very useful for families who have a child born with a disability to have the extra time.

We think what would be additionally useful if your child is born with a disability is to have some time after that period, between the first year and school age, say, when the child turns five. You would be able to take four weeks a year in addition for the extra time you need as a parent of a child with a disability, either to advocate for proper child care, to spend time in the hospital, or to spend time with speech therapists and pathologists.

There's a whole series of time-off kinds of issues that families have trouble with when a child is born with a disability. It would be optional; a parent could choose whether or not they needed to take that time. It would have the added benefit of creating awareness in the workplace from an employer's perspective of what the issues are that families face in terms of having a child with a disability.

So they're small things, but taken as a package, we think they might have some impact on a range of different family situations and different income levels.

There are two final things. One, I would like to echo the point Sherri has made for the need for a process. Tax and disability issues have been on the table for a long time. As true as taxes, it was a long time ago, yet many of those things continue to come back in various forms and recommendations. I think we now have moved the agenda yet one more step forward in terms of thinking about the issue. We would like a process in which the community and the experts in the field, as well as some officials from perhaps the Department of Finance and the Department of Human Resources Development, could come together and begin to think about what would be cost-effective and useful for people.

My very last point is that I think this combination of things we've put forward—and I'll call it again “strategic incrementalism”—is building towards a longer-term approach. We haven't done the real costing on this, but I think likely these are not expensive items. We're looking at probably well under $25 million in tax expenditures. These are small things, yet they would represent a huge amount of goodwill towards both the disability initiative and a recognition of children who have a disability.

The Chair: Thanks very much.

Roy Cullen is obviously still in the House, so we are very fortunate to have Louis Lévesque here, who I understand has been through all the reports. So we would love your comments and then any particular questions.

This committee is well known, with Miss Grey and Madame Dalphond-Guiral and Mark Muise. We actually would like to do something. So we would love your assistance in letting us know what is actually doable in this budget, now that we have this amazing consensus.

Louis is from the Department of Finance.

Mr. Louis Lévesque (General Director, Tax Policy Branch, Department of Finance): I certainly love the position of being asked to tell what's doable in the budget. You will understand that I will refrain from that. I think, though, I can give some general remarks that would not get me past the boundary of what an official should be doing or not doing.

In terms of the different submissions or discussions, there were a number of recommendations regarding the medical expense tax credit. I would say that one is a relatively easy one, certainly easier to grasp than some of the other ones.

I can say without any problem that it is the government's policy that the medical expense tax credit is there to recognize the medical- and disability-related costs, the actual costs that are related to a disability. Obviously as technology and practices change, there are changes all the time to what is required.

There are difficult boundary issues all the time, because a lot of items that are used by people with disabilities are also used by people without disabilities. That's an argument that the department and the government have used quite consistently to say it's difficult to justify a tax subsidy for something, because other people are also using it. I think we've crossed that line. We've taken a more emphatic view and a more holistic view. For example, there is the case of vans, for which we were recognizing the cost of things like an alteration, but the point was put to us that if I didn't have a disability, I wouldn't need the van in the first place, and so some of the cost of the van should also be recognized.

• 1630

I would say that the number of things that have been raised today we will certainly take into due consideration in terms of reporting back to Mr. Martin, because they're not big-ticket items; they're really adjustments at the margins to things that reflect what actually has been going on. I could go through the list where, for example, we have renovations of an existing home. Somebody makes the case, “I'm building a new home and I'm making those alterations; why is it that they're not covered?” Frankly, if the question is put to me, I have a little trouble finding what the rationale is.

So these are commonsense kinds of recommendations that we'll certainly take into account. These are certainly areas where we will go back to Mr. Martin on the basis that there are a number of things that have been put on the table and are very consistent with the overall policy. We have to make changes on an ongoing basis to reflect reality, and we're certainly open to doing that.

In terms of the disability tax credit, a number of people have made the point that the current definition is very narrow and restrictive, and that is certainly the case. That was the intent. There's no doubt about that. If you go back to the health survey of 1991, there are about four million people identified with some form of disability. According to surveys there are about 800,000 people who have a severe disability, and the credit currently covers about 600,000 people, unless I'm totally wrong. So you cannot say it's not covering the intended population, that it's totally off base, but certainly there are tough boundary issues, and breathing is one that always comes back in terms of not being listed as an activity of daily living. It's a difficult position to sustain.

The difficult issue in this area is that it's a statutory definition. It's complex on both the legal side and the administrative side, and to have a consistent and fair application raises difficult issues. And we're aware that Quebec has made some recent changes. There have been some court cases recently where the courts are telling us that we have some really restrictive criteria. So again we're willing to take a look at this, but I would say it's a more difficult issue because it involves definitions and in this area there is nothing that's really black and white.

