Bill C-445 (Historical)

An Act to amend the Income Tax Act (tax credit for loss of retirement income)

This enactment amends the Income Tax Act to provide a refundable tax credit to a taxpayer in respect of whom an employer and the employees failed to make the contributions required to be made to a registered pension plan.

[Diane Blanchard, Secretary, Regroupement des retraité(es) des Aciers Atlas]

Mr. Chairman, members of the Standing Committee on Finance, ladies and gentlemen, I would like to begin by conveying my greetings and once again expressing our appreciation for your interest in our cause.

On March 25, as part of your study on the retirement income security of Canadians, we had an opportunity to make you aware of our difficult living conditions. In your own words, you, the members of the Standing Committee on Finance, said that you appreciated the chance to put a human face to the questions and gather information, with a view to passing legislation that might put a stop to the widespread hemorrhaging affecting the pension funds of ordinary Canadians. For us, these discussions were an opportunity to gauge the misunderstandings and incomprehension.

Today, June 1, 2010, marks our 60th pension cut, representing a personal loss of tens of thousands of dollars, and 60 months of having to juggle with a budget that has been cut by between 30% and 58%, in order to meet our financial obligations. It is five years since we began the process of alerting governments to the gaps in the administration of private sector pension funds in cases of bankruptcy, as well as the devastating consequences for retirees and all sectors of the economy.

At the time, this was a relatively new phenomenon. Before us, only retirees from Singer and the Jeffrey Mine in Asbestos, Quebec, had suffered losses, as their pension funds had an actuarial deficit at the time their employer's company went under. So, we began working on a number of different fronts. Our analysis confirmed that only a political solution could solve our problem.

So, we went knocking on the door of our federal member of Parliament, Louis Plamondon, of the Bloc Québécois. As luck would have it, Asbestos was represented by André Bellavance, an activist from the same political party. It was therefore as a result of a joint effort that Bill C-445 was introduced in May of 2007, then introduced again in February of 2009, as C-290, An Act to amend the Income Tax Act (tax credit for loss of retirement income).

During the two-hour debate in May of 2008, at second reading, the Liberal Party and the NDP stated that they were in favour of more in-depth study of the bill, thereby giving it a chance of survival—an expression of empathy for which we are deeply grateful. The Conservative Party, however, felt it was poorly drafted and, because it might veer off in many different directions, likely to result in astronomical costs for the Treasury.

We are neither politicians nor tax experts able to ascertain the implications of its wording, no more than we have the expertise to examine it. We recognize that it is normal to want to engage in verbal jousting and flex one's muscles when one has a grip on power, but there comes a time when the cries and tears of ordinary people must be heard and a solution found to ease their suffering.

We derived no pleasure from having to drive hundreds of kilometres on this awful day. We see our appearance before you as a cruel humiliation. Having to enter the arena once again, at the end of your life, to redress a wrong is an aberration. And yet, ours was a life of work, sacrifice, contribution to this country's economic progress and foresight, because we contributed to a pension plan, with dignity and pride. Being reduced now to the level of welfare because of our income, but with no opportunity to avail ourselves of its benefits in the way of exemptions, is destroying us.

At the previous meeting, Mr. Menzies, in expressing your consternation, you stated that what Mr. St-Michel had said was extremely troubling, and that what had happened to him was terribly unfair. You added that this kind of thing should not happen. And yet, that is what happened, and we know all the reasons behind the current state of affairs: lax management, elastic legislation that favours employers, and tax benefits that allow an employer to escape his obligations, with no concrete protections for workers who bear the brunt of all the inherent risks when a plan is discontinued. Workers can easily monitor the share of wages and social benefits. However, that share of the pension plan is managed at a higher level, away from the watchful eye and control of others.

With respect to provincial and federal jurisdiction, I am sure you know that we have made the same appeal to Jean Charest's team. Five years after our indirect appeal, the Harper government now feels the need to react to this hemorrhaging. What will become of the groups that were sacrificed while the storm raged? Our two ambassadors from the Bloc Québécois are proposing to hand over Bill C-290 to the Conservative Party to amend it as it sees fit, in order to break the log jam and restore some of our dignity. Our demand, as representatives of the Regroupement des retraité(es) des Aciers Atlas, imposes no particular form of redress and can be summarized with this simple image: a blood transfusion is needed to get the patient back on his feet.

Moreover, there is a need to move quickly, because the time we have left is not unlimited. I would just remind you that our income—

[André Bellavance, Bloc, Richmond—Arthabaska, QC]

Thank you very much, Mr. Chairman.

I would also like to introduce the people to my left. They are two economists with the Research Department of the Bloc Québécois, Jean-David Beaulieu and Odile Rochon. So, if there are any questions about the numbers, we may want to call on them for assistance.

This is a bill we are all very familiar with, because I introduced it for the first time in 2007. At the time, it was Bill C-445. I would like to give you some background to explain how I came up with the idea of introducing this bill. I might add that it was developed in cooperation not only with a number of MPs, but also with people who have been affected—retirees who lost a lot of money in their pension plan.

You have already introduced my MP colleague, Louis Plamondon. He, my colleague representing Chambly—Borduas, Mr. Yves Lessard, who is here at this table, and myself all met with the people from the Jeffrey Mine and Atlas Stainless Steels a few years back. They asked us what could be done under the federal tax system to help them out, given the loss that they had suffered under their pension plans.

After some discussion and brainstorming, we concluded that a bill introducing a tax credit would be the best solution. In that regard, I take my hat off to Mr. Gaston Fréchette. He lives in my riding and is the chair of the Jeffrey Mine Retiree and Active Workers Sub-Committee. He is the one who proposed the idea of a tax credit that would soften the blow for retirees whose pension plan was cut following the closure or failure of their employer's company.

So, Bill C-445 was introduced for the first time in 2007. I have just given you a brief explanation of the discussions that led up to this solution. Because of the election in 2008, this bill died on the order paper.

Today, Mr. Chairman and colleagues, we come before you, at this stage in the process, to discuss Bill C-290 which, if I am not mistaken, was introduced again in February of 2009.

Following that, we also received a great deal of support. I believe that some witnesses will be coming here to add their voices to those of the pensioners from these two companies located in our respective ridings. A petition has also circulated. In our region, we have gathered more than 2,000 signatures in support of this request for a tax credit through Bill C-290. We also have the support of the Fédération de l'âge d'or du Québec, or FADOQ—at least, of its president— for this bill.

I would like now to briefly explain what happened at the Jeffrey Mine. A bankruptcy occurred in 2002. On average, people lost 40% of their pension. Approximately 1,200 workers were affected by this. In fact, under their pension plan, people lost some $55 million. Atlas Stainless Steels, located in Sorel, went bankrupt in 2003. Workers there lost between 28% and 58%—almost 60%—of their pension funds. Approximately 250 workers are affected. On average, they lost $6,000 each. As you see, there is quite a gap: some lost almost 30%, while others lost 58%.

There is one question we have been asked frequently. Are there currently other cases that could be eligible for this 22% tax credit proposed under Bill C-290? To our knowledge, there are none at the present time. Could other industries eventually fall under it and could other workers also be penalized? The answer is yes. Having said that, such cases will have to involve workers whose employer has gone bankrupt and shut down, as well as workers who have actually lost part of their pension funds.

The solution we are proposing is a 22% tax credit. It is the equivalent of the federal marginal tax rate that applies to the middle class. I will explain by way of an example. If someone was expecting to receive $20,000 under his pension fund and ended up with only $12,000, he would be looking at a loss of $8,000. So, it is based on that loss that the tax credit is determined. The tax credit would be $1,760, non taxable and transferable to a surviving spouse, but not retroactive.

