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> Part II
> 
> The Reform Party's Vision: A Better Social Security System for
> Canadians
> 
> Personal security is vitally important to Canadians. The major
> function of social security policy is to ensure that if the first line
> of personal security (a good job at a good income) fails, resources
> exist to care for people through unemployment, sickness, old age,
> disability and other special circumstances.
> 
> For too long politicians maintained that personal security could be
> provided effectively only if monopolized by government. The end result
> is that social programs are too costly, bureaucratic, centralized and
> financially unsustainable. Canadians have been promised that
> government would provide the lion's share of their most important
> security needs. In practice, government programs have crowded out the
> traditional role of families, communities and local organizations in
> the delivery of personal security. Governments have also lulled
> seniors into a false sense of security, by encouraging them to depend
> on government-run pension programs that are proving to be financially
> unsustainable.
> 
> After thirty years of ballooning government spending on social
> programs, we are somehow left with less security rather than more.
> Because of what amounts to medical rationing, one percent of all
> Canadians (approximately 270,000 people) are waiting for surgery. The
> Canada Pension Plan is effectively bankrupt, leaving today's young
> people uncertain that they will ever receive pensions. The payroll
> taxes used to pay for Unemployment Insurance - most of which are
> hidden in the form of unseen employer contributions - have reached
> such a high level that many employers have reduced numbers of
> employees. Moreover, generous UI benefits offer a strong incentive to
> delay rejoining the workforce. These benefits, combined with the
> burden imposed by the high premiums needed to support them, make
> government-run employment insurance a leading cause of unemployment.
> 
> Reform's vision of social policy includes decentralization of spending
> authority to levels of government closest to the people, an improved
> framework of cooperative national standards, the empowerment of
> families and individuals, and a re-invigorated charitable sector.
> 
>     ------------------------------------------------------------------------
> 
> 
> Principles of Social Reform
> 
> At the heart of the Reform vision of a better social security system
> is the goal of empowering individuals, communities and local
> organizations to play a more significant role both in funding and in
> delivering social services. This vision is governed by five
> principles:
> 
>   1. Build on the Canadian tradition of self-reliance, recognizing the
>      family as the primary caregiver in society
> 
>   2. Empower communities and charitable organizations to play an
>      increasing - rather than a diminishing - role in social security
> 
>   3. Make assistance available to those who are genuinely incapable of
>      providing for themselves
> 
>   4. Where government must be involved in the delivery of social
>      services, give the resources and responsibility for them to those
>      levels of government closest to the people who need them
> 
>   5. Ensure that the government can pay for security measures without
>      borrowing money. Fiscal sustainability of social programs is the
>      key to ongoing security for all Canadians.
> 
> These principles reflect the assumption that when people are equipped
> with the tools to take care of their own security - and that of their
> families and communities - they will do it better than government.
> 
>     ------------------------------------------------------------------------
> 
> 
> The Welfare State versus the Secure Society
> 
> Reformers want to replace the Welfare State with a Secure Society. In
> the welfare state, government assumes that people are poor,
> defenceless and helpless. Their security needs are interpreted as a
> need for an ever-expanding net of direct transfers, in which much of
> society's wealth is taxed away from those who earned it and placed in
> the hands of those whom the politicians and the bureaucrats deem to be
> in need. Aside from the obvious potential for arbitrariness and
> injustice, the welfare state eventually becomes unsustainable. After
> all, everybody has many genuine personal security needs: child care,
> education, health care, pensions, and so on. The bureaucratic welfare
> state wastes so much and misdirects so much of the money that it tries
> to transfer or to transform into government-provided services, that
> people are left with their security needs unmet, or met only in the
> most slipshod manner. It cannot be forgotten that government borrowing
> equals more interest which equals less money for people.
> 
> The welfare state fails to recognize the obvious: not all security
> needs are the same. Transfers of wealth, whether in the form of cash
> or of government-subsidized services, are often the worst way to
> provide for these needs. Most Canadians are not poor enough to be the
> appropriate beneficiaries of direct transfers from government. What
> they need from social policy is a safety net. They need policies that
> will protect them from personal ruin if they become ill, if they lose
> their jobs, etc. It is impossible to eliminate all such risks under
> any system, but it is possible and highly desirable for government to
> provide a framework within which such risks can be reduced. This is
> what the secure society promises.