There is an issue that was raised a number of times, which is the tax administration side of this. I should probably have clicked to it and I would have asked my colleagues at the Canada Customs and Revenue Agency to be there, but I certainly can commit them to going back to the people who have raised these things today in terms of the complexity of the guides.

In fact, Revenue Canada has moved the disability file to the benefits side of the organization, notably to change the mindset of people from chasing after tax cheaters to more that we're in the business of delivering social programs of the federal government. In the revenue agency they now have an advisory group for issues dealing with persons with disabilities. I'm sure they all would be more than willing to sit down again with people to say what are the areas where we can improve our communications and have better liaison with various groups? These things should be done as a matter of fact, but obviously a number of improvements can be done.

Now I get a sense that I'm getting into more dangerous territory.

Mr. Mark Muise (West Nova, PC): No. Keep going. You're doing very well. I urge you to continue.

Mr. Louis Lévesque: There were a number of pointers in the direction of families with children and families that have children with disabilities. I must say that it's an area where I certainly have personal sympathy. I have a ten-year-old with attention deficit disorder, so the notion for the need for respite care is very close to my heart. I have two other children who are younger. So I can understand where people are coming from when they're raising those issues.

There are a number of points I would make. Certainly the government has said, on the follow-up date, that one of the areas.... The 2000 budget will have a multi-year tax relief plan, focus on personal income taxes, focus on low- and middle-income Canadians, and focus on families with children, notably because the assistance provided to “middle-income families” under the Canadian tax system is relatively low compared to other countries. These are all facts that are clearly laid out in the fall update.

• 1635

The connection to people with disabilities that has been made is that by definition, because there's a lot of time and care involved, there are a lot of situations where we end up with one of the parents, typically the mother, staying at home to take care of a child with some form of disability. Anything the government would do in the area of tax relief to really target middle-income families would be surely highly beneficial in terms of families that have a child with a disability, notably. And going back to the problems that were raised in terms of the lack of indexation of tax parameters, which has eroded the value of the benefits that are provided, generally the increased tax burden has had an impact on all families, but it has had an impact certainly on families with disabilities.

So the measures the government will be putting forward will certainly help in that area. To get more specific would really get me into a lot of trouble. I'm certainly willing to answer general questions, but I think I should refrain from going further into judgment calls as to what we should be doing or not.

The Chair: We hope the questions from the committee will unveil some of those.

In terms of the disability tax credit, it seems from our committee report that the fact that there are people on CPP disability who don't qualify for the.... It looks unfair, I would say, to Canadians. This just doesn't make any sense. Our cystic fibrosis friends, who aren't here but are always the big promoters of this, would seem to have the most difficulty, because, as Sherri pointed out, breathing doesn't seem to be an activity of daily living. They take two or three hours a day just to get breathing with their exercises and with all of those things. They can therefore only work half days, so the tax system seems to be the absolute best place to help these people.

This is just my souvenir leftovers from our last report, seeing as we didn't get you last time.

Mr. Louis Lévesque: I can certainly acknowledge the fact that some people would argue that the rules are that if you take an inordinate amount of time to perform a basic activity of daily living, you may qualify. But the fact that you take an inordinate amount of time to undergo a therapy that will allow you to go though the activities of daily living seems a little bit like a chicken and egg counterproductive result. I can have some sympathy for the argument in terms of.... But I won't wander further.

The Chair: I think they are happy with the Ontario definition of disabilities. I think I would like us to know.... I think the Ontario one was what I'd heard, but anyway, we can find out.

Mr. Louis Lévesque: I'm not sure about that.

Miss Deborah Grey (Edmonton North, Ref.): Welcome again.

Connie, I want you to know I'm neither an expert nor a tax lawyer, nor a board member either. But I'm—

Ms. Connie Laurin-Bowie: But you're elected.

Miss Deborah Grey: I'm a committee member, and we just don't want to go round and round this bush again. I haven't had a chance to go through the large committee report the finance committee just came out with. Have all of these submissions been made to them?

Ms. Connie Laurin-Bowie: We made a submission to the finance committee that is consistent with the one we're giving to you today. Prior to the release of the finance committee report, I also tried to get.... Apparently it's out of print. They've run out of copies, and it's not on the website. My understanding was that disability was not listed in any place, even though there were some submissions on the issue.

Miss Deborah Grey: Yes.

Ms. Sherri Torjman: We were invited to present, and Ken Battle made a presentation at the designated time during which I had actually had a commitment to make a speech at another organization, and he made very clear the fact that we wanted to see disability on their agenda. He said it before anything else. Actually, it was his opening remarks, if we go back to the transcript. So we did in fact make the case for that.

Miss Deborah Grey: But did it get into the report?

A voice: I don't think so.

Ms. Sherri Torjman: I'm not sure.