I said earlier that the bill only applies to retirees who have been cheated through income losses under their pension plan following a closure or bankruptcy. This is not a virtual loss, as it would be for someone who loses his pension funds because of the economic crisis or because the stock market falls. He could not suddenly claim a tax credit because, in actual fact, he would not already have lost the money. The idea is not to make up for an actuarial deficit resulting from a stock market drop. That point must be absolutely clear.

I would like to provide a further clarification, Mr. Chairman. There are legislative amendments which, in our opinion, would mean that there would not be a lot of other companies or retirees who could avail themselves of this tax credit, even though one may think the door is always open. It is important to realize that Bill 30 is already in effect in Quebec. In Ontario, the Pension Benefits Guarantee Fund has been set up. In other provinces as well, there are laws in effect which prevent such unfairness from occurring, at least we hope so. That means that these kinds of situations will be very few in number. There is also the Bankruptcy and Insolvency Act which has been amended by the Parliament of Canada. The benefits must be paid into the pension plan before the court accepts the bankruptcy. Therefore, any contributions due by the employer are paid out of the company's assets. Before an employer can declare bankruptcy, those contributions must be made, which obviously makes an enormous difference. I believe that amendment came into effect last September 18.

I am not telling you anything you do not already know when I say that regulations will be introduced once the bill is in effect, in order to restrict the scope of some of these measures. But the initial idea was to help workers who have been cheated out of their pension—to help retirees. Thus far, I must say we have received the support of the Opposition parties at every reading. The Bloc Québécois obviously voted in favour. Only the Conservative Party has opposed this bill. Today will be an opportunity for you to ask us questions. We will be very pleased to answer them, Mr. Chairman.

Thank you very much.

Speaker's Ruling

[The Acting Speaker, NDP, Denise Savoie]

Before resuming debate on this bill, I am prepared to rule on the point of order raised on June 18, 2009 by the Parliamentary Secretary to the Leader of the Government in the House of Commons concerning the requirement for a royal recommendation for Bill C-290, An Act to amend the Income Tax Act (tax credit for loss of retirement income), standing in the name of the member for Richmond—Arthabaska.

I would like to thank the parliamentary secretary for having raised this matter, as well as the member for Richmond—Arthabaska for his contribution to the questions.

Members will recall that Bill C-290 was among those bills identified as causing some concern for the chair, as stated on June 2 at Debates, page 4074. In his remarks, the parliamentary secretary clearly identified Bill C-290 as proposing to reintroduce a refundable tax credit. He further commented that refundable credits are direct benefits paid to individuals regardless of whether the tax is owed or not, and are paid out of the consolidated revenue fund.

He went on to point out, citing a Speaker's ruling made on June 4, 2007, and a ruling made by the Speaker of the other place on May 11, 2006, that refundable tax credits have been ruled to require a royal recommendation.

In his comments on this issue, the hon. member for Richmond—Arthabaska, while acknowledging that the bill seeks to create a refundable tax credit, drew the attention of the House to an earlier Speaker’s ruling of October 16, 1995 in support of his contention that measures to alleviate taxation do not require a royal recommendation.

The chair notes that a question similar to that at issue here was raised with respect to Bill C-445, An Act to amend the Income Tax Act (tax credit for loss of retirement income), in the second session of the 39th Parliament.

That bill, which appears to be very similar to Bill C-290, was also introduced by the member for Richmond—Arthabaska, and was determined to require a royal recommendation in a ruling given on May 2, 2008.

The chair has reviewed carefully Bill C-290, particularly with respect to the manner in which it compares to the earlier Bill C-445, and as was noted in the May 2, 2008 ruling on Bill C-445,

Whether or not the tax credit is refundable or non-refundable is the key issue in determining the need for a royal recommendation.

Non refundable credits are deducted from a person’s tax payable rather than being calculated separately: they simply reduce the amount of tax payable by an individual.

Refundable credits, on the other hand, are not limited simply to the reduction of tax payable. They provide an entitlement to funds which is independent of the tax otherwise due. They are calculated separately and, where no further reduction of tax payable is possible, they give rise to a disbursement from the consolidated revenue fund. Any such disbursement, no matter how it may be characterized in the legislation which proposes it, represents spending for a new and distinct purpose and must therefore be accompanied by a royal recommendation.

In this regard, there does not appear to be any substantive difference between Bill C-290 and its predecessor, Bill C-445. Both involve refundable tax credits.

Accordingly, the Chair will decline to put the question on third reading of Bill C-290 in its present form unless a royal recommendation is received.

The debate, however, is on the motion for second reading, and this motion will be put to a vote at the conclusion of the second reading debate.

Income Tax Act

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

Madam Speaker, as the NDP critic for seniors and pensions, I am very pleased to participate in tonight's debate on Bill C-290.

Let me begin by thanking the Bloc member for Richmond—Arthabaska for bringing forward this bill.

For those who may have just turned on their televisions, I would like to add some commentary to help them understand what we are talking about.

Bill C-290 would grant a refundable tax credit equal to 22% of the reduction in pension benefits experienced by beneficiaries of registered pension plans, other than trusts, who suffer a loss of pension benefits when their pension plans are wound up in whole or in part. It applies to both a defined benefit plan and a defined contribution plan. Bill C-290 would also allow taxpayers to apply for a reassessment of taxation if they voluntarily request reassessment on or before 10 calendar days after the end of the taxation year.

Without the legalese, that essentially means that if the income of a retiree's pension drops from, say, $30,000 to $22,000, he or she would receive 22% of the $8,000 loss, which would be a non-taxable amount of $1,760.

This bill is particularly timely. It allows us to discuss pension protection and retirement security on the cusp of a demographic change that we will see very soon. In fact by 2014, one-quarter of Canada's population will be over the age of 65.

This bill is equally timely because of the NDP motion that was just put before us. Members will know that the motion passed on Tuesday of this week, which was an NDP opposition day. It was my motion in fact, which I am very pleased with. It called upon the Conservative government to expand and increase CPP, OAS and GIS, to establish a self-financing pension insurance program, to ensure that workers' pension funds go to the front of the line of creditors in the event of bankruptcy proceedings, and to end the practice of rewarding bonuses to CPP investment managers and recover the $7 million in bonuses paid out this year when they lost $24 billion.

Bill C-290 is very much in keeping with the spirit of my party's own work, and my work, and as such we will be supporting it.

To hear some Conservative MPs in this place tonight, one would think the debate over retirement security is mostly about containing costs. For more progressive voices, it represents an opportunity to re-examine the growing gap between the rich and the rest of Canadians and to make decisions that protect the public interest instead of the interests of the wealthy few.

At a time when more wealth is being created in this country than at any other time in our history, people in Canada are working longer and harder, not to get ahead, but just to keep up. In fact, average Canadians today are squeezing out 200 more hours of work each year than they did nine years ago.

Until recently, a few people at the top were enjoying the benefits of the current economy while everybody else was not. We have seen the windfall salaries and extraordinary bonuses of CEOs, but wages and purchasing power for everyone else are essentially stagnant or falling. The working people and retirees are falling farther and farther behind.

One of the reasons of course is tied to what is happening in our economy. In the manufacturing sector, our economy lost over 350,000 jobs between 2002 and 2007, and since October 2008, an additional 406,000 jobs were lost in Canadian forestry, industry and manufacturing.

This week, in fairness to the government, we did see an announcement of an infusion of $1 billion into the forestry industry. I do hope that money flows faster than the infrastructure dollars.

It is absolutely essential that the government sit down with leaders from both the labour movement and the business community to develop a plan to maintain and build both the manufacturing and resource sectors of our economy. Not only are those jobs crucial for sustaining families, but we know empirically that the highest level of pension coverage is associated with union memberships in those jobs.

About 80% of union members belong to workplace pension plans, compared to just under 30% of non-union members. With the overall percentage of people who belong to workplace pensions being in a continual decline, it is imperative that we continue to fight for unionized jobs and to maintain the struggle at the bargaining table for defined benefit plans. It is the only way to ensure predictable retirement incomes for workers.