> 
> The first category of security needs is for protection against
> personal catastrophe such as the death of a family's chief
> income-earner. Most people, most of the time, do not experience a
> crisis of this nature and catastrophes are by their nature
> unpredictable. Our need for security against personal catastrophes can
> be dealt with by means of private insurance. In a secure society,
> government would establish national standards for various forms of
> catastrophe insurance.
> 
> The second category of security needs consists of needs that arise
> reasonably far in the future, but which are predictable. Most people
> will have such needs at some point in the future, so one can't insure
> against them. But one can prepare for them. Typical needs in this
> class are post-secondary education, non-catastrophic health care,
> retirement income, and periodic unemployment. In a secure society,
> such needs would be taken care of by means of a system of
> personalized, tax-sheltered, savings accounts. Canada is already a
> world leader in the use of such accounts for the purpose of
> accumulating retirement income - through our system of RRSPs.
> 
> The final category of security need is for immediate help for those
> who have not been able to provide for themselves. This is the proper
> function of charity or, in its absence, of government transfers.
> 
> Empowering charitable organizations, community groups and individuals
> would go a long way to ensuring that those unable to care for
> themselves are provided for. There would still be a need to provide
> public assistance for those truly unable to help themselves. Such a
> system could be designed to deliver a level of income sufficient to
> meet basic needs.
> 
> Such a system must also take steps so that no one wealthy enough to
> pay taxes would receive assistance, and so that those who received
> assistance would pay no tax. So that the marginal tax rates paid by
> the working poor would not be confiscatory, some assistance could take
> the form of a supplement to employment income.
> 
>     ------------------------------------------------------------------------
> 
> 
> Self-Reliance and Family
> 
> The first source of personal security should be the individual's
> personal resources. The second should be his or her family. It is a
> tragedy that many Canadians have come to blindly accept that
> government can and will provide them with personal security from
> cradle to grave. Formal social programs have largely displaced
> personal responsibility and family reliance. Individuals rely on
> government pension plans and fail to save adequately for their own
> retirements. When children grow up, they no longer feel the obligation
> to care for their parents, since they expect the state-run health care
> and retirement systems to provide assistance to the sick and elderly.
> 
> One potential element in empowering families might also be to increase
> the deductability of child care expenses, regardless of the method of
> care chosen by the parents. This would not interfere with the manner
> in which Canadians choose to raise their children, because it would
> not pay subsidies based on the type of care.
> 
> We also note that if RRSP-style savings accounts were to be used to
> replace direct government transfers as the primary means by which
> typical families could save for their own security needs, families
> would be tremendously strengthened. For example, families would be
> strengthened by RRSP-style tax-sheltered savings plans for
> post-secondary education, which would help parents to save for the
> education of their children. Young adults leaving home would still be
> reliant upon the aid of others to help fund their education, but those
> others would be their parents, not "the tax-paying public."
> 
> For this reason, another option being considered by the Reform Party
> to enhance personal security is the use of tax-sheltered, savings
> accounts, which could be called Registered Personal Security Plans
> (RPSPs). Such a plan would be an extension of Canada's RRSP program.
> Individuals would be able to invest the funds in their own RPSPs and
> could withdraw funds as required to pay for health insurance,
> unemployment support, education for the bearer or the bearer's
> children, training and finally retirement. Contributions would
> eventually replace payroll contributions for Unemployment Insurance
> and the Canada Pension Plan.
