Institutional links

Wrestling With the Poor Cousin: Canada Pension Plan Disability Policy and Practice, 1964 - 2001

The Liberalization of CPP Disability Benefits and Eligibility: 1987 - 1993

Retirement income reforms and CPP disability program developments over the 1987 to 1993 period had clear links to the earlier pension debates and reforms proposals. Connections were apparent in the changes the Mulroney Conservative governments made to minimum standards in occupational pension plans, to increases in tax assistance for retirement savings vehicles, and to broader definitions of disability for income tax purposes for tax deductions and tax credits. The influence of previous pension debates and thinking was equally apparent in reforms to the CPP. An intergovernmental consensus on CPP reforms was reached by late 1985. Federal legislation on these changes was approved by June 1986, with the changes taking effect in January 1987. Pension reform also exhibited choices and processes relatively distinctive to the Mulroney government (Prince, 1992). Despite the Mulroney Conservatives' preoccupation with deficit control and expenditure restraint during their nine years in power, the CPP disability program, as well as other disability programs, were largely shielded from this restraint agenda and, in fact, were at times enriched.²⁵ However, while CPP benefits were enriched and eligibility rules liberalized, deficit control included staffing reductions in Health and Welfare which resulted in an increase in a backlog in appeals.

Shaping the 1987 Reforms

When the Minister of National Health and Welfare, Jake Epp, introduced Bill C-166, the legislation to amend the CPP, he rightly called it "the culmination of several years of consultation ... on the subject of pension reform" with the provinces, parliamentarians, and Canadians. Shortly after the Conservatives formed the government in September 1984, discussions "were put in high gear" between National Health and Welfare and Finance officials on one side, and provincial governments on the other. Within a year an agreement was reached. According to Epp, the concerns that dominated federal-provincial discussions were fourfold: "maintaining the long-term health of the Plan's fund; second, ensuring the affordability of premiums paid by working Canadians and their employers; third, adapting benefits to the changing needs of Canadians; and fourth, maintaining parallelism between the CPP and the QPP." In particular, Epp placed strong emphasis on thoroughly taking into account the financial sustainability of the reforms to be introduced. "Of course, improvements in social programs must always be carefully considered by the Government in light of present and projected financial considerations. Indeed, because expenditures on social programs normally involve a continuing and escalating outlay there is probably no area of spending that must be subject to more careful thought" (Epp, 1986: 14250).

The legislation to amend the CPP passed swiftly through the House of Commons in June 1986, in a process and climate marked by non-partisanship and cooperation between the government and the opposition parties.²⁶ With good justification, Epp called the legislation "one of the most important Bills that the Government will introduce during its present mandate." The reforms would have far-reaching implications and significant improvements for many individuals, although the Minister assured with "only a moderate impact upon long-term costs of the plan" (Epp, 1986: 14251).

Among the major changes to the CPP that came into effect in 1987 were:

• a new 25 year financing schedule with the first increase in the contributions rate since 1966
• a review of the contribution schedule every five years by federal and provincial finance ministers
• flexible retirement benefits payable as early as age 60 and starting as late as age 70
• continuation of survivor's benefits if the survivor remarries (previously survivor benefits were terminated if the surviving spouse remarried) ²⁷
• sharing of retirement pensions between spouses or common-law partners
• extension of allowing CPP credit splitting to include couples who separate from a marriage or common-law union.²⁸

Specifically to CPP disability, the 1987 changes were:

• more than doubling the value of the flat-rate component of the benefit from the previous amount to a level equal to that paid by the QPP
• relaxing the contributory eligibility rule to contributions having to be made in either two of the last three years prior to disablement or in five of the last ten years before the disablement
• increasing the ceiling of the combined disability and survivor benefits to accommodate the higher flat-rate disability benefit
• allowing the payment of two benefits where the earnings of both parents were lost due to death or disability regardless of the child's marital status (previously only the higher of the two benefits was payable)
• extending the time limit from 12 months to 15 months retroactively for the determination of disability.

The federal government estimated that, over the next year (1987-88), the increase in the maximum monthly disability benefit would help approximately 155,000 CPP disability pensioners; that the liberalized eligibility requirement would mean about an additional 5,000 people would qualify for benefits; and that as many as 5,000 people would benefit from the increased ceiling of combined disability and survivor payments (Epp, 1986: 14252). A small number of individuals and families would also benefit from the changes in children's benefits and retroactivity claims.

Between the early 1980s pension debate to the 1986 legislation, core ideas for reforming the CPP disability program underwent a process of adoption, restriction and rejection. Ideas for liberalizing the program ranged from probably the boldest vision, put forward by the Canadian Labour Congress, through Minister Begin's proposals, to the intergovernmental consensus reached in late 1985 and contained in Bill C-166. Table 6 shows some main features of these three plans.