What is happening now is not sustainable. I am from Hamilton. I have witnessed the economic insecurity faced by industrial workers in Hamilton. One can see the shock on their faces and the fear in their eyes. Every time a plant closes down, the pensions and benefits of workers are threatened. Anyone in the House who followed the CCAA proceedings at Stelco, which is now U.S. Steel, will know what I am talking about. Sadly, that is but one of many local examples where restructuring or plants closures have created pension uncertainty for workers.

It is time for the government to acknowledge that pensions are deferred wages. They are not bonuses paid to workers at the end of their working lives. They are part of an agreed-on compensation package for hours worked. That is why the NDP has been pushing the government to finally enact certain clauses in the Wage Earner Protection Program Act that is already the law of the land.

The purpose of that act was to ensure that workers' pension funds go to the front of the line of creditors in the event of bankruptcy proceedings. The Wage Earner Protection Program Act sets out provisions to ensure that unpaid wages in the event of a bankruptcy are paid to workers and that super creditor status is set up for unpaid pension contributions.

Elements of the amendments to the above pieces of legislation were enacted by the Governor in Council in the summer of 2008. However, not all aspects of the changes were implemented. That left some glaring loopholes that our party's leader made it his mission to close.

On May 13, the member for Toronto—Danforth said:

Mr. Speaker, the truth is that the government will not act even when it is the law.

In December 2007, Parliament took action to protect Canadian pensions by adopting Bill C-12 to amend bankruptcy laws. Section 39(2) prioritizes unpaid pension contributions in the case of bankruptcy. Sections 44 and 131 ensures that the court cannot unilaterally overturn a collective agreement. Section 126 prohibits a court from sanctioning restructuring plans unless all unpaid wage claims and pension obligations have been met. It is the law but the government has refused to put it into force. Why?

At the root of that bill, of course, is the vision that workers must receive the pensions they have earned. Bill C-290 shares that vision as well. I would suggest that, for that reason alone, this bill deserves the support of all members of the House.

Yes, there are some areas that merit further examination. However, the Bloc members who have participated in the debate thus far have acknowledged that and have expressed their willingness to explore these issues further at the committee stage. For example, public data detailing the number of pension plan beneficiaries who would be eligible to claim the tax credit proposed in Bill C-290 is not available.

We do know that in 2003 there were approximately 3 million members of private sector registered plans, of which 73% were members of defined benefit plans. However, at present, no one collects the data on this, so it is really hard to say just what the amount of cost would be. The government does say $10 billion in costs. That is certainly conjecture and I think this bill should be moved to the committee for review.

I call upon my Conservative and Liberal colleagues now to walk the talk. They supported our opposition day motion, which really meant, in its commitment to principles, they should continue in that frame of thought and support Bill C-290. They voted for my motion; they should now vote for Bill C-290. The principles are the same.

I would remind my colleagues that the House also supported the most recent incarnation of Bill C-445 in the 39th Parliament.

[John McCallum, Liberal, Markham—Unionville, ON]

Madam Speaker, I am pleased to debate Bill C-290, which is an act to amend the Income Tax Act to compensate for the loss of retirement income. The bill is a reintroduction of Bill C-445, which was on its way to finance committee last year before the Prime Minister broke his own fixed election date law and called the 40th general election.

At its heart, Bill C-290 has a very laudable goal, to help protect Canadians' pensions when a business fails and it can no longer meet its pension obligation in full. It would provide a 22% tax credit on the portion of a pension that was promised but not delivered.

Having a pension suddenly reduced or cancelled entirely can be devastating to seniors. A great many of them do not have the option of going back to work to supplement their lost pension income. Instead, they are forced to lower their standard of living, eat less food, keep the thermostat a bit lower in the winter. Nothing about it is pleasant.

Despite the emotional, sociological, and economic toll that loss of retirement income can take, the Conservatives deliberately put thousands of seniors in that exact position two and a half years ago when they hiked taxes on income trusts by 31.5%. In one fell swoop the Conservatives killed an investment vehicle that thousands of seniors relied on for regular monthly distributions to live out their retirement in dignity.

To make matters worse, 10 months before destroying $25 billion of seniors' hard-earned savings, the Prime Minister promised up and down that a Conservative government would never, ever tax income trusts. As a result, seniors flocked to income trusts, putting their life savings in them, only to watch the Prime Minister break his promise and destroy their hopes and dreams.

The worry and the dread of the seniors who suffered at the hands of the Prime Minister is very similar to the worry that seniors who lose their defined benefit pension plan experience. Bill C-290 seeks to alleviate some of that worry. As a result, I am happy to say that my position has not changed since the last Parliament. I do have some concerns about the bill, but it certainly deserves to be sent to the finance committee where MPs can hear from experts and hopefully improve the bill.

Once it arrives in committee, I would specifically like to hear from finance officials about how much the bill would cost the treasury. This is particularly important now because we currently have a Conservative government.

As every Canadian knows, a Conservative government means that Canada is currently running a deficit. The two go hand in hand and they have become synonymous in the minds of voters.

[André Bellavance, Bloc, Richmond—Arthabaska, QC]

moved that Bill C-290, An Act to amend the Income Tax Act (tax credit for loss of retirement income), be read the second time and referred to committee.

Mr. Speaker, it is a great honour to participate in this debate once again. I say once again because, as I will have the opportunity to explain, this is the second time I am tabling this bill. Of course, it has now changed its number. Previously, it was Bill C-445. It has become Bill C-290.

So I am truly very happy to take part in this debate this evening. I also thank my colleague for having seconded this bill. Once again we are returning to the task and not letting up. I am sure that the people watching us at home right now who are affected by this bill are also very happy that we have come back to it before the summer break to have the first hour of debate on the second reading of this bill.

On May 17, 2007, as I was saying, I took the floor in this House to table Bill C-445. One year later, that bill had passed second reading and was about to be debated in committee. It was going to be submitted to the Standing Committee on Finance when elections inopportunely, as I would put it, interrupted the entire process. The people from our region with whom we worked on this bill were aware of the parliamentary process, whereby the bill and the entire initiative could be interrupted by the calling of an election. This delayed all of our work. We always said it was like building a house: you have to go about it brick by brick, and at some point the job might have to be interrupted. However we began again immediately after the election, and two years later, here I am again with Bill C-290, which reintroduces the full text of Bill C-445. You will recall that that bill was intended to grant a refundable tax credit to taxpayers who are the victims of a failure of an employer or certain employees of that employer to make contributions to a registered pension plan.

Bill C-290 is a bill to amend the Income Tax Act (tax credit for loss of retirement income). That is now its title. I must explain that there has been a minor change to the bill, and that was to its title only. Initially, Bill C-445 referred to a tax benefit, whereas now we refer to a tax credit. The legislative drafters said that it was more correct to speak of a tax credit than a tax benefit. For the rest, this is precisely the same bill, which I tabled again last February after promising to do so. In fact I see this as a commitment. One must always pay attention to one’s election promises. Our people knew very well, at the time of the last election campaign, that I was making this commitment in order to keep it. I had to be re-elected, and fortunately I was. I have kept my promise with the tabling of the bill which now bears the number C-290.

This bill proposes a refundable tax credit, as I said earlier, for loss of retirement income equivalent to 22% of lost revenues. The credit would have no impact on the retiree's income, whether or not he pays taxes. In addition, the credit could always be transferred to a surviving spouse, and it would apply to both a determined contribution plan and to a determined benefit plan. The usual example given is that of a retiree whose income would drop from $30,000 to $22,000. That is a loss of $8,000. If we take 22% of this $8,000 loss, as provided in the bill, a non taxable amount of $1,760 would go to this person whose pension was reduced because his company went bankrupt or closed.