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Mr. Louis Lévesque: I don't think there is any specific recommendation—unless I missed something. We reviewed the recommendations

Miss Deborah Grey: Thanks.

David, did any of your stuff get into the finance committee report?

Prof. David Duff: No. In fact, the paper was finished about a week and a half ago, so I just didn't have—

Ms. Connie Laurin-Bowie: But we were drawing on the paper in our presentation.

Miss Deborah Grey: Great.

Harry, what about this? Did these recommendations get into the finance committee?

Mr. Harry Beatty: I'm afraid I can't answer. I was asked to come on Friday, I think it was, and I didn't really get a chance to check all of this with the CCD so—

Miss Deborah Grey: One would think it would be chatter around the office if someone from your organization were going to make these excellent recommendations to the finance committee, don't you think?

Mr. Harry Beatty: I don't work at the CCD office, though.

Miss Deborah Grey: Oh, I see.

Mr. Harry Beatty: I'm their researcher, but I don't work with them.

Ms. Connie Laurin-Bowie: The CCD did give a presentation to the finance committee, in Winnipeg, I believe.

Miss Deborah Grey: Okay.

So, Mr. Lévesque, this stuff will all be looked at or...? My point is this: if we're just starting to talk about this today when those guys have just come out with a report that big, I certainly feel like we're a little late.

The Chair: That's why we're here.

Miss Deborah Grey: Well, no, it shouldn't be why we're here now. It should have been on October 12 when we started, because we all know that pre-budget submissions are going to be happening in the fall. The committee has been all over God's green earth, and now they have this wonderful coil-bound stuff and maybe this stuff is not even in it.

The Chair: It's not.

Miss Deborah Grey: Well, I hate to sound frustrated here, but who's going to care?

If Mr. Martin is going to look at it and you folks in the department are going to look at this wonderful sacrosanct piece of work that the finance committee has come up with, with Lord knows how many submissions at the back of it, and you guys have done some tremendous work here...and we're sitting here on December 15, when everyone has plane tickets to be out of here. We're not back until February 7, and we're saying we hope to write a letter to the finance minister...?

The Chair: Well, I think the finance minister has indicated that he would like to be able to do something on this area regardless of whether it's in the finance committee report. That's why we're here today: to see if we can come up with some consensus in a letter to Mr. Martin to make sure he knows what this committee would like him to do on this issue. I don't think it's too late. Mr. Martin has been known to do things that aren't in the finance committee report.

But I think it does come out of this meeting that whatever we can also recommend in terms of an ongoing feedback loop, so that it's not always like this, with us checking to see what's in the finance committee report—

Miss Deborah Grey: I won't make any more comments. I'll just say thank you to all of you for the work you've done. Let's get at it, get a letter written, and get it out of here.

Mr. Mark Muise: Could I make a suggestion to follow up on what Miss Grey said?

The Chair: Yes.

Mr. Mark Muise: Early when we come back, possibly we could invite the minister and review what we've just discussed here to follow up with—

Miss Deborah Grey: The budget is printed by then, is it not?

[Translation]

Ms. Madeleine Dalphond-Guiral (Laval Centre, BQ): Yes, yes.

[English]

Miss Deborah Grey: I think it would be late. I don't know.

The Chair: I think Mr. Martin does want feedback on this issue and on a lot of other issues around this, and I think we will be, hopefully.... The day this budget is done, he will be busy working on the next one. I think that in the strategic incrementalism that Connie was talking about, we absolutely want to see what we can get into this one and then we want a process by which there is always feedback on this really important issue as things change.

Madame.

[Translation]

Ms. Madeleine Dalphond-Guiral: First, I would like to apologize for being a bit late. Since routine proceedings were extended in the House of Commons, I had to stay there longer.

Mr. Mark Muise: But what are they doing there?

Ms. Madeleine Dalphond-Guiral: What are they doing there? Routine proceedings. Look at the debates.

Some voices: Oh, oh!

Ms. Madeleine Dalphond-Guiral: That being said, I simply want to make a comment. I was very sorry to learn that in the Finance Committee report, no mention was made anywhere of the importance of improving the financial situation of the handicapped Canadian population.

I find that deplorable. I'm over 60 and perhaps I should stop being naive, but really... We saw all of the ministers; they all came, with their heart on their sleeve and their hand on their heart. I find this quite worrisome because I think, and I don't think I'm mistaken, that the Minister must keep an eye on this committee. I don't know any committee chairman who is as free as a bird. If they decided to be free as birds, they would lose their jobs.

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And so, I wonder whether the Minister of Finance has a real will to act. Ministers entrust mandates to their committee. Are these pre-budget consultations window dressing, or are they serious?