Table 6
Evolution of Thinking Toward the 1987 CPP Disability Reform

Feature	Canadian Labour Congress Proposal (1982)	Federal Government Proposal (1982)	Bill C-166 Legislation (1986)
Flat- Rate Portion of the Benefit	Increase to the level of the Old Age Security Benefit (about 20% higher than the QPP level)	Increase to the same as the QPP (from $71 to $228 per month)	Increase to the same level as the QPP (from $88 to $224 per month)
Earnings-Related Portion of the Benefit	Raise from 75% to 100% of contributors' retirement pension	Raise from 75% to 100% of contributors' retirement pension	Leave at 75%
Eligibility Requirement	From contributions in 5 of the last 10 years to 1 of last 2 years	From contributions in 5 of last 10 years to 1 in last 2 years	Contributions in 5 of last 10 or 2 of last 3 years

The successive restriction in reforms is understandable when a comparison is made among the national labour organization, a strong social Liberal minister in Begin, a Conservative government focused on public deficit and spending control, and the political reality of obtaining broad provincial consent to proposed reforms. Jake Epp convinced Michael Wilson to take the idea of contributions in one of the last two years as the federal government's position on disability eligibility reform. The provinces, however, were not interested.

The similarity of proposals in substantially increasing the flat-rate part of the disability program indicates the wish to improve what was a much needed but modest income benefit and to maintain uniformity of benefits between the CPP and the QPP.²⁹ The reforms that were eventually enacted originated from the earlier reform in the Quebec plan, the Obstacles report among others, policy analysis from within the Departments of Finance and National Health and Welfare, and intergovernmental negotiations over 1984 and 1985 on these issues and the wider CPP agenda of financing and retirement pensions. Public pension reform was not a central issue in the federal election of 1984, and moved from interest group action and media discussion to intergovernmental relations.

Staying on the Front Burner

During third reading of the legislation that would become the 1987 reforms, the Minster of National Health and Welfare acknowledged the desire among MPs to improve disability benefits even further and to reform the definition of disability used by the CPP, which many MPs saw as far too restrictive. The Minister said that, "passage of Bill C-116 does not mean that we are putting pension reform on the so-called parliamentary back burner. Rather, it stays on the front burner where Canadians generally and Members of the House will want to see the full heat retained" (Epp, 1986: 14880).

Over the next five years, if the CPP and the disability program were not continually on the front burner of the Mulroney government's agenda, they were never off the policy stove, always seeming to having something cooking politically or administratively. Numerous changes and innovations were initiated, all in the direction of the liberalization of benefits, rules, supports and services. These changes are outlined in Table 7.

Table 7
Overview of Changes to the CPP and Disability Program, 1987-1992

1987	Bill C-116: takes effect with various changes to CPP benefits and financing arrangements
1988	Pension Appeals Board, the Leduc decision on employability
1988-89	Regulation changed allowing initial decisions to be made by one official rather than a board of two, aimed at helping with backlog of appeals and improving the time for processing applications.
1988	Applicants for CPP disability requested to submit medical reports from their physicians
1989	Departmental policy directive establishes written guidelines for assessing eligibility
1989	Departmental memo on medical conditions of older applicants
1990	Vocational rehabilitation pilot project for CPP recipients in two provinces
1991	Pilot project integrated with the 1991-96 National Strategy for the Integration of Disabled Persons
1991	Tax liability of CPP disability pensions reduced in federal income tax
1991	Bill C-260: Extension of CPP credit splitting to ensure that division of pension credits is a non-assignable right, not to be affected by separation agreements or court orders
1991	Bill C-116: Reform of CPP appeals system with the creation of the Office of the Commissioner of Review Tribunals
1992	Bill C-39: new 25 year schedule of contribution rates, increase in children's benefit, and several other amendments, including "incapacity" provision Bill C-57: lifted the time limit on filing late applications
1992	Definition of earned income for RRSP contributions changed to include CPP disability pensions

While the changes enacted in Bill C-116 and introduced in 1987 resulted from federal-provincial negotiations and agreement, most of the other changes came from the federal government. Some of the changes were accomplished through legislative amendments but many were done through departmental guidelines and management actions or by tax reforms. Many had a direct bearing on disability benefits or eligibility, while others had more indirect impact.³⁰

In 1988, the Pension Appeals Board made a decision, in the Leduc case, which appeared to take a more flexible approach to the definition of the availability of gainful employment than had been the accepted practice to date.³¹ This had the apparent effect of widening or easing the basis for determining the eligibility of an applicant for the disability benefit. This led to a 1989 policy directive within Health and Welfare Canada that reflected the interpretation given to the Leduc decision, by referring to local labour market and regional economic conditions as relevant considerations for officials to take into account when determining eligibility for CPP disability benefits. A 1989 departmental memo from the Director of Disability Operations, to departmental adjudicators, said that applicants over age 55 with medical conditions that did not allow them to do their own job or equivalent would now be deemed to have a disability for the purposes of the CPP (Torjman, 2002). A similar change had been made to the QPP, through legislation, effective 1984, so that a disability pension became payable to persons between the ages of 60 and 64 who were not capable of carrying out their regular employment for health or medical reasons.³²

It is fair to say that at the time of the Leduc decision, officials in Health and Welfare were not especially preoccupied with costs implications of the disability caseloads. In fact, the department and successive ministers had long been under pressure to recognize "real world" factors, such as the education and age of applicants and employment conditions, in determining the eligibility for disability benefits.³³ The department felt obliged to respond to the Leduc decision, and interpreted the ruling as requiring and justifying them to move in that direction, thus liberalizing the interpretation of disability under the legislation.