This was what happened with the 1,200 retirees of the Jeffrey mine in Asbestos, in my riding. That is why I spoke of my electoral commitment to these people, naturally. It happened as well to the 300 people working at Atlas Steel in Sorel, in the riding of the seconder of this bill, my colleague from Bas-Richelieu—Nicolet—Bécancour. He too told his fellow citizens that the Bloc was going on the attack. Even if the bill unfortunately died on the order paper when the last election was called, we were not going to let go.

Another thing happened as well. We know how it works, but I want to explain it to our viewers. There is the famous draw, in the case of private members' bills, which allows each member the opportunity to introduce a bill at one time or another. My colleague from Bas-Richelieu—Nicolet—Bécancour and I decided that whichever of us was chosen first would introduce the bill again. I do not want to monopolize this bill. We are working as a team.

It did not matter which colleague introduced it, what counted was to move it forward as quickly as possible. I am not very lucky in the lottery or in draws, but this time I was lucky and I was drawn first. So, I reintroduced the bill, and now we have a chance to debate it for the first hour at second reading before the summer recess. I am therefore very happy. My colleague from Bas-Richelieu—Nicolet—Bécancour was drawn right after me. It would not have made much difference. But I won and so I stand before you. You will still have an opportunity to hear my colleague in a few minutes.

The retirees from the Jeffrey mine and Atlas Steel worked hard and honestly all their life. They contributed to a pension fund that was drastically cut through no fault of their own. This is important to say. We have the option of helping them, and this is what we are trying to do with Bill C-290, by giving them part of their loss. Or we could leave them to their fate. Unfortunately, that is what the people in the Conservative government did with Bill C-445, while the Liberals and the NDP supported the Bloc to have it sent to committee.

I want to remind this House that the Conservatives told us that this bill would cost a fortune. Despite my requests, I never did find out how they came up with figures as outrageous as $10 billion. I can talk about this later if I have time, but I asked the people at the Library of Parliament to do some research. I was told that it would take an absolutely unbelievable catastrophe for the figures to reach such incredible levels, even though the economic situation today is not what it was when I first introduced this bill. Other retirees could certainly benefit from this tax credit, but if more people who have been penalized can benefit, then that is good.

I am certain that my Liberal and NDP colleagues will continue to support us. At least, I hope so. Perhaps there will be speeches later to confirm this. Perhaps the Conservatives have changed their minds since this bill was first introduced in 2007 and will recognize that these retirees deserve the little boost that the measure in Bill C-290 will give them.

I want to give some background on this bill to show how the idea came about. The bill was the result of extraordinary cooperation between the subcommittee of retirees from the Jeffrey mine in Asbestos and from Atlas Steel and my colleagues from Bas-Richelieu—Nicolet—Bécancour and Chambly—Borduas. My colleague from Chambly—Borduas attended the initial meetings here in Ottawa. The retirees came to meet with us, and we asked our human resources and social development critic to come with us to see whether we could find any common ground. Our former labour critic was also present. We wanted to try to see what we could do to help these people. It is all well and good to say that we support them, but can we do something tangible to help them?

When they explained their problem to us we did not have an immediate solution. It would not have been fair to these people, who have certain expectations of their elected members when they tell them their problems, to present a bill and not have a tangible solution. Thus, we took our time and had discussions with them and, finally, agreed that it would be possible to present a bill. My colleague from Chambly—Borduas was very involved from the beginning and quite active in the discussions that led to the idea of a bill for a refundable tax credit for people who lose retirement income when the company closes its doors or goes bankrupt.

Creating a tax credit was the idea of Gaston Fréchette, the chair of the Jeffrey Mine retirees subcommittee in Asbestos, who lives in my riding. We had been talking about this for quite some time. Not only is he very involved in this matter but he is also helping retirees with something else. Mr. Fréchette is working very hard to help people with a legal battle. He is also very involved in his community.

I would have to say that it was rewarding. At the same time, we realized that we might have something that one day could be put on the table as a real solution. As I said earlier, Rome was not built in a day and we had to start somewhere. This is what we finally came up with. The parliamentary process is somewhat difficult and it can also be lengthy. That is obvious from the fact that two elections have taken place since we started this.

As for me, this is my third term. It was during my second that I introduced this bill for the first time, and here we go again. There is no doubt that there will be another vote this fall to see whether there is agreement to refer this bill to committee. That was the solution we had, and there was no other solution anyway for us to get this file through the federal government.

As I said, Mr. Fréchette worked very hard on the first introduction of this bill and we will certainly hear from him again just before we vote on it in the fall, when we will of course be seeking the support of my 307 colleagues in this House of Commons for our bill.

Back when we introduced Bill C-445, Mr. Fréchette sent a letter to each member, as well as taking time to personally phone every Quebec member, regardless of party, soliciting their support for the bill. He also circulated a petition, which originated in my riding, calling for public support for our bill. That was a great success, with more than 2,000 signatures gathered in a relatively short period of time from people willing to sign in favour of Bill C-445.

As I said, exactly the same bill has now become Bill C-290. In my opinion, if people signed the petition on Bill C-445, it is abundantly clear that they still support the demands made in the petition which circulated immediately after the first bill was introduced.

So this has been a team effort involving people from both Sorel-Tracy and Asbestos. There was great solidarity and they focused their efforts on enabling us to advance this idea, introduce it here in the House of Commons, get it through an initial vote and to achieve the right to have it go to committee. I know that the pensioners are prepared to appear before the committee. This is something we have been waiting for for a long time, and I hope that it will become reality when the time comes to vote on it, which will, as I said, likely be in October. It is always a bit risky to set a date, but it ought to be somewhere around that time .

The people who have supported us, the ones who signed the petition, believe that no retiree should have trouble making ends meet because he is not receiving the retirement income to which he contributed all those years.

Since 2003, Asbestos retirees have lost $55 million from their pension fund and $30 million in benefits. With Bill C-290, compensation will be available to retirees whose supplementary pension funds have been cut.

I see that I have one minute left, so I will get to my conclusion. I must say that surviving spouses would also be eligible if their spouse was entitled to part of the pension.

In addition to all the support we have in our respective ridings, we also have the support of the NDP and Liberal members in this House. Also, just recently, Ernest Boyer, the president of the FADOQ network, the Quebec federation of seniors, said:

Too often, in such a situation, we hear the same old arguments: retirees who have a supplementary defined benefit pension fund are very lucky, almost like the bosses who got generous bonuses from their companies, so the Quebec government [or the Canadian government] does not need to assist these so-called fat cats.

He said that on the contrary, they believe these retirees need assistance.

[André Bellavance, Bloc, Richmond—Arthabaska, QC]

Mr. Speaker, I am pleased to present a petition signed by nearly 2,000 people calling on Parliament to support a bill that was numbered C-445, which I introduced during the previous Parliament with the support of the hon. member for Bas-Richelieu—Nicolet—Bécancour. The purpose of the bill was to create a refundable tax credit for retirement income losses of 22%, for the victims of these substantial financial looses.

A number of retired employees of the Jeffrey mine in Asbestos in my riding and of Atlas Steels in Sorel-Tracy saw their retirement income drastically reduced after their former employer went bankrupt. Since February 2003, $55 million has been lost in retirement funds and $30 million in benefits for retired workers of the Jeffrey mine, while incomes have been reduced by between 28% and 58% since April 1, 2005, for retired workers of Atlas Steels.

As I present this petition, I can assure the House that my colleague and I remain committed to pursuing the fight to provide justice to the retired workers of the Atlas Steels facility and the Jeffrey mine in Asbestos.

The House resumed from May 26 consideration of the motion that Bill C-445, An Act to amend the Income Tax Act (tax credit for loss of retirement income), be read the second time and referred to a committee.