Clearly, we can invite Mr. Martin to come in the month of February, but as Carolyn says, it will probably be too late and we will have to wait another year. We are finishing up the 20th century and beginning a new one with the same grand principles, but people have been saying that something has to be done for ages, and nothing gets done.

So I don't really know what we could do on an emergency basis. Personally, I'm willing to come back next week to hear Mr. Martin. I have no problem with that at all.

Mr. Mark Muise: Nor I.

Ms. Madeleine Dalphond-Guiral: I have no problem whatsoever with that.

[English]

Mr. Mark Muise: Madam Grey?

[Translation]

Ms. Madeleine Dalphond-Guiral: I could even bring a meat pie.

Some members: Oh, oh!

[English]

Mr. Mark Muise: Are you willing to come back?

Miss Deborah Grey: From New York.

The Chair: Are you d'accord with what has been said, to put in a letter to Minister Martin and then see if he wants—

[Translation]

Ms. Madeleine Dalphond-Guiral: I don't know how much time it will take him to read his mail, but I would tend to think that... We wrote him a letter. If the committee must sign it, it has to meet because we will always have things we will want to add, change, or emphasize, and that takes time. When will he be coming? Perhaps the Minister of Finance will take a holiday in the Caribbean. Perhaps he needs one. I don't know. Perhaps we should do something a little more emphatie. I'm sure you would agree with that.

[English]

The Chair: Okay. We'll leave the strategy until the end of the meeting.

Mark, did you have some questions as to the way this is....?

Mr. Mark Muise: I have two.

I have to agree with what both of my colleagues have said, because I think it has to be there, it has to be in front of the minister, and it has to be part of the next budget. I have two more specific questions, and they could go to the department and to our guests as well.

One has to do with disabled younger people who become adults and are able to live on their own, somewhat, but haven't made contributions to CPP, of course, and therefore can't claim CPP disability benefits. Parents are unable to support them for financial reasons, and these individuals want to have some independence from their families. How can that be addressed? Are there mechanisms that do this adequately, or is this something that should be touched on?

Ms. Sherri Torjman: At the current time, these people would be eligible for welfare if in fact they qualified under provincial regulations; each province has a very different set of regulations. But in terms of other kinds of provisions for these people, I am not aware of any.

Unless, Harry, you are...?

Basically these individuals are left to claim whatever welfare is provided in their respective jurisdictions.

Mr. Harry Beatty: It's really social assistance, which varies a great deal in the provinces and territories. The CCD would like to move towards the refundability of the disability tax credit. One problem, of course, is that individuals who live independently may not get it anyway. But if it were refundable, it would be targeted at low-income people. However, agreement would have to be worked out with the provinces and territories so that it would actually be passed through. Otherwise, even if you did it, if someone was getting the refundable credit, the province or territory might just reduce their social assistance accordingly.

Mr. Mark Muise: Which they're doing now, in many instances.

Ms. Connie Laurin-Bowie: May I just add one point on that?

You've hit on a really important issue for our membership. Many people who have an intellectual disability fall between the independent.... Just to underline how disability pops up under different titles, one thing that really became apparent to me at a presentation to the finance committee, when a number of social action groups from Toronto were talking about the issue of homelessness, was the enormous proportion of homeless people who have a disability, and likewise the proportion of people who live below the poverty line who have children with a disability. While disability has not been a front-burner issue, in all of these places that are hot topics, including homelessness, disability is a hidden subsection.

• 1650

So I think the point you're making is really important. It underlines a point we didn't actually come to, which is the need to look at the issue of federal-provincial cooperation and at income support programs across the country in a comprehensive way. We've actually begun to think and talk about those issues as a community, but quite a bit of work that could be done in this area hasn't been done.

Mr. Mark Muise: I have somewhat of a vested interest....

Yes, Professor Duff.

Prof. David Duff: I touch on this in two aspects of the paper. One is that where people are able to work, obviously the additional costs of just being in the paid labour force need to be better taken into account. I think in the current system, they are. There can be incentives provided for employers to make their workplaces more accessible and more welcoming to disabled people. If they can't, then we're talking about income support.

There I would just echo the comments that there are gaps in the system, and where there are gaps there is a need for something out there that is really like the child tax benefit.

I think there's a role here for the federal government to play in this. It has to be coordinated with the provinces, there's no doubt about that, but that's where the paper ends up.

A lot of these other provisions don't make a difference for people who have low income. I don't see something like this actually displacing the disability tax credit or deduction, but it's a separate social policy measure that forms a type of guaranteed annual income for people with disabilities.

Mr. Gregory Williams: To echo those comments, one of the things we asked Professor Duff to do when he was looking at a long-term and comprehensive theme in terms of the income tax system was also to identify what he thought its limitations were and then talk about some broad architecture about where you go after that. I think he's alluded to this.