> 
> The way that such accounts would work was explained by the Canadian
> Institute of Actuaries in a report submitted in 1994 to the Standing
> Committee on Human Resources Development, which recommended examining
> such a plan as a replacement for UI. The report describes these
> accounts this way:
> 
>      A well designed Unemployment Insurance program would be one to
>      encourage and reward attachment to the workforce. A capital
>      accumulation program would fulfil this role, as this type of plan
>      could be set up to deposit employer and worker contributions into
>      a registered unemployment savings trust account. This account
>      would be tax-sheltered and invested at the sole discretion of the
>      worker, similar to a group RRSP arrangement. This program would
>      be compulsory for all workers and would replace the existing UI
>      program. This could be coordinated with CPP / QPP to enhance
>      retirement security.[13]
> 
> The empowerment and independence that such accounts could bring to
> individuals and families is strikingly shown by Chart 4, which shows
> the potential earnings of such an account at a typical rate of
> investment return. Based on this evidence, we think that the use of
> such accounts for all predictable social needs merits serious
> consideration.
> 
> Like RRSPs, but unlike current government plans, RPSP funds would be
> fully-funded, out of the reach of governments, and directed by
> individuals who know best what their own security needs are.
> Contribution levels would probably be set at around 10 percent of
> earned income, which is roughly the level established for such
> programs in Singapore and Chile.
> 
> Such a plan could create a huge pool of savings for private
> investment. This plan would bring a significantly lower public cost to
> providing personal security. The cost of government would be reduced
> and this would lead to lower taxes. Most importantly, however, it
> would put more money in the hands of individuals and families to
> provide for their needs. To guarantee the security of these funds,
> steps would be taken to prohibit government from confiscating this
> pool of capital for its own use.
> 
>     ------------------------------------------------------------------------
> 
> CHART 4
>     ------------------------------------------------------------------------
> 
> 
> Empowering Communities and Charitable Organizations
> 
> Distant, impersonal and expensive government programs cannot be easily
> tailored to personal needs in times of crisis, and they are open to
> abuse. The best way to ensure targeted and personalized delivery of
> assistance to individuals is to empower local communities and
> charitable organizations to provide the third line of defence in
> providing for the personal security needs of Canadians - after
> personal responsibility (employment) and family.
> 
> The key to reinvigorating private social services would probably be to
> offer an enhanced tax credit to individuals contributing to charitable
> organizations or to community groups engaged in the delivery of social
> services. A revived charitable sector would mean that governments
> would not be the only source of assistance. Instead, local communities
> could tailor their aid packages to local needs.
> 
> What most Canadians need from social policy is a safety net for
> personal security. They want policies to protect them from personal
> ruin if they become seriously ill or lose their jobs. Again, while it
> is impossible for any system to eliminate risks, it is possible and
> highly desirable for government to provide a framework within which
> risks can be reduced.
> 
>     ------------------------------------------------------------------------
> 
> 
> Decentralization
> 
> Where government must be involved in social service delivery, Reform
> believes that the resources and responsibility for the delivery of
> social services must be devolved to the levels of government closest
> to the people. Lower levels of government are best able to respond to
> their needs.
> 
> In principle, this would shift responsibility from the federal to
> provincial and municipal governments in the areas of social
> assistance, health care, child care, education / training and cultural
> development. In addition to maximizing efficiency, such an arrangement
> would show greater respect for the existing constitutional division of
> jurisdictions between federal and provincial governments.
> 
> Not that there would be no role for the federal government in these
> areas. The federal role would focus on facilitating federal-provincial
> cooperation to establish and to maintain national standards. The
> federal government would use equalization as the principal mechanism
> for bringing the standards within the financial reach of every
> province.[14]
> 
> The principle of decentralization can be illustrated by looking at
> health care. The federal government claims to be the guardian of
> national standards in health care which it enforces by withholding
> health care transfers to provincial governments when they do not
> comply with Ottawa's interpretation of Canada Health Act standards.
> Under existing arrangements, federal funding for health care has
> declined for years. This will effectively eliminate Ottawa's ability
> to enforce any national standard.
> 
> It is unacceptable that the federal government should simply wash its
> hands of responsibility for the nation's health needs as its transfers
> to the provinces decline. One way to maintain and improve such
> standards in the absence of such transfers would be to amend the
> Canada Health Act. Meaningful national standards could be preserved
> and improved by redefining them to cover "core" or essential health
> services to all Canadians, regardless of ability to pay. A revised
> Canada Health Act could also recognize that under our constitution,
> the provinces have jurisdiction over health care and would end federal
> interference in the administration of all non-core, non-essential
> services. This would allow provinces (and patients) more flexibility
> to fund these services as they saw fit.
> 
> We agree with the opinion expressed by health care experts Jane Fulton
> and Ralph Sutherland:
> 
>      The public may, in time, agree that although access to a broad
>      range of basic health care should be guaranteed to everyone, the
>      original Medicare model, in which everyone received everything
>      health care professionals wished to deliver, is not only
>      intolerably expensive, it is undesirable for other
>      reasons_Consumers should be allowed to stay outside of the
>      publicly funded system completely if that is their wish, or to
>      supplement publicly funded care with additional privately funded
>      care if that is their wish.[15]
> 
> A narrower set of basic health services would be covered by provincial
> revenues and equalization payments. For the remaining services,
> provinces would be flexible as to the funding arrangements as demanded
> by their electorate and as determined by fiscal necessity.
> 
> This is our vision for decentralization_to better link the provision
> of social services to the funding of those services. This will allow
> social services to better reflect the needs of diverse communities and
> regions across Canada, while respecting the needs of all Canadians.
> 
>     ------------------------------------------------------------------------
> 
> 
> Financial Sustainability
> 
> Many of the measures outlined above would be fully-funded by
> individuals or dependent on local agencies or community organizations
> to ensure ongoing effectiveness and sustainability. Those programs
> directly financed by government - health care and public assistance,
> for example - would be designed to guarantee not only short-term, but
> long-term financial sustainability.
> 
> A personal security net which does not meet the criteria of financial
> sustainability provides no security at all. It only guarantees that
> whatever replaces our current system will need to be radically
> redesigned in the future.
> 
>     ------------------------------------------------------------------------
> 
> 
> Conclusion
> 
> The Reform Party believes that Canadians should look beyond the
> existing framework of programs and to new and better ways to meet our
> social security needs. We also believe that this new way of doing
> things should be guided by the five principles outlined above.
> 
> The financial unsustainability of government social programs currently
> poses a great threat to our social fabric. Instead of providing
> personal security, these programs often make Canadians anxious about
> their futures and the futures of their families. Only by moving
> personal security provisions away from financially unsustainable
> government programs to localized delivery and personal responsibility
> can we offer Canadians real hope for the future.
> 
> The Reform Party recognizes that many of the reforms described above
> would require a "phase-in" period. They also hinge on the government's
> getting Canada's deficit under control. These are long-term options.
> They will be the subject of continued discussion with Canadians. We
> lay them out to show Canadians where the Reform Party would like to
> see social programs evolve. Our deficit reduction exercise is an
> important first step in this direction. While many of these
> preliminary ideas are not part of our deficit elimination plan, this
> package should be seen as the first step toward fulfillment of a
> better, sound, security system for Canadians.
> 
>     ------------------------------------------------------------------------
> 
> Next Section | Back to Contents
>     ------------------------------------------------------------------------
> 
> 
> Footnotes
> 
> [13] Canadian Institute of Actuaries, "Submission from the Canadian
> Institute of Actuaries to the Standing Committee on Human Resources
> Development on Unemployment Insurance," Ottawa: unpublished, 1994, p.
> 35.
> 
> Return to text
>     ------------------------------------------------------------------------
> 
> [14] Cash transfers under Canada's current arrangements will fall to
> zero by about 2010, and tax points will provide additional revenues to
> the provinces over those they currently receive. See the discussion of
> Established Programs Financing (EPF) reforms under Part IV, below.
> 
> Return to text
>     ------------------------------------------------------------------------
> 
> [15] Jane Fulton and Ralph Sutherland, Spending Smarter and Spending
> Less: Policies and Partnerships for Health Care in Canada. Ottawa: The
> Health Group, 1994, p. 210.
> 
> Return to text
>     ------------------------------------------------------------------------
> 
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>     ------------------------------------------------------------------------
> 
> [Image] hermae@parl.gc.ca