[André Bellavance, Bloc, Richmond—Arthabaska, QC]

Mr. Speaker, five minutes is a very short time, so I will get right to the point. I would, however, like to thank a few people. First, I thank all the members who participated in the debate. In a democracy it is important to make progress on such issues. I would especially like to thank the hon. members for Bas-Richelieu—Nicolet—Bécancour and Chambly—Borduas. Not only did they take part in the debate, but they also helped draft Bill C-445.

I would also like to thank the Liberal and NDP members who showed common sense, as clearly mentioned by the member who just spoke. They want to see some progress on this issue and refer the bill to committee.

I informed the people of my riding any time amendments were made to the bill. I do not understand the Conservatives' arguments to the effect that it could cost $10 billion. However, if someone provides some evidence of that and if we need to amend or change the bill somewhat in order for it to maintain its substance without costing a fortune, clearly, we would be open to that. I made a commitment to the people of my riding and my colleague from Bas-Richelieu—Nicolet—Bécancour will do the same in his riding. We promised to talk to them and discuss things with them to see if people agree with any proposed amendments. For our part, we are remaining open, as are the Liberals and the NDP, but the Conservative government remains completely uncompromising. It is appalling.

I will continue with my thanks, to keep things on a positive note. Indeed, I am delighted by my colleagues' decision to pass this bill to the next step. That is what matters. We will not give up and we will continue to try to make the Conservatives come to their senses.

I would like to thank those who often go unmentioned and who work in the shadows, our researchers. All of the parties have research services, and in our case Marc-André Roche did an extraordinary job helping us create this bill and making it what it is today—an excellent bill that will help retirees who were shortchanged. Obviously, the House of Commons' law clerks and the people at the Library of Parliament helped as well. We do not often thank them. We do not often talk about them, but we should. As for Marc-André, he is sometimes a night owl. He works at night, and I am convinced that there were times when he was working at three or four in the morning for the workers of Asbestos and Sorel. That deserves a round of applause.

We mentioned their work earlier. The member for Chambly—Borduas spoke about it, but I must do the same. I am talking about the members of the Jeffrey Mine retirees subcommittee in Asbestos and Gaston Fréchette, their president. This man has done an extraordinary job calling all of the members of parliament, signing letters and ensuring that they had the most support possible. Just recently, I was in Asbestos to talk to the Jeffrey mine retirees about everything that has happened to date and where we are in terms of the bill. Once again, there were 120 people in the room to hear what I had to say. Mr. Fréchette had done his job of inviting them; he keeps them incredibly well informed. The Atlas Stainless Steels retirees in Sorel also worked to help develop this bill.

I want to remind members what Bill C-445 is all about. It has to do with a tax credit for loss of retirement income. It would provide a refundable tax credit to a taxpayer in respect of whom an employer and the employees failed to make the contributions required to be made to a registered pension plan. That is what happened with the retirees in Sorel and Asbestos. For example, a retiree whose income drops from $30,000 to $22,000 would receive 22% of the $8,000 lost, which would be a non-taxable amount of $1,760 per year. That is not a fortune.

I often use this example because it can be an average of what people lost. It is worth repeating so that we understand that it does not solve everything, but it would at least partially rectify an injustice.

I see that I have only one minute left. This is the first time I have ever made such a short speech in the House.

I can say and repeat to my constituents, to the people of Sorel, that we will not give up on them. I am calling on the Conservative members from Quebec in particular. Mr. Fréchette personally called the Conservative members from Quebec to ask them to support this bill. When you speak out against the Bloc Québécois, you often say that you have an influence in the government and that you can make things happen. Prove it. Make things happen for the retirees of Asbestos and Sorel. We must ensure that the government, that the Conservatives, listen to these people for once. Then, we will be able to say that you have an influence and that you have done something for the retirees.

Until then, unfortunately, the opposite will be true. You still have time. The vote has not happened yet. We are counting on you to have an influence and live up to your claims.

[Dean Allison, Conservative, Niagara West—Glanbrook, ON]

Mr. Speaker, thank you for the opportunity to speak in opposition to this bill sponsored by the member for Richmond—Arthabaska. While the bill touches on a matter of importance to all Canadians' retirement income, it does so in a manner that is inconsistent with sound pension and tax policy. We have been hearing many concerns from seniors lately, especially those on fixed income, about talk among the official opposition to make them pay new taxes, taxes that could make it more expensive for them to buy food, heat their homes, visit their grandkids, and so much more.

Bill C-445 attempts to address another concern of seniors, shortfalls in pension income. However, as I mentioned earlier, this bill does so in such a way that it raises serious issues with respect to pension and tax policy while disregarding the fact that our retirement income system remains sound and effective.

Canada's retirement income system is based on three pillars. The old age security, OAS, and the guaranteed income supplement, GIS, programs provide a basic minimum income guarantee for seniors. The Canada and Quebec pension plans, CPP and QPP, ensure a basic level of earnings replacement in retirement for all working Canadians.

The system of tax deferred savings in registered pension plans and RRSPs encourages and assists Canadians to save for retirement to supplement their public pensions. It has been recognized that Canada's retirement income system has helped reduce the incidence of low income among seniors and it ensures that Canadians achieve an adequate retirement income to maintain their living standards.

While most acknowledge our retirement income system is effective, sustainable and sound, our Conservative government has worked to improve it even further. Budget 2006 doubled the amount of eligible income that can be claimed under the pension income tax credit to $2,000. This is the first time the credit amount has been increased since it was introduced in 1975.

Budget 2006 also provided funding relief for federally regulated defined benefit pension plans by introducing several changes that will help re-establish funding for federally regulated defined benefit pension plans in an orderly fashion, while providing safeguards for promised pension benefits. To improve work and savings incentives, budget 2007 increased the maximum age from 69 to 71, by which Canadians must convert their RRSPs to registered retirement income funds, RRIFs, and begin receiving pension payments.

As well, budget 2007 announced tax changes to permit employers to offer more flexible phased retirement programs in order to retain older experienced workers and ease succession planning pressures. Budget 2007 also confirmed the tax fairness plan announced in the fall of 2006 which increased the age credit amount by $1,000 and permitted pension income splitting.

We continued to make improvements for seniors in budget 2008. In particular, this year's budget proposes to invest $60 million per year to ensure that low income seniors who work can realize greater benefits from their employment earnings through an increase in the guaranteed income supplement, GIS, exemption to $3,500 of employment earnings. This means that those who earn up to $3,500 per year from employment, the average amount earned by GIS recipients, will have their earnings fully exempted without any reduction in GIS benefits. This encourages labour market participation and provides support for low income seniors.

This is something we heard as we were looking at the employability study. As we went across the country, we heard from seniors that they would like the opportunity to still participate in the labour market, but they do not want that income to be clawed back. Once again, this shows that this Conservative government has been listening to what seniors are looking for. This will enable them to work longer and not have all their income clawed back.

In addition, budget 2008 proposed a number of provisions to significantly enhance the flexibility for holders of federally regulated life income funds, LIFs, to withdraw funds from those plans. These provisions will ensure that LIF holders will have the flexibility they need to manage their retirement savings according to their circumstances, better reflecting the wide range of choices available to seniors today.

Budget 2008 also announced the introduction of the tax-free savings account, the TFSA, a benefit to all Canadians, especially our seniors. The TFSA will provide an additional general purpose savings vehicle to complement existing registered savings plans. It will be a flexible savings account to allow Canadians to earn tax-free investment income to more easily meet their lifetime savings needs.

For seniors, one of the key features of the TFSA is that neither investment income earned in a TFSA nor withdrawals will affect the person's eligibility for federal income tested benefits and credits, such as OAS and GIS benefits. The TFSA will also provide seniors with a savings vehicle to meet any ongoing savings needs. Little wonder when commenting on budget 2008 the Canadian Association of Retired Persons thanked our government for “listening to many of its recommendations over the years and taking steps in the right direction”.