I think there is an opportunity for federal leadership on this issue. There's definitely a comprehensiveness problem. The overriding problem you hear about disability is poverty, and we're going to have a hard time getting at that through the tax system per se, to the degree that we're only first pursuing a fair tax policy. It doesn't mean the tax system isn't potentially a good mechanism to be delivering federal income supplementation to those people, in some type of accord with the provinces, perhaps particularly where the provinces would agree to reinvest the resources they were saving in the services and supports that, as Sherri already alluded, are so often badly missing or non-comprehensive or lacking in standards and quality across the country.

This is a long-term project, but I think it's definitely one worth talking about.

The Chair: Joe has to go, Mark, so I'll come back to you later, if that's okay.

Mr. Mark Muise: Okay.

Mr. Joe Jordan (Leeds—Grenville, Lib.): I have just a couple of points.

Connie, I was visited by a group from my riding about a year and a half ago on the issue of savings vehicles. I went and spoke to Minister Martin.

I think that's how I ended up on this committee.

Voices: Oh, oh!

Mr. Joe Jordan: At any rate, he expressed a willingness to take a really good look at this. So I don't think we need to lament the fact that we didn't make the finance committee report. I'm an environmentalist, and we didn't make the finance committee report either. But we have this committee, and I think we have a minister who's willing to take a serious look at what we put on paper.

I absolutely agree with the notion of a larger strategic framework, and maybe we need, Madam Chair, to commit to working on that when we get back.

In terms of the window of opportunity we have for this budget, is there any sense of priorities here? I mean, if we have to ask for things, is there any way, through getting back to the officials of the committee, you could put your recommendations into some type of priority order or get some consensus here about what they should be?

Ms. Connie Laurin-Bowie: We've been going through the process of trying to distill what that might look like. It hasn't been a very formal presence. It's been almost iterative, and drawing on...and as with anything else, there are a few choices that could be made. We think some are better than others in terms of the long-term objectives.

• 1655

From a political perspective, my instinct says it needs to be something related to kids. So what can we do in the short term on kids? In the whole range of things we saw—David's done a voluminous amount of work and Sherri's been involved in this for years, as has CCD—the only thing we could come up with was the child care deduction.

One of the things about the child care deduction that's interesting to me isn't so much what the take-up would be now but how it would actually impact on families in the future who have a child born with a disability, and their attachment to the labour market. While it might not actually mean that x number of people go back to work, it would mean that, if they wanted, a lot fewer people would go back to work after the birth of a child with a disability.

I also want to make a quick point about what you said about the RRSP deductions. The most vocal part of our membership has been families who can see the benefit of creating a tax investment tool. Unfortunately, that's not a hugely representative slice of the population, so we'd like that to go with something else. I guess that's the main message.

Mr. Joe Jordan: I guess my point is that if you don't prioritize, someone else is going to.

Ms. Connie Laurin-Bowie: Yes, we prioritize.

Mr. Joe Jordan: I think that would be very helpful. I mean, I share the amazement here. To me, from what I hear, some of these things....

I have a problem with the “common sense” term. I'm from Ontario—

Ms. Sherri Torjman: Exactly. Don't use it.

Mr. Joe Jordan: —and there's a negative connotation to this, but some of these things do make sense.

Maybe in our letter, Madam Chair, we could list the things that we think are quick fixes in terms of the act but then get some policy things in there as well.

I guess that's where we would need some sense of where you think the priorities are. I agree; with a children's budget, that's the hook, and if we commit to the longer-term framework, then I think we can move this agenda forward in a positive way.

The Chair: Sherri.

Ms. Sherri Torjman: I don't want to make the list of priorities too long, because there's always a danger in that. I agree with Connie, but I also would point out that we have to come to grips somehow with this issue of respite care.

I recognize what you were saying, Mr. Lévesque, about the difficulties of how you do this, and who you include, but somehow we have to figure it out. It is such a problem.

Ironically, if parents had to put their child in some form of institutional or residential care, as a government or as a community we would end up paying for it. But for parents who are caring at home, somehow we can't figure it out.

So I think it's really important to come to grips with that in a very concrete way. Again, the nature of information is facilitating information.

You did make reference to this, Louis, that certainly we can do something in that regard.

I think it would be very helpful to people. I know of many families who are not claiming things for which they're eligible, just because of complex regulations.

So that would involve very little cost overall.

Mr. Harry Beatty: Of course, I'm here on behalf of the CCD, and in terms of prioritizing, I probably would be on dangerous ground, in a way, like Mr. Lévesque. I would like to say a little bit more, though, about the need to provide support to persons with disabilities who are at lower-paying jobs in the workforce or in entry-level positions.

Everyone who has looked at the system over a number of years for people with disabilities has commented on the trap where there is really a lot of pressure on people to stay on benefit programs—social assistance, CPP, worker's compensation. People are afraid to take opportunities, even people who shouldn't be. With development of technology and so on, a lot more people could work. But people are afraid.

First of all, the supports aren't there when you enter the workforce. When you enter the workforce, you have a lot more indirect and direct costs. You have to get to work. You have to get dressed to go to work. You have to get meals. It all tends to cost a bit more when you're disabled. That's why we're looking at the refundability of the disability tax credit.

There's also, of course, the broader issue that people are just terrified that if they try to work they're going to lose everything. People say, oh, well, you worked for three months, so you're not disabled. Congratulations! You're in the mainstream and on general welfare like everyone else.

That's the broader problem, but it really is a difficult step, I think, because of the extra costs. A lot of people don't make it, or are afraid to make it, or their families won't let them try. People stay in the dependency system when they want to work, and it would be better for society, government, and everyone else if they were working.

• 1700

The Chair: Professor Duff.

Prof. David Duff: I would say there are two criteria you'd use to figure out what you'd put as first priorities. First, what could be done easily to clean up the current system, as it's kind of in a variety of places. On that ground, I would say we should do something with the medical expense tax credit, pull out the disability-related expenses and change the structure of it to get rid of the threshold. It's something that could easily be done. A decision would have to be made to get rid of the threshold there, but most of the language would be the same and you'd just pull it out and put it in a different place. So that's easy.

There are other clean-up things that would be relatively easy. The attendant care expense deduction is one—adding on the eligibility to go to school. That's another no-brainer. It's done for the child care expense deduction, so it's just bizarre that it's not there for the attendant care expense deduction.

Beyond that, the other set of criteria would be things Connie has pointed out that fit into a current political agenda or interest around children. I would say there are really three there. One is the child care expense deduction, but that's going to benefit middle-income families. Then the private savings vehicles are going to benefit more affluent families, and there's a recommendation here for a registered disability savings plan that would fulfil that role.

Then you have to think about low-income families. The recommendation in here for that would again involve negotiations with the provinces, but would be a supplement to the child tax benefit for kids with disabilities. That's taken into account elsewhere in the Income Tax Act, and it seems to me it just makes sense for the child tax benefit to have some kind of supplement.

Mr. Joe Jordan: Thank you, Mark, for giving me the time to intervene.

Mr. Mark Muise: Not a problem.

The Chair: Mark, do you have another question?

I wouldn't mind trying to let Bill summarize what he hears, in terms of the consensus, to see whether we have consensus on what would go in a letter, which then would be e-mailed to you by Monday morning. Then any sort of changes you can.... If you want to put your own letter to Mr. Martin separately, I think it would be great if we could have consensus on this in terms of the tax system. It would be terrific. Then I would entertain to personally deliver it to Mr. Martin on our behalf on Tuesday.

Ms. Madeleine Dalphond-Guiral: On Christmas Eve?

The Chair: I will be here Tuesday; I'm not sure if Mr. Martin will. Mr. Martin actually expressed interest in being here today. He wanted to be able to come by, but he is in Berlin. I was impressed that he offered to come.

Mr. Mark Muise: May I ask one question before Bill does that? It will be pertinent to what—

The Chair: Yes.

Mr. Mark Muise: There's also what's called a disabilities opportunity fund. I don't know if it's called something else in various provinces, but I know in my area a budget is given to a very small administrative staff that has moneys available to help people with disabilities with little things, but little things that mean a whole lot, that can let them go out, earn a living, and become productive. It helps in what you were saying earlier, Mr. Beatty. That has been funded for a few years.

The funding has not been reconfirmed for the next fiscal year, and I would like to ask our guest if that is something worthwhile pursuing. Apparently, I've been told, the cost to fund it is about $40 million, but there's very little bureaucracy, it doesn't need to go to the minister, and they come before the group and make their pitch. If it's worthwhile, a cheque is given and the benefit is directly given.

I'd like to ask you about that quickly, and maybe ask Mr. Lévesque what he can add to that. I think it would be important for the bigger picture.

The Chair: We did get that in the finance committee report.

Mr. Mark Muise: Oh, thank you. Let me just say one thing to that. Because we are so busy with various other committees and this is a subcommittee, I can't always attend as much as I should and would like to.

Ms. Sherri Torjman: Thank you so much for raising that. We didn't raise it here today because we were talking about some of the tax issues. It's a very important fund that's due to expire, as you mentioned. It was $30 million a year over three years, and to ensure that it continues is really important. Because of the flexibility it allows, it's been a very important fund, so thanks for raising it.

• 1705

Mr. Harry Beatty: On behalf of CCD, the continuation of the fund is very important to them, as you've raised, Mr. Muise. It is also a somewhat shorter-term initiative for them. Over the longer term, the opening up of mainstream training opportunities, and so on, to persons with disabilities is a priority as well. It doesn't really, in the long term, make up for the fact that many of the people with disabilities tend to be ineligible for many of the more mainstream programs, perhaps because they're not eligible for employment insurance, not having had so much connection with the workforce.

[Translation]

Ms. Madeleine Dalphond-Guiral: I will make a comment along the same lines as those of Mr. Muise. The Opportunities Fund is probably a gesture to allow handicapped persons to regain their confidence and their self-esteem, something we all need, by earning a living.

I know that a few weeks ago, after questions were put in the House, a sum of $900,000 was allocated to Quebec to allow people to make it to the end of January. The end of January is a month away.

That allowed about a hundred handicapped persons to keep their jobs. There is a $2 million shortfall to make it to the end of the fiscal year. We know that the money allocated to the departments comes from the Department of Finance. So in our letter, we will probably be talking mostly about benefits and the tax system. But we could add one element. When handicapped persons, and there are a great number of them, want to work and feel capable of working, if we ask them for their preference, I think that they would unhesitatingly choose a program that would facilitate their integration into the work force. They would choose something that would allow them to find out what they are capable of doing as persons and that would allow employers to recognize them as excellent workers.

In Laval, we receive extraordinary co-operation from employers. If they were not happy, we would certainly not have that kind of co-operation. We know that to obtain that co-operation, we have to use incentives, measures that open doors. It might be important to have that clearly appear in the February budget.

[English]

The Chair: I have one tiny little thing too. The Canada study grant shouldn't be taxable—just so it goes in the summary on my little shopping list. Also, in order to get the Canada study grant, some Canadian adolescents and whatever have to pay $1,000 out of their own pockets to get the assessment done in order to qualify for the grant. Especially for those with learning disabilities, these psychologists' reports are $1,000. Even if they had one done three years before or something, it won't do; they need a recent one.

Bill.

Mr. William Young (Committee Researcher): The consensus, even including Mr. Lévesque, seems to be fairly strong. Certainly on the short-term issues, the first from the community is child care, second is respite care, third is the provision of tax information in a form that makes it accessible, fourth is additions to the medical expense tax credit items, fifth is indexation of certain measures, and sixth is the eligibility definition in the disability tax credit. Those can be both children-related and non-children-related. In the medium to long term, there is investigating the feasibility of what one could call a disability expense tax credit, and the establishment of an ongoing mechanism and consultation with the community and other departments.

Did I miss anything?

Ms. Connie Laurin-Bowie: Did I hear the RRSP investment tool?

Mr. William Young: Yes, it was on that page, not this page.

• 1710

Ms. Connie Laurin-Bowie: The only thing we didn't actually talk about is something that Cam Crawford from the Roeher Institute continues to bring to mind for me, which is the need for investment in the research capacity on some of these issues, that we really need to be able to engage some of the people in the field with some of the data Finance currently owns. So there needs to be some—

Mr. William Young: It seems to me that's an issue—

Ms. Connie Laurin-Bowie: Maybe it's attached to the process.

Mr. William Young: —that would come out of any ongoing consultations. It's not something that should necessarily stand on its own.

There are two that I forgot: the Canada studies grant and the opportunities fund renewal, which is a non-tax item. Sorry.

The Chair: It creates taxpayers, though.

Nancy, is there anything long distance or anything that...? Nancy is the member from Nunavut. They have one of the best audits of persons with disabilities in the country in terms of every single hamlet. They have tracked the people with disabilities who live up there. It's a fantastic piece of work they've done.

Mrs. Nancy Karetak-Lindell (Nunavut, Lib.): Because I don't know enough about how the programs work, the only concern we had was the extra costs of living in remote areas, where everything is so expensive. But federal programs have always one amount for everybody in Canada, no matter where they live. That was a concern for me, because we never get the extra dollars for the extra expense of our cost of living being so high.

I know that for people who file income tax returns, they do get the northern deduction. But as was said by others around the table, most of these people end up not having an income, so they don't really file income tax returns in the same way as working people do who get to claim the northern deduction. So that's a concern for all of the remote parts of Canada that have a high cost of living.

The Chair: Thanks very much.

Mr. Gregory Williams: This isn't really a recommendation, because I wouldn't be so bold, but just an observation. When you're talking about the issue of indexing or partial de-indexing, it's sometimes easier to talk about acknowledging or offsetting the costs created by partial de-indexation as opposed to reintroducing an index or indexing the amount, because it allows the finance minister more flexibility if he only has to adjust one or two times, following the strategic incrementalism as opposed to committing himself to something long term, which potentially is fiscally irresponsible. But that's just an observation.

Ms. Sherri Torjman: We didn't raise this in our discussion today and perhaps it's something to look at over the longer term, but I'm wondering whether it would be possible for the Department of Finance to do some cost runs or analyses of what some of these proposals would actually cost. Granted, the cost depends very much on eligibility criteria and who would be included in the change and that sort of thing. But maybe this is something that could be discussed in the ongoing dialogue, because it's very difficult to make proposals without the model Finance uses. In order to make proposals that are reasonable and appropriate, we need that assistance. This is a request to have some data.

The Chair: That could easily go in the letter.

Mr. Louis Lévesque: I see no problem with this. The only caveat—and we have no better crystal ball than anybody else—is if the cost is increasing the amount of the disability tax credit, I could have done this in 10 minutes, and it's not a big deal. If somebody were to ask me if we were to change the legislation to now read this or that, it's like—

Ms Sherri Torjman: But, Mr. Lévesque, perhaps we could present you with some parameters. Let's say there were four or five options with different parameters. It would be very helpful to have Finance do some of the runs—

Mr. Louis Lévesque: That's no problem.

Ms Sherri Torjman: —because that then helps us make some intelligent decisions.

Mr. Louis Lévesque: Even on the things that are not easily quantifiable, you can have a sensible discussion and put a ballpark figure on things, absolutely.

Ms Sherri Torjman: Exactly. Okay.

Mr. Harry Beatty: Perhaps I could just make one comment on costing. In a lot of cases the criticism community groups make of the current tax system and of government programs more broadly is that there is insufficient support given to community living, to people trying to live independently, to families giving care at home, and also to integration into the labour force. If some of these things were done, our argument would be that more people would be working and there would be less dependence on disability income programs and residential care.

• 1715

Those things are very hard to quantify. If you just do a costing for one year and if you make some changes or marginal improvements, say, to the supports for community living or employment, you're not going to see a radical social change in one year. So I would support the costing concept that Sherri, Greg, and Connie are putting forward, but I would like to see it qualified that way, not to have Finance produce this huge price tag that doesn't really take into account any of the benefits and long-term cost savings.

The Chair: I think that over time, such as with the opportunities fund, which has an 80% success rate, those people become taxpayers, and we want to see that costed out in terms of good social policy being good economic policy.

Mr. Louis Lévesque: I would say there's no disagreement in principle with those things. However, it's very difficult to do any serious quantitative work on this.

On the other hand, I must tell you that we give the same line to everybody, even those people who come with proposals to be examined, such as stock options for high-tech workers, and who explain to us that it would save the country and the economy because of the growth and that eventually it would cost nothing. We try to keep a very narrow-minded financial approach as to what's the fiscal framework for the next three years and what's going to be in there. We're very narrow, stubborn, and stupid, but fair with everybody.

Ms. Sherri Torjman: I think we can make the case for those savings. I think we can do that very well.

What we need is some data from a finance perspective on some of the proposals we're making so that we have those costs. Then we can incorporate them further and work with them for other proposals we'll be making, and looking at net costs rather than gross. If you can tell us the gross costs, we'll figure out the net costs.

The Chair: I understand that with cystic fibrosis we're talking about 600 people or so. We're talking about very few people, so it couldn't cost that much, sir.

Prof. David Duff: There was just one final thing for the list. You'd have to decide whether you wanted to consider this. It's longer term. It's the use of the taxes to provide income support. The two pieces there are a supplement to the child tax benefit for disabled children and consideration of something for disabled adults in the same form, a refundable disability tax credit. That's presumably longer term.

Ms. Connie Laurin-Bowie: As a caveat to that, before I give you my item to put on the list, I think that in order not to raise too many alarm bells, that should be put under the process.

The Chair: Absolutely. It's the feedback loop.

Ms. Connie Laurin-Bowie: It's one of things we want to talk about.

The Chair: Yes.

Ms. Connie Laurin-Bowie: I don't know if you didn't like this proposal, Bill, or you just didn't want to put it on, but since we have the opportunities fund on, could we also include the idea of parental leave enhancement? You don't have to be specific about it. If we put it on the list, it's on the table. Thanks.

The Chair: I just would like to thank you so much. I think it is not too late. This is the beginning of this ongoing process. I think today we've agreed that there needs to be a feedback loop on what's working and what's not working that's always operating. It seems that it's always the people in the trenches who actually have the solutions. One of the best things about Parliament is that we get to bring wonderful people like you and fabulous people like Mr. Lévesque, who—

Voices: Oh, oh!

Mr. Louis Lévesque: It certainly is not too late for people to give input.

I can only say that we're having a five-hour meeting with the minister on Sunday, from 3 p.m. to 8 p.m., so if your letter were there, I'm sure he would kind of....

Ms. Sherri Torjman: Thank you very much for the opportunity to do this. We really appreciate it.

The Chair: Thank you very much.

The meeting is adjourned until the next millennium.