During this period, federal officials took some steps on CPP vocational rehabilitation programming based on regulations which had existed since the 1970s but had never been implemented. For the 1990-91 fiscal year a small scale project to test the feasibility of rehabilitation provisions for disability clients was piloted in British Columbia and Ontario to support the policy goal of return to work. The next year, the pilot was added to the Mulroney government's five year National Strategy for the Integration of Disabled Person, which had as one of its themes the better inclusion of persons with disabilities in the economy (Prince, 1992). The CPP disability vocational rehabilitation initiative was therefore extended to all provinces and given earmarked funds for the 1991-96 time of the National Strategy.

In 1991, the Conservatives anno unced a new way of treating the tax liability of CPP and QPP disability benefits. As a budget paper explained: "Recipients of Canada Pension Plan/Quebec Pension Plan disability pensions are taxed on these benefits in the year they are received, even though a portion of the benefit often relates to prior years. As a result, since the tax system is progressive, tax liabilities may be significantly higher than if the benefit had been paid and taxed on an ongoing basis from the date of eligibility" (Wilson, 1991: 147). The budget introduced a measure to allow spreading the amount of a lump-sum payment over the years in which they were paid, thereby reducing the tax liability of the recipient. Another tax reform pertaining to CPP disability was made through the 1992 federal budget. For purposes of contributing to a Registered Retired Savings Plan (RRSP) the definition of "earned income" was revised to include CPP and QPP disability pensions. "This measure," The Budget Papers explained, "recognizes that CPP/QPP disability pensions replace the earnings of a disabled individual. It makes the tax treatment of these benefits consistent with the existing tax treatment of taxable long-term disability benefits from private plans" (Mazankowski, 1992: 142). Through budgets over this period the Conservatives also expanded the list of eligible expenses for the Medical Expenses Tax Credit, a tax measure of obvious importance to Canadians with disabilities. These various budget measures were all aimed at providing more equitable opportunities for income security.

Legislative Players and Processes: The 1992 Changes

Cabinet parliamentary government confers most of the constitutional and actual power to initiate policy on the executive - the Prime Minister and the cabinet, with the senior bureaucracy as influential advisor. Of key importance in financial matters, is the fact that with few exceptions only the government can initiate legislation involving money. Parliament's role in policy making is commonly viewed as marginal, reactive and antagonistic. The opposition parties have the right and duty to criticize and scrutinize government actions and inactions. By and large, parliamentary government functions through intense partisan competition among political parties governed by strict party discipline. This feature of the House of Commons was most evident in the 1960s when the CPP was first proposed, debated, altered and enacted. The partisanship of debate makes it very difficult for government and opposition parties to work cooperatively in the House.

CPP disability is a policy area, however, where the role of parliament and of individual MPs has been something more than marginal and far from always being adversarial. Rather, at numerous times legislative players and processes have been influential and consensual. A non-partisan, constructive approach was predominant in the 1964-65 Joint Committee work of the Senate and House of Commons on the original CPP legislation, the 1981 Obstacles report on disability issues, the 1983 parliamentary Task Force on Pension Reform, and the debate around Bill C-116 in 1986, which the Minister of National Health and Welfare called "one of the brighter spots in Parliament with all sides acting together on behalf of Canadians" (Epp, 1986: 14249).

The issue of CPP disability has enabled individual MPs, on the government side as well as the opposition parties, through questions to the relevant Minister, motions and private Members' Bills to urge new action or reforms to the administration and policy on disability benefits. These questions and motions provide MPs opportunities to:

• speak about the problems that constituents are having with CPP, pointing to actual gaps, limitations or inequities of the disability program;
• communicate ideas from parliamentary bodies and other organizations, and promote the reform process by highlighting the need for changes to the disability program;
• draw out information about the appeals system (e.g., processing time for applications, or the number of appeals in a year) and elicit statements of intentions from the Minister about the CPP and the disability program, and;
• bring pressure on, or lend support to federal Ministers in defending and improving benefits in meetings with their Cabinet colleagues or their provincial counterparts.

Government responses typically are polite, complimenting the Member for their concern for persons with disabilities, but also are deflective. Government Members may review the history of the CPP, praise the initiatives already undertaken by the government and perhaps add that any specific reform ideas advocated by individual MPs need to be considered within the wider context of the CPP and disability income system in Canada.

A fascinating sequence of parliamentary and disability pension politics took place in 1991 and early 1992, as summarized in Table 8.³⁴

Table 8
Legislative Stages of Three Bills on Amending the CPP, 1991-92

Stage/Bill	Bill C-280 Private Members' Bill	Bill C-39 Government Bill	Bill C-57 Government Bill (replacing Bill C-280)
First Reading	September 20, 1991	November 18, 1991	February 14, 1992
Second Reading	November 26, 1991	November 19, 1991	February 20, 1992
Third Reading	November 26, 1991	November 19, 1991	February 20, 1992
Outcome	Ruled inadmissible by Senate legal staff Raised by Minister of National Health and Welfare at a federal-provincial meeting, and agreement secured	Received assent and became effective 1992	Received assent and became effective 1992

In September 1991, Bill C-280, a private member's bill to amend the Canada Pension Plan Act was introduced by the Hon. Alan Redway, formerly a Minister of Housing in the Mulroney Cabinet. At first reading, Redway explained that the bill was "aimed at a long-standing, but I believe only a technical injustice in the limitation period for making application for the CPP for disabled people" (Redway, 1991a: 22468). Redway had been working on this issue since 1985, after becoming aware of the issue while door-to-door campaigning for the 1984 federal election. A constituent he met had been denied a disability benefit because he had not applied in time. This was not a new or unique problem to this individual. As a social policy expert explained at the time: "Disability benefits are the only CPP pensions with a time limit for applying. Depending on a person's work history, the deadline can be anywhere from 15 months to six years. But once it has passed, entitlement is lost. Every year, almost 900 disabled ex-workers are turned away for applying too late. Unwilling to give up on ever working again, they had kept taking treatment and hoping for a recovery, unaware that time was running out. The unfairness of their plight is so compelling that virtually every MP has gone to bat for constituents caught in the deadline trap" (Shifrin, 1992).

Redway began making representations to Jake Epp, the Minister of National Health and Welfare, who apparently told Redway that it would be addressed in the 1986 legislation. However, it ended up not being included in that package of reforms. Redway and other Conservative MPs then took the issue to the Health and Welfare Standing Committee and pressed for legislative action.³⁵ Again, the reply was that it would be taken up in the next round of changes to the CPP. In the second Mulroney government, a new Minister of Health and Welfare, Benoit Bouchard, told Redway he was not aware of this issue, perhaps revealing the short and selective corporate memory of the department. Feeling that time was running out for action in the second, and most likely last mandate for the Conservative government, Redway decided he had to resort to a Private Member's Bill.

Under the system for Private Member's Bills, if a bill is selected and deemed worthwhile by the House Management Committee, an all-party body, it receives three hours of debate and might then be put to a vote, for approval in principle, and then sent to the appropriate committee for public hearings. Redway's bill was selected but, after strong intervention by the government's House Whip, was limited to a one hour debate with no vote.

Redway wanted to change the limitation period for the CPP disability pension, thus allowing people to make a later application and be eligible to receive a pension with the understanding that "they have made contributions for at least one-third of their contribution period." At second reading two months later, Redway acknowledged the assistance of Michael Hatfield, the legislative assistant to the previous Minister of National Health and Welfare, Jake Epp, in drafting the wording of Bill C-280. The House Management Committee decided the bill would not be votable, but Redway argued that there was "no need to get the provinces' approval in advance. This bill could be passed, it just would not take effect until the provinces agreed" (Redway, 1991b: 5380). While not mentioned during the debate, the child rearing drop-out provision passed by Parliament in 1977 but not in taking effect until 1983, was an example that supported Redway's argument.

At the 55 minute mark of the allotted one hour for debate, an NDP member yielded the floor to Redway allowing him to move the motion that the House allow the bill to pass all three stages, a motion requiring unanimous consent of those present. During debate, several opposition MPs thanked Redway for his initiative and spoke approvingly of expanding access to benefits for Canadians with disabilities. The Parliamentary Secretary to the Minister of Health and Welfare, Barbara Sparrow, called for a recorded vote. This undoubtedly helped the motion, as no MP wanted to be on record as opposing this. Unanimous consent was given and the bill was read a third time and passed unanimously, 196 to nil. The bill went to the Senate but was turned back there because it did not have "a royal recommendation."

However, early in 1992, the Minister of National Health and Welfare sounded out the provinces on the proposal contained in Bill C-280, and obtained their approval. The unanimity of the House of Commons on the reform proposal certainly aided in getting provincial agreement so quickly. The Minister then informed the House that he would correct the anomaly identified in the private members' bill and would introduce an important amendment.³⁶ Bill C-57went rapidly through all three stages in the House of Commons in less than a week in February 1992, made possible by all-party support and cooperation. The effect of the legislation was to lift the time limit on late applications for disability benefits, protecting people from non-eligibility solely on the basis of having filed a late application.

The Mulroney government's own major legislative measure on reforming the CPP was Bill C-39, which was tabled and approved in rapid fashion in November 1991. The two main amendments were:

• a revised 25 year schedule of contribution rates, and;
• a $35 increase in the monthly flat-rate benefits for children of deceased CPP contributors.

As was set out in the 1987 reforms, the 25 year schedule of CPP contribution rates was to be reviewed every five years by the federal and provincial Finance Ministers. In 1991 the first such review was done and Bill C-39 revised the schedule with contribution rates increasing moderately faster than previously scheduled.

Policy development on the children's benefit increase began with a federal-provincial working group established in 1986 to explore new approaches to survivor benefits. The next year, the federal government released a consultation paper, Survivor Benefits Under the Canada Pension Plan (Canada, 1987), which was tabled in the House of Commons and then referred to a parliamentary committee. After holding hearings and inviting submissions, the committee released its report in April 1988 which, in turn, informed further federal-provincial discussions over the next few years. Early in 1991, the federal and provincial governments reached agreement on CPP financing and the children's benefit, forming the core of Bill C-39. Effective January 1992, the $35 lift in the children's benefit represented a 30 per cent increase and was estimated to assist some 170,000 children of deceased or disabled CPP contributors.

Bill C-39 also contained the following amendments relevant to CPP disability programming:

• a CPP disabled contributor's child benefit would now be able to be converted, without need for application, to a CPP orphan's benefit;
• CPP children's benefits will be provided to a child who comes under the care and custody of a CPP contributor after the contributor becomes disabled; ³⁷
• allow the sharing of information among the CPP, Old Age Security and Family Allowance programs as well as in limited conditions with provincial administrations;
• allow the reimbursement of CPP disability benefits to the administration of a long-term disability plan under approved conditions; ³⁸
• change the timing for a Ministerial review on disability benefit claims, the first level appeal period, from 12 months to a three month turn around time;
• grant late applicants with an incapacity the right to apply on the basis they were incapable of applying for the disability within the normal 15 month time limit, thus protecting the benefit eligibility of these CPP contributors.

When tabling this legislation, the Parliamentary Secretary to the Minister of National Health and Welfare told the House of Commons that, "These minor amendments are an insignificant cost. At the same time, they would improve administration, make limited improvements to eligibility rules and clarify certain sections of the legislation" (Sparrow, 1991: 4887). The impact of these amendments in Bill C-57 turned out to be something more than minor. These changes resulted in an influx of applications and reapplications, more refusals and more appeals, driven in part by the "uploading" of potential disability clients from provincial social service departments.³⁹

A Restructured Appeals System

This period also saw a restructuring of the appeals system for the CPP, which had not been substantially altered since the beginning of the Plan. Calls by Members of Parliament for making changes to the CPP appeal procedures are apparent in House of Commons debates from the early 1970s onwards, including various private members' bills. The general thrust of these proposals was to assist claimants in their appeals and to limit or remove the minister's prerogative to appeal a decision or recommendation made by a review committee under the CPP.⁴⁰

Amendments to the CPP appeals system were passed in 1986 as part of Bill C-116, An Act to amend the Canada Pension Plan and the Federal Court Act, but did not take effect until 1990-91. At that time, the Office of the Commissioner of Review Tribunals was established along with a new system of appointing and managing Review Tribunals. The previous system of review committees and the new Review Trib unals system are compared and contrasted in Table 9. Basic features of the appeals system such as role, powers, and size of the review bodies continued under the restructuring. Fundamental reforms involved the creation of the Office of the Commissioner of Review Tribunals (OCRT), a body relatively autonomous from the Minister and the Department of National Health and Welfare, responsible for overseeing and supporting a new national network of panel of members.⁴¹ The OCRT received an expanded mandate as of January 1997 when appeals under the Old Age Security Act were entrusted to it.

Table 9
Restructuring the Second Level of Appeals for CPP Decisions

	Review Committees	Review Tribunals
History	1967 to 1991	Since 1991-92
Jurisdiction	Make determinations on eligibility for persons claiming benefits under the Canada Pension Plan	Make determinations on eligibility for persons claiming benefits under the Canada Pension Plan and, as of 1997, the Old Age Security Act
Role	To hear an appeal from the decision of the Minister on reconsideration	To hear an appeal from the decision of the Minister on reconsideration, de novo
Powers	Confirm or vary a decision of the Minister	Confirm or vary a decision of the Minister
Number of members	Three	Three
Method of appointing members	Minister appoints one Appellant appoints one These two select a third who serves as chair	Members are selected from a national panel of up to 400 appointed by the Governor-in-Council
Membership of bodies	Composition of specific Committees determined in accordance with the legislation Ad hoc: Panel members changed with each appeal Unpaid lay persons	Composition of specific Panels determined by the Commissioner in accordance with the legislation Permanent: Panel members appointed for 2 to 5 years Professional and lay persons to be paid
Administration	Department of National Health and Welfare	Office of the Commissioner of Review Tribunals

Both the original appeal system and the new one rest on the principles of natural justice and procedural fairness that parties have a right to appeal an initial decision; that there be a hearing for affected parties to be heard; that there be notice of such hearings; that the rules of procedure be published and known; and that reasons be given for decisions. With the restructuring of the appeal system, however, an important dimension of natural justice was added or more fully realized, that is, the right to appeal to an independent body. Bill C-116 also allowed the chair of the Pension Appeals Board (PAB) greater flexibility in determining the composition of Boards in individual cases, and allowed for appeals of PAB decisions to the Federal Court of Canada.

A key difference between the two systems at this second level of appeal is that, with the formation of the Review Tribunals and the OCRT, applicants have the opportunity to appeal Ministerial decisions to an independent and impartial body for adjudication, agencies quite separate from the government officials and organization being appealed against. This placed the CPP in fuller compliance with procedural requirements of administrative justice.

Beyond the natural justice concerns, three other issues were at play.⁴² First, it was felt that staff at the then National Health and Welfare were too involved in the process and as a result there was insufficient independence from the initial decision and the reconsideration. Second, from the department's viewpoint, it was often the case that the appointee for the appellant acted as an advocate rather than in an adjudicative role, and could thus strongly bias the outcome. Because their agreement was necessary on the nomination of the chair of the review committee. Third, there was no requirement for legal expertise on the Review Committees, so many legal errors were made. As the director general of income security policy in National Health and Welfare explained the change from review committees to review tribunals:

a very substantial proportion of the appeals that go to the review committee are subsequently turned down. We find that although the informal type of ... [committee] that we currently have has definite advantages ... [and] are composed of well-intentioned people, they do not know very much about how the act works. What we find happen is that eventually a lot of those people [making appeals] go up the line only to find out that they are being turned down. They may have won at the review committee levels, but that is subsequently reversed. We find that perhaps there should be a body of people on which we could draw, who have some experience in the process in reviewing cases, and perhaps this would reduce the number of reversals (Fortier, 1986: 5:34).

Apparently, the Minister was appealing close to half of the reconsideration decisions because of these concerns. Making the appeals system more professional, expert and efficient in making decisions, therefore, were aims of federal officials (National Health and Welfare, 1990: 3-15).

When the legislation was under consideration, these aims raised unease among labour groups and opposition MPs. The Canadian Labour Congress expressed three concerns about the proposed changes to the appeals system: first, labour leaders were not aware of any major criticisms of the then existing review committee system by CPP contributors; second, there was no prior public discussion of the changes; and, third, adding professionals to the tribunals may gain expertise but at the expense of informality and the perceived accessibility of the second level of appeals (Martin, 1986: 5:22). Opposition parliamentarians as well raised fears that the new system might become less flexible in interpreting who is eligible for disability benefits and no longer give the benefit of the doubt in a CPP application. Liberal MP Sheila Copps said: "I would hate to see the CPP system go the route which has plagued provincial compensation plans for years. They look at only the physiological aspect of the effect of any disease or illness. They do not look at the totality. That has been a hallmark which has served the Canada Pension Plan well" (Copps, 1986: 14885). Other MPs made similar points during the debate, prompting the Minister to remark at third reading of Bill C-116, "This is one are of the Canada Pension Plan which has a discretionary aspect, relative to medical advice. We must be sensitive to some of the points made in terms of discerning who is eligible for the disability pension" (Epp, 1986: 14879).

Outcomes and Implications

The liberalization of disability benefits, contributory requirements and time limits on claims introduced through the legislative reforms of 1987 and 1992 had a number of outcomes, some anticipated and others unintended. For instance, as expected, the protection of applicants from non-eligibility solely on the basis of having filed a late application resulted in benefits for about 3,000 applications.⁴³ Overall, CPP disability caseloads grew through this period and at a faster rate than in the 1970-86 period. The average monthly number of disability beneficiaries went from around 200,000 in 1987 to about 325,000 by 1993. Following on the Leduc decision, National Health and Welfare widened their interpretation of disability, which led to a general increase in applications across the country. The declining economy of the early 1990s surely influenced how panel members at local levels interpreted the rules for disability benefits, taking into account the real options for employment. This would have been another contributing factor to the rising caseloads. After averaging about 12 per cent of total CPP expenditures in the previous 10 years, adult disability benefits averaged nearly 16 per cent in this period, while children's benefits stayed at under two per cent of total payouts.

In 1985, the maximum monthly disability pension had been $414.13 and in 1987, with the increase by the Mulroney government, the flat-rate portion was substantially increased, from $91.06 in 1986 to $242.95 a month in 1987. By 1988, the maximum monthly benefit was $660.94 and by 1993 it had grown to $812.85 (Burbidge, 1996: 104). Total expenditures on CPP disability benefits, between 1987 and 1993, jumped from $1.1 billion to approximately $2.5 billion. The liberalization of CPP disability benefits and eligibility rules meant that the CPP and the QPP now differed on this area more than before, with the gap closed only after the QPP instituted similar reforms in 1993. Consequently, through the 1987-93 period, the CPP experienced striking increases in disability expenditures and caseloads that the QPP did not (Torjman, 2002).

An unintended outcome of the large increase to the disability benefit was the shifting of costs upward from provinces and private insurance to this national program. Federal officials came to believe that, "the [CPP disability benefit] increase in some cases was partly offset by the private insurance sector or by provincial or municipal social assistance programs" (National Health and Welfare, 1989: 6-15). This wave of "uploading" costs to the CPP was most likely, in large part, triggered by the significant increases in the flat-rate portion of the disability benefit in 1988. Through the economic recession and rising welfare caseloads of the early 1990s, provincial governments became more active in searching for income support alternatives to social assistance or workers' compensation, including CPP disability payments. In part, there was synergy here as a result of cost concerns among all governments. Around this time, for example, Ontario's auditor reported that the province was not taking steps to ensure that provincial disability welfare recipients were referred to CPP. This led to a flood of applicants in the early 1990s. Struggling with their own fiscal restraint challenges, some provinces routinely advised new social assistance and workers' compensation applicants to first apply to the CPP disability program. Private insurers and insurance companies, likewise, came to more systematically review their beneficiaries to see who might be eligible for the CPP (Wills, 1996: 74). Insurance industry firms agreed to pass along the ad hoc increases to existing beneficiaries in 1987, but to offset the CPP benefit in full (as always) for future beneficiaries.⁴⁴

The 1991 restructuring of the CPP appeals system sought to achieve greater detachment in the proceedings for the two main parties, the appellant and the Minister, along with better continuity in the membership of the Review Tribunals. The expected results were impartiality and equality in the treatment of the parties, and more informed and consistent decision-making by Tribunal members. As before, disability pension cases continued to comprise about 95 per cent of the appeals through this period. With the Review Tribunal system established, it was expected that about 1,800 appeals would be received each year. Experience through the rest of the decade would prove otherwise.

Adequacy of benefits was an obvious consideration of governments with the 1987 and 1992 reforms to the CPP benefits, carrying significant and lasting cost implications. As a result, "CPP disability benefits have gained attention for two reasons that were not foreseen in the mid 1980s. First, there has been some concern that recent increases in CPP disability claims might reflect the use of CPP disability as a "de facto" early retirement program. Second, changes in assumed rates of disability have raised the long term estimates of the contribution rates required by the CPP" (Baldwin, 1996: 72). The 1987 reforms also reduced the CPP reserve from three years to two years of equivalent benefit payments, an issue which would surface in the next period of CPP policy debate.

Increasing the flat-rate portion of benefits involved politically redefining the acceptable minimum for income protection provided by the disability program. As a uniform level of payment, the flat-rate portion is a benefit based on assumed average need for income, available to all who qualify regardless of their earnings level. By weighting payments in favour of lower-paid workers, the 1987 and 1992 benefit reforms modified the relationship between contributions paid and benefits received. So did the increase to the children's benefit of disabled contributors, since Canadian workers with children do not pay higher contributions for CPP coverage than workers without family responsibilities. That the disability program was seen to have departed too much from "true insurance principles" of private sector pension plans became part of the critique of CPP, especially from politically conservative quarters, through the rest of the 1990s (Robson, 1996).⁴⁵

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25 Over several budgets between 1986 to 1991, the Mulroney government de-indexed and then froze the formula for determining transfer payments to the provinces for post-secondary education and health care. In 1990, they also introduced a ceiling on the federal share of increased transfers under CAP, for social assistance and social services, to Alberta, Ontario and British Columbia, the three "have-provinces" not in receipt of equalization payments. Also introduced in the 1990 federal budget was an expenditure control plan which was broadened and extended in the 1991, 1992 and 1993 Conservative budgets. Exempt from this control plan were elderly benefits (OAS, GIS and Spouses' Allowances), veterans income programs, the CPP, and other special programs for persons with disabilities. However, staring in 1990-91, and phased-in over three years, the OAS was subject to a claw-back, through the income tax system, of benefits from higher income seniors. The CPP was exe mpt from the Conservatives' spending control plan because CPP benefit outlays are not part of the federal government's expenditures and thus do not directly affect the size of the federal budget and any resulting surplus or deficit.

26 Bill C-116 received first and second reading on June 11, 1986 and then referred to committee for study and comments. On June 26, 1986, the Bill returned to the business of the House of Commons. Three motions to amend the Bill were quickly debated and agree to, and the Bill was then given third reading and approval.

27 When the equality section of the Canadian Charter of Rights and Freedoms came into effect in April 1985, this provision was cited by federal Department of Justice officials as being problematic. Interview.

28 As noted earlier, a 1978 legislative reform, which took effect in 1983 after Ontario drop its opposition to the change, enabled CPP credits to be divided between ex-spouses after a divorce or legal annulment. The 1987 reforms expanded this credit splitting to situations involving a separation of partners.

29 The 1987 change in the CPP disability eligibility rule to making contributions in two of the last three years put the CPP out in front of the QPP, a difference between the two plans that was not closed until1993 when the Quebec plan liberalized eligibility requirements for disability pensions (Pension News, 1994: 7).

30 An example of a change with an indirect impact on CPP disability was the 1991 legislative amendment for assisting people denied a credit split as a result of provisions in a spousal agreement entered into before June 4, 1986. The amendment provides that applicants who were divorced or whose marriage was annulled on or after January 1, 1987 will be credited with the same amount of credits which they would have otherwise received.

31 See "Edward Leduc v. Minister of National Health and Welfare," in CCH Canadian Employment Benefits and Pension Guide Reports(1988: 6021-22).

32 As well, the 1984 reform to the QPP altered the eligibility criteria for persons between ages 60 and 64 who for medical reasons could not perform their regular employment. The test of participation in the work force was changed from contributions in five of the last 10 years to not less than two years over their contributory period (National Health and Welfare, 1985: 12).

33 Interviews.

34 The year before, in June 1990, another private member's bill to amend the CPP, Bill C-260, was in fact passed. It too was done by a government backbencher, Bill Kempling (Burlington). Kempling worked in close consultation with, and received assistance from the Minister of National Health and Welfare and his staff as well as several officials in the department in drafting the bill. The purpose of Bill C-260 was to correct an error in the drafting of Bill C-116, which took effect in 1987. The private bill was to ensure that the division of pension credits would not be affected by court orders or separation agreements over the period 1978 to 1986. Bill C-260 was endorsed by the National Council of Welfare, among other social policy groups, and supported by the PC and NDP in the House of Commons.

35 Another Conservative backbench MP, Geoff Wilson (Swift Current-Maple Creek-Assiniboia) frequently raised the matter of amending the CPP's test of recency provision so that workers with disabilities who otherwise had legitimate applications for the disability pension were being rejected.

36 In the 1970s, another private member's bill dealing with the CPP, specifically legal assistance for applicants under the appeals system, was incorporated in government legislation, and the backbench MP therefore withdrew his bill. See Coates (1976: 10452).

37 Until 1992, only a natural child born after the month of a disability and a child legally adopted after that month could receive the CPP children's benefit.

38 The intention of this amendment was to ensure that long-term disability plans operated by insurance companies or other government agencies "will be willing to guarantee payment of the full amount of the disability entitlement between the onset of a private benefit and the award of the CPP disability benefit" (Sparrow, 1991: 4887).

39 Interviews. The Parliamentary Secretary probably used the term minor amendments in this context to signify that these changes were not "amendments of substance" as defined under the CPP legislation, and therefore, did not require the approval of at least seven provinces that represented at least two-thirds of the population of Canada. See note 6 for more details.

40 In the 1970s, a Progressive Conservative MP, Robert Coates, tried on a number of occasions to refine the appeal procedures under the CPP and to remove the minister's right to appeal decisions of review committees. For example, see the Commons Debates, January 29, 1976, pp. 10452-58.

41 Interestingly, Bill C-116 makes reference to the position of the Commissioner and the Review Tribunals but is silent on the formation of the Office. Nor was the Office mentioned by the Minister or departmental officials in committee hearings or statements in the House of Commons. The OCRT itself then is not a statutory body, a feature one might expect for an administrative tribunal or a quasi-judicial body of government.

42 This discussion draws from communications with Simone Godbout and government officials, who I wish to thank for these comments.

43 An example outside of the disability program pertains to the ability to draw CPP retirement benefits between ages 60 to 70, actuarially adjusted, following the 1987 reforms. This wider choice of when to retire for the purposes of the CPP was an immediate hit with many Canadians. Almost 175,000 flexible retirement benefits were taken up by the Spring of 1988. Still another example was that about 31,000 formerly ineligible recipients of survivor benefits were reinstated in the first few years following the 1987 reforms (National Health and Welfare, 1989: 6-8).

44 Interview.

45 Neither increasing the flat-rate component nor increasing the children's benefit is departures per se from the insurance principle. All CPP contributors pay for disability benefits, some will collect while others will not. Some will experience a severe and prolonged disability while they have young children. While other contributors will not. All contributors, however, are protected against this commonplace risk through a collective pooling of contributions; an essential feature of social insurance programs around the world.