Canadians can see that the government has worked to ensure that the retirement income system is responsive to the needs of savers, pensioners and seniors.

This brings me to the matter at hand, Bill C-445. This bill would be extremely costly. In fact, according to the Department of Finance, it would cost about $10 billion, as the bill would effectively provide a refundable credit on the full amount of registered pension plan benefits received by most retirees. Clearly, it would not be feasible to support such a costly measure.

Moreover, not only would the measure represent an unjustifiable transfer of resources from all taxpayers to those receiving pension benefits, it would undo the hard-earned results of responsible fiscal management and put at risk the sustainability of the tax relief and investments that this government has introduced. For this reason alone, the bill should not be supported.

More than that, to adopt the measures proposed in this bill would not be good pension or economic policy and certainly would not be fair to the taxpayers of this country.

This bill would place on the Government of Canada's shoulders the responsibility for providing compensation in respect of all pension plans that reduced pension benefits. However, the Government of Canada is responsible for pension benefit standards for plans sponsored by federally regulated employers only. Since provinces are responsible for the protection of pension benefits for plans sponsored by provincially regulated employers, the onus placed on the Government of Canada for such compensation would be unjustified.

The best way of ensuring that promised pension benefits are secure is to have healthy plans with good supervision. At the federal level, pension plans are regulated under the Pension Benefits Standards Act, 1985 and are supervised by the Office of the Superintendent of Financial Institutions. The superintendent's mandate is to protect the rights and interests of plan beneficiaries. The PBSA sets forth a number of requirements in respect of the funding and administration of pension plans.

Providing any kind of guarantee or compensation for pension benefits, whether through the tax system or otherwise, is potentially costly for taxpayers. In addition, as I mentioned earlier, it raises issues of fairness, given that the costs would be borne by all taxpayers, while the benefits would accrue only to a minority of those participating in pension plans.

In short, a refundable tax credit in respect of shortfalls of pension income would not be the best way to promote the security of pension benefits. It would create undesirable economic incentives for pension plan sponsors and would be an improper use of our tax system. It would also be potentially costly and unfair in its application. Therefore, I urge members not to support this bill.

[Chris Charlton, NDP, Hamilton Mountain, ON]

Mr. Speaker, I am delighted to participate in tonight's debate on Bill C-445 as the NDP critic for seniors and pensions.

Let me begin by thanking the member for Richmond—Arthabaska for bringing this bill forward. For those who may have just tuned into the debate, let me just take a moment to remind television viewers of what we are debating.

Bill C-445 would grant a refundable tax credit equal to 22% of the reduction in pension benefits experienced by beneficiaries of registered pension plans, other than trusts, who suffer a loss of pension benefits, normally when their pension plans are wound up in whole or in part. It applies both to defined benefit plans and defined contribution plans.

Without the legalese, what that essentially means is that if a retiree's pension income drops from $30,000 to $20,000, let us say, he or she would receive 22% of the $8,000 lost, which would be a non-taxable amount of $1,760.

This bill is very timely. It allows us to discuss pension protection and retirement security on the cusp of a demographic trend that will see almost one-quarter of Canada's population over the age of 65 by 2041.

For some, as the comments made by the Conservative MPs in this debate have made clear, our aging society presents a policy challenge that focuses solely on the need for cost containment, but for more progressive voices it represents an opportunity to re-examine the growing gap between the rich and the rest of us and to make decisions that protect the public interest instead of the interests of the wealthy few.

At a time when more wealth is being created in this country than at any other time in our history, people in Canada are working longer and harder not to get ahead but simply to keep up. In fact, average Canadians today are squeezing 200 more hours of work out of each year than they did just nine years ago.

While a few people at the top are enjoying the benefits of the current economy, everyone else is not. Sure, we have seen the windfall salaries and extraordinary bonuses of CEOs, but wages for everyone else are essentially stagnant or falling. The middle class and its retirees are falling farther and farther behind.

One of the reasons, of course, is tied to what is happening in the economy. In the manufacturing sector alone, our economy has lost over 350,000 jobs since 2002. The forestry sector is similarly being devastated, yet despite repeated calls by NDP members in this House, the government is refusing even to acknowledge the need for creating a national jobs strategy.

It is absolutely essential that the government sit down with leaders from both the labour movement and business to develop a plan to maintain and build both the manufacturing and resource sectors of our economy. Not only are these jobs crucial for sustaining families, but we know empirically that the highest levels of pension coverage are associated with union membership in those jobs.

About 80% of union members belong to workplace pension plans compared to just under 30% of non-union members. With the overall percentage of people who belong to workplace pensions on a continual decline, it is imperative that we continue to fight for unionized jobs and maintain the struggle at the bargaining table for defined benefit plans. It is the only way to ensure predictable retirement incomes for workers.

What is happening now is not sustainable. I am from Hamilton, so I have witnessed at first hand the economic insecurity faced by industrial workers. Every time a plant closes its doors, the pensions and benefits of its workers are threatened. Anyone in this House who has followed the CCAA proceedings at Stelco will know what I am talking about. Sadly, that is but one of many local examples where restructuring or plant closure has created pension uncertainty for workers.

It is time for the government to acknowledge that pensions are deferred wages. They are not bonuses paid to workers at the end of their working lives. They are part of an agreed upon compensation package for hours worked. That is why I was proud to introduce Bill C-270, the workers first bill, in the House of Commons as my very first legislative initiative upon being elected.

As members here will know, Bill C-270 will ensure that workers' wages, pensions and benefits receive super-priority in cases of commercial bankruptcy. If we really want to ensure that workers can retire with dignity and respect, then we must ensure they have an adequate retirement income. Bill C-270 and a federal, employer-funded system of pension insurance are essential to achieving that goal.

At the root of that bill, of course, is the vision that workers must receive the pensions they have earned. That is what is at stake in Bill C-445 as well. For that reason alone, it deserves the support of all members in this House at second reading.

Yes, there are some areas that merit further examination, but the BQ members who have participated in the debate thus far have acknowledged that and have expressed their willingness to explore those issues further at the committee stage. For example, public data detailing the number of pension plan beneficiaries who would be eligible to claim the tax credit proposed in Bill C-445 are not available.

We do know that in 2003 there were approximately three million members of private sector registered pension plans, of which 73% were members of defined benefit plans. However, at present, no one collects data that would assist us in determining the number of pension plan beneficiaries who may be eligible for this type of tax credit.

Therefore, for the government members to suggest that the cost of Bill C-445 is $10 billion is pure conjecture. I would welcome the opportunity in committee to have them share their detailed financial analysis. I suspect that at the moment they would have no such document they could table.

Conversely, the BQ members concede that the bill may impact more than Jeffrey Mine and Atlas Steel in Quebec and the St. Anne Nackawic Pulp Co. in New Brunswick. So be it. Let us send this bill to committee and do the research, but let us not throw out the baby with the bathwater.

This bill simply wants to provide some fairness: fairness for pensioners who find that their retirement benefits are reduced through no fault of their own. That is a laudable goal and ought to be supported by all members of the House.

Yes, this bill represents but one option for providing fairness for retirees. Maybe there are others that would achieve the same goal differently. If there are, let us talk about them at committee.

I believe the members of the BQ are sincere in their objective, which would suggest that they may be flexible on the means for achieving their goal. I, for one, welcome the opportunity to explore any option, including Bill C-445, that would give workers the ability to retire with the dignity and respect they deserve.

What is paramount is that we as policy makers recognize the five keys to solid pensions. First, workers must get the pension that they earned. Second, it should be a given that all workers deserve decent pension coverage. Third, there must be respect for both today's and tomorrow's retirees. Fourth, pension money must work for, not against, workers. Finally, as I said at the outset, we must develop a national good jobs strategy so that a dignified retirement is possible.

