Prime Minister Justin Trudeau says the government is considering whether to pay interest on the millions of dollars in guaranteed income supplements it has owed low-income seniors as far back as 2008, but is only now getting around to paying.
The government is "looking into the issue" of paying interest to the more than 83,000 eligible seniors who were shortchanged, Trudeau said at a news conference today in Vancouver.
"We are also working with our systems to ensure that errors like this don't happen anymore."
CBC News reported this week that the Families, Children and Social Development Department discovered last April that as many as 140,000 low-income seniors were eligible for guaranteed income supplements but had not been receiving the cheques. Most were in Ontario and the western provinces.
The discovery was made as officials installed a new computer system to speed processing of potential GIS claimants.
Average back payment $2,000
A September briefing note obtained under the Access to Information Act said some people were owed as much as $40,000, though most payments were about $6,000. The department now says the average payment is about $2,000.
The back payments have cost the government more than $245 million so far, but the department has not been paying interest — even though the minister has the power to do so.
'The minister shall take remedial action ...' – Section of Old Age Security Act that allows for interest to be paid, among other remedies, for late GIS cheques
Section 32 of the Old Age Security Act says that if a person has been denied a benefit "as a result of erroneous advice or administrative error … the minister shall take remedial action as the minister considers appropriate to place the person in the position that the person would be … had the erroneous advice not been given or the administrative error had not been made."
The new Liberal minister in charge of the department, Jean-Yves Duclos, "is studying the issue of interest payment," confirmed his spokesman Mathieu Filion — an apparent about-face from last week, when a spokeswoman for the department declared: "Interest is not paid on retroactive benefits."
Filion added, "As of today, 95 per cent of affected people already have received the amount of money they were entitled to get."
Paying interest on GIS back payments that have already been delivered would be administratively complex, and could set a precedent for other federal benefit programs.
In another gaffe a year ago, the department found that it had denied employment insurance supplements to hundreds of low-income families since 2007. The money was eventually paid — but with no interest.
The seniors who were denied pension money for years may have also forfeited provincial benefits and social services, which are often keyed to, or triggered by, receipt of GIS cheques. Department officials say they are working with the provinces "to assess and mitigate potential impacts on affected seniors."
The guaranteed income supplement program has been touted as one of Canada's most effective anti-poverty tools, giving a non-taxable financial lift to some 1.7 million low-income Canadians, the majority of them elderly women. The monthly cheques, given in addition to Old Age Security payments, are worth as much as $773.60, depending on circumstances.
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