Most Canadian seniors are guaranteed an income above the poverty line by Old Age Security, Guaranteed Income Supplement and the Canada Pension Plan. Seniors are less likely to be poor than children or adults under 65 - with one exception. Mike Veall has found that 71 percent of recent immigrants aged 66 and older have incomes below the poverty line. Although recent immigrants were just 2 percent of the 66 and over age group, they constituted 20 percent of those in poverty (2004 numbers based on tax return data).
Seniors who have just arrived in Canada are much more likely to live in poverty for two reasons: (1) they usually don't have much private pension income and (2) they aren't eligible for OAS and GIS. A person has to be in Canada for 10 years before he or she can start to collect Old Age Security and Guaranteed Income Supplement. Even then, a person is not entitled to receive full benefits until she has been in Canada for 40 years.
Mike Veall notes that removing the OAS/GIS residency requirement would do a great deal to lift recent arrivals out of poverty. In another article, Patrik Marier and Suzanne Skinner make the same point. Is it a good idea to make recent immigrants eligible for OAS and GIS? If the objective of OAS and GIS is relief of poverty, then surely the answer to this question must be yes.
The combination of OAS, GIS and CPP is a powerful anti-poverty tool. A recent Department of Finance document gives a snapshot that shows just how well Canada does compared to other countries when it comes to supporting the elderly:
There's a proven recipe for eliminating poverty: (1) use tax returns or another simple test to identify people without earnings or pension income (2) pay benefits that guarantee everyone an adequate income. So why do we still have poverty in Canada? We don't chose to provide everyone with those income guarantees. 71 year olds, yes, 17 year olds, no.
Yet, as Stephen Gordon has written, Canada is now experiencing huge demographic changes - fewer working-age people, increasing numbers of over 65s, and an increasingly diverse senior population. The increased costs of OAS/GIS resulting from population aging will have to come from increased taxes, new debt, or cuts to other spending. In order to do any one of those things, a strong case would have to be made that OAS/GIS is a good use of funds.
The appeal of Guaranteed Income Supplement - what makes it so different from provincial social assistance programs - is that it is an entitlement. There are no asset tests, no work requirements, no meetings with social workers, no 'man in the house' or other rules. OAS and GIS are (for those who are eligible) a right, which preserves the dignity of OAS and GIS recipients. To be considered, all you have to do is file an income tax return and apply.
But reporting a low income on your tax return - the eligibility test used for GIS, and the basis of Mike Veall's numbers - is not the same as being poor. Recent immigrants are much less likely than other seniors to be living alone. Should seniors living in relatively comfortable arrangements with their children be considered poor? What about cash-poor seniors living in million dollar homes in Vancouver? Should eligibility for GIS involve some kind of check on an individual's living arrangements/assets to see if a person is actually living in poverty?
Moreover, the idea that someone, just because he or she has reached the age of 65, is entitled to special income guarantees, is hard to justify now that most provinces have no standard retirement age. The reason that 17 year olds are not entitled to an adequate guaranteed income is that they are expected to be in work, in school, or supported by their parents. If people over 65 are perfectly capable of working - as those in favour of ending mandatory retirement seem to imply - why should seniors automatically be eligible for special income support programs? Yes, many over 65 are disabled and unable to work - but so are many under 65. Why an age test?
There are other implications of thinking of Old Age Security and Guaranteed Income Supplement purely as poverty relief programs. Currently, any one who has been resident in Canada for 20 years can continue to receive Old Age Security even while living elsewhere. If we abandon the notion of OAS as a contributory program, does it make sense to pay OAS to people not living in Canada? Is there a non-invasive way to ensuring that people are, in fact, resident where they claim to be?
Compared to these other debates, whether or not recent immigrants are entitled to receive OAS and GIS might seem a minor issue. I think of it more as a canary in the coal mine - an early sign of the hard choices Canadians will have to make in the years ahead.
Personally, I support Old Age Security. It is a potent force for empowering and protecting older women, as Shelley Phipps, Peter Burton and I have written about elsewhere (in a book, not on-line unfortunately). I am glad that my mother is entitled to receive it.
But I don't expect it to be there for me when I retire.