If we can all agree on these five principles, then I think the work that we do in committee on Bill C-445 would indeed move the yardsticks in the right direction. Despite the fact that the comments made by the Conservative members thus far in this debate and the equivocation that has been articulated by the Liberal members may call into question their commitment to the rights of workers and retirees in this country, I would like to remind them of a vote that they all cast in this very chamber not that long ago.

I had the privilege of introducing the seniors charter in the House of Commons on behalf of the NDP caucus. That charter, as members will recall, created a road map for ensuring that seniors can retire with the dignity and respect they deserve. One of the enumerated rights in that charter was the right of income security for seniors.

It was passed in the House by a vote of 231 to 52. Obviously we in the NDP voted for it unanimously, but so did all of the Conservative and Liberal MPs. Ironically, it was only the BQ that was opposed.

I call on my Conservative and Liberal colleagues to now walk the talk. If their support of the charter really meant a commitment to its principles, then their vote on Bill C-445 will be the proof in the pudding.

The charter clearly stated that seniors have the right to “income security, through protected pensions and indexed public income support that provides a reasonable state of economic welfare”. Those members voted for the charter, so they must now vote for Bill C-445 and send it to committee. The principles in each are the same.

I cannot wait for the vote because workers and retirees will then finally see who takes the principled position.

[John McCallum, Liberal, Markham—Unionville, ON]

Mr. Speaker, I am pleased to rise here today to debate Bill C-445, An Act to amend the Income Tax Act (tax credit for loss of retirement income).

First, the bill is certainly worthy of study. It would provide a refundable tax credit to retirees whose pension funds had shrunk to the point that they would be unable to pay out what was promised to the retirees. The credit would be worth 22% of the amount lost from the pension fund payouts. For example, if their pension plans were reduced from $35,000 a year to $28,000, they would get a tax credit worth 22% of the $7,000 reduction. In other words, just over $1,500 would be their tax exempt amount.

There are few things that could be more nerve racking for people than being of retirement age and finding out that their pension plan would be unable to pay what they had expected that it would. What can they do at this point? If they are 70 years old, do they go back to work? For many Canadians this is not a realistic option. Instead, what they do is they lower their standard of living. They do not buy their grand kids the birthday presents they really wanted to give them. They move to a smaller home. They do not take vacations. They eat less food. In short, they take all the dreams they have had for their retirement years and make them all a little smaller.

Many seniors experience just this nightmare scenario when, in October 2006, the Prime Minister broke his solemn election promise not to tax income trusts. Many seniors relied on their regular, often monthly distributions from income trusts to help supplement their retirement income and lifestyle. Knowing this, the Prime Minister looked right into their eyes during the last election and promised that a Conservative government would never endanger that retirement income by taxing income trusts. Once he had their votes, however, the Prime Minister's interest in protecting the savings and investments of seniors disappeared.

On Halloween of 2006, he hiked taxes on income trusts by an astounding 31.5%. The resulting market losses over the next two days left the investment portfolios of Canadians $25 billion smaller. Since then, some seniors have had to adjust. They have been unable to enjoy the lifestyle for which they had worked and saved a lifetime.

As one analyst put it in the Saskatoon StarPhoenix:

It's a huge impact for seniors....If you worked 40 years to create that nest egg and in a short time you lose one-quarter of that wealth, it's like going back to work for 10 more years.

That is the government's record on seniors and retirement savings. I hope any member of the House who told a single voter that they would never tax income trusts knows just how much pain and how many sleepless nights they have caused in many households across the country.

As I mentioned earlier, there is a principle contained in Bill C-445 that I think we should all appreciate, helping to ensure that seniors have the support and income they need to retire with dignity. That is why I feel this bill merits further study.

That being said, I also have some concerns as to whether the bill's scope will be limited to the intent that the member for Richmond—Arthabaska has in mind. I have heard some concerns raised, due to the wording of the bill, that the tax credit might be available to almost every retired person who enjoys a defined benefit pension plan. They would do so regardless of whether their own pension plan had recently reduced the benefits that were promised to them under the terms of the plan. There is also a large matter of fairness that must be considered as we consider the bill.

Many millions of Canadians do not have the benefit of being part of a defined contribution pension plan. It is these people with no pension of their own whose tax money will act as a guarantee for the pension incomes of people who do in fact belong to such plans.

A third concern, as the bill now stands, is if it could create a disincentive for people or a company to contribute to their defined benefit pension plan. Why pay the full amount if the government will back up a portion of the plan? I imagine that this certainly is not the intent of the member for Richmond—Arthabaska. He is of course trying to help those who have honestly contributed to their own plan. Nevertheless, I could see some less scrupulous individuals or companies take advantage of these new measures. This will need to be examined in committee

As I mentioned earlier in my speech, there are few things more nerve-racking than having a pension reduced, especially in the years when it is impossible to return to the workforce to supplement that lost income. For that reason, I believe the bill merits further study. We should send it to the finance committee where members can determine if this is the best way to go about helping retired individuals whose pension benefits are reduced.

As I have also indicated, however, the bill raises many questions in my mind. I am not convinced that its scope will be limited to what is intended by its sponsor. I hope these concerns can be alleviated during further study of the bill and if amendments are required to improve the bill, I hope the sponsoring member would be amenable to accepting them.

[Harold Albrecht, Conservative, Kitchener—Conestoga, ON]

Mr. Speaker, I thank the House for the opportunity to resume my comments on Bill C-445. As I indicated earlier, we do not support this proposal as it is fundamentally flawed.

First and foremost, the largest issue with Bill C-445 is the exorbitant cost which would be fiscally irresponsible and threaten Canada's fiscal health.

A key pillar of Canada's pension system is tax deferred retirement savings, including registered pension plans and RRSPs. These plans provide Canadians with incentives to save for retirement and help bridge the gap between public pension benefits and retirement income goals.

I believe we all acknowledge that the best way to ensure that promised pension benefits are secure is healthy plans with good supervision. At the federal level, pension plans are regulated under the Pension Benefits Standards Act, or PBSA, and are supervised by the Office of the Superintendent of Financial Institutions. The superintendent's mandate is to protect the rights and interests of plan beneficiaries. Moreover, the PBSA sets requirements related to the funding and administration of pension plans.

For example, it requires that plan assets be kept separate from those of the plan sponsor. In the case of defined benefit plans, actuarial valuations of the plan's liabilities must be regularly conducted. If there is a funding deficiency, the sponsor is required to remit to the pension fund, over a certain period of time, amounts by which the estimated liabilities exceed plan assets.

It also provides that contributions owing but not yet remitted to the pension plan are subject to a deemed trust. This means that these amounts are considered separate from the employer's estate in bankruptcy proceedings. Recent changes to federal bankruptcy legislation granted a super priority to employer and employee contributions not yet remitted.

In addition, after widespread consultations on benefit security and the viability of defined benefit pension plans under federal regulation, our Conservative government has brought forward measures to ensure Canada's regulatory framework continues to be responsive to the needs and circumstances of pension plan sponsors.

In budget 2006, we provided funding relief for federally regulated defined benefit pension plans by introducing several temporary measures. These included: allowing solvency payment schedules to be consolidated in order to smooth solvency payment obligations; extending the period of making solvency funding payments to 10 years from 5 years, subject to a condition of buy-in by plan members and retirees; and, extending the solvency funding payment period to 10 years through the use of letters of credit.

Such changes will help re-establish funding for federally regulated defined benefit pension plans in an orderly fashion, while providing safeguards for promised pension benefits. What is more, we will continue to work to ensure the retirement income system is responsive to the needs of workers, pensioners and seniors in a way that is consistent with sound pension and tax policy principles.

Regrettably, the proposal currently being debated would not support the basic objectives of the pension and retirement saving system nor the tax system.

Bill C-445 recommends a government backed guarantee for pension benefits through the introduction of a refundable tax credit for pension income shortfalls, a proposal that would not be good pension or economic policy and would not be fair to the taxpayers of this country.

To begin, such a guarantee could provide a disincentive for employers to properly manage their pension plans to control financing risks. The fact that plan sponsors would not be required to contribute anything whatsoever to cover the cost of the refundable credit would exacerbate this affect.

Providing any kind of guarantee or compensation for pension benefits, whether through the tax system or otherwise, is potentially costly for taxpayers. In addition, it raises issues of fairness given the costs would be borne by all taxpayers while benefiting only a minority of those participating in pension plans.

As well, Bill C-445 would place on the federal government the responsibility for providing compensation in respect of all, and I underline all, pension plans that reduce pension benefits. Placing such an onus on the federal government for such compensation, which is estimated to be in the vicinity of $10 billion dollars, would not be justified.

Before concluding my remarks, I would like to briefly touch on some of the measures our Conservative government has taken to support seniors, specifically through the tax system. I am speaking of measures like passing legislation that will allow, for the very first time in Canadian history, pension income splitting for seniors and pensioners, a significant major change that will benefit seniors.

As Jamie Golombek, a well known taxation and estate planning specialist recently declared, “Pension splitting is probably one of the biggest tax changes in decades, in terms of the amount of tax savings this can mean for pensioners”.

We have done much more, though. We are fully exempting the first $3,500, up from the current maximum exemption of $500 of earned income from the guaranteed income supplement calculation, to extend further benefits to seniors. We are giving older workers the choice to stay in the labour market by permitting phased retirement. We are increasing the age limit to 71 for converting an RRSP to strengthen incentives for older Canadians to work and save.

We are doubling the amount of pension income eligible for the pension income credit. This measure alone will benefit nearly 2.7 million pensioners. We are enhancing the flexibility to withdraw funds from life income funds, also known as locked in pensions, to ensure that holders of such funds have the necessary flexibility to manage their retirement savings according to their own circumstances.

Measures like these I have mentioned are just part of the reasons that seniors and seniors' organizations right across Canada have applauded our Conservative government's initiatives like our recent federal budget, a budget which the former Canadian Association of Retired Persons commended, “for listening to many of its recommendations over the years and taking steps in the right direction”.

The Federal Superannuates National Association, a major organization representing 155,000 federal pension members, also welcomed budget 2008 because it addressed “a number of concerns of seniors. FSNA is particularly supportive of the 2008 budget measures aimed at low-income seniors”.

To recap, I urge members not to support Bill C-445. It would not be the best way to promote the security of pension benefits. Rather it would create undesirable economic incentives for pension plan sponsors and be an improper use of the tax system, not to mention costly and unfair in its application.

The House resumed from May 2 consideration of the motion that Bill C-445, An Act to amend the Income Tax Act (tax credit for loss of retirement income), be read the second time and referred to a committee.

Income tax Act

[The Acting Speaker, Conservative, Royal Galipeau]

The time provided for the consideration of private members' business has now expired and the order is dropped to the bottom of the order of precedence on the order paper. When we next return to the study of Bill C-445, there will be eight minutes left for the hon. member for Kitchener—Conestoga.

It being 2:30 p.m., this House stands adjourned until Monday next at 11 a.m., pursuant to Standing Order 24(1).

(The House adjourned at 2:30 p.m.)

[Harold Albrecht, Conservative, Kitchener—Conestoga, ON]

Mr. Speaker, perhaps once you hear the beginning of my speech, you will want to extend the time to allow me to get in my entire speech.

Bill C-445, which is sponsored by the member for Richmond—Arthabaska, is a proposal for a refundable tax credit to deal with shortfalls in pension income. From the onset, I will state that we do not support this proposal as it is fundamentally flawed.

First and foremost, the largest issue with Bill C-445 is cost, which the Department of Finance estimated to be approximately $10 billion. Clearly, supporting a proposal with a cost of this magnitude would be fiscally irresponsible and it would threaten Canada's fiscal health.

Furthermore, the proposal also raises serious issues with respect to pension and tax policy and ignores the present state of Canada's retirement income system. Bill C-445 touches on a matter of importance to all workers, the security of their pensions.

This government recognizes that the security of workers' pension benefits is a key element in ensuring the effectiveness of Canada's retirement income system. It has been recognized that Canada has a diversified retirement income system based on a mix of public and private pensions. The old age security and guaranteed income supplement programs, along with the Canada and Quebec pension plans, are considered to be the pillars of that system, ensuring a minimum level of income in retirement for Canadian seniors.

[Louis Plamondon, Bloc, Bas-Richelieu—Nicolet—Bécancour, QC]

Mr. Speaker, it is also a pleasure for me to speak at second reading to Bill C-445, which was introduced by my colleague for Richmond—Arthabaska and which I was honoured to second. I would first like to thank him for all the work he has done with me to prepare this bill. I would also like to thank the member for Chambly—Borduas, the Bloc Québécois researchers and the officers of the House of Commons who advised us on the legal aspects and the drafting of the bill.

I would like to congratulate the member for Richmond—Arthabaska because he expressed in his speech the very thoughts of the former employees of Atlas Steels and the Jeffrey mine. These people were treated unfairly and they were victims. This request is not based on a whim. They want to redress a wrong. He explained the financial blow dealt to these individuals who had already retired in the belief that their pensions were guaranteed for the rest of their lives.

I would like to thank the NDP member who spoke just before me. He definitely extended the debate to the complex issues faced by seniors, including health. From the outset, he said he was prepared, together with his party, to support the bill. I thank him. As for the few questions he may have, we will attempt to reassure him when we study the bill in committee.

I would also like to thank the Liberal Party critic whose speech was very clear. From the start, he said that this bill deserved to be referred to committee. He said he had questions, and I understand that. He is entitled to have questions. But I think that he did not completely understand the purpose behind this bill.

The member for Richmond—Arthabaska, the member for Chambly—Borduas and I would be very happy to answer his questions and to appear before the committee. The former employees are also prepared to come and work with us, including Mr. Saint-Michel and the Jeffrey mine retirees' representative, Mr. Fréchette. They will come to explain the situation and I do not think they will have any problem answering the Liberal critic's questions. I thank him for supporting this bill. These two pledges of support, along with the support of all the Bloc members, ensure that this bill will be sent to committee so that it can move to the next stage.

However, the Conservative member's statement surprised me. I did tell several Conservative members from Quebec about this bill. I am not judging them, but it seems they may have forgotten to inform the parliamentary secretary, who spoke earlier. Talking about $10 billion shows that either he is trying to get people worked up about this or he has gone crazy. Imagine: $10 billion! We are talking about some 260 workers in one place and about 900 in another. The total per year would be $1.7 million. These people are not going to live forever. Every now and then, some of them die. They are not young, and a few years from now, this will not cost the government anything. Yet he was saying that it would cost $10 billion. Where did he get that number from?

Perhaps his speech was influenced by the combined deficit of all public and private retirement funds in Canada. If all of those people lost their jobs and were covered by this bill, it would cost $10 billion. What kind of logic is that? It does not make sense. This is a matter of a few million dollars, and we are asking the government to fix an injustice. As I said earlier, it is not as though these workers acted on a whim. We have to demonstrate compassion for workers who have been deprived of income to which they had a legal right.

These people, like all workers, including the members of this House, paid contributions out of their income. The employer also paid, of course. Those contributions went into a fund and, all of a sudden, one third of the money was taken away without giving the retirees a say in the matter.

However, this fund was supposed to be guaranteed. If hon. members who retire were suddenly told, a year later, that their pension was being cut by one third, I think the reaction would be violent or at least very noisy. An injustice has been done and we want to correct it. The people suffering this injustice worked hard for many years. They have managed to build up a strong claim and a bill was born out of this claim.

Like my colleague from Richmond—Arthabaska before me, I would like to pay tribute to Pierre Saint-Michel and Gaