In the 1930s, the economy collapsed and unemployment soared. The Depression showed how quickly poverty could afflict the entire country and this made a lasting impression on Canadians.
The Old Age Pension of 1927 provided the elderly poor with some relief. The program gradually included more people, such as blind persons, but eligibility remained limited and seniors had to pass a degrading "means test".
The pension became increasingly unpopular when provincial legislation was used to back up the means test:
In 1939, Canada's entry into the Second World War put people back to work and breathed new life into the economy. These good economic times, however, were not as favourable for seniors, whose pensions were devalued because of inflation. The contrast between the prosperous and the aged poor and the memory of the Depression inspired many people to propose a new national system of social security. Political parties, unions, seniors and social interest groups urged the elimination of the means test and the establishment of policies to protect all Canadians from extreme poverty.
Unemployment Insurance and Family Allowances were introduced in the 1940s to assist workers and families. In 1951, the Constitution was amended to allow the federal government to pass theOld Age Security Act. The Act, which took effect in January 1952, established a federally funded pension for all men and women 70 years of age and over.
The test involved provincial pension authorities calculating all aspects of a senior's income (e.g., pensions, income from boarding house operations, etc.) as well as the value of "perks" they received, such as free room and board. The means test, however, did not take into account how much money a person needed to pay for food, shelter, clothing, fuel, utilities or household supplies.
If a senior's annual income, including pensions, was greater than $365, he or she was not eligible for the Old Age Pension. The income each received determined the amount of assistance to which he or she was entitled.
The problem, however, was there was no specific way to calculate a senior's income. Provincial pension authorities had extensive discretion, so the calculations were inconsistent and varied greatly from province to province. For example, some calculations were based on the assumption of income from property when, in fact, such income did not exist. The value of free room and board varied depending on the province. Because a senior's income depended on where he or she lived, some seniors were denied assistance while others received widely varying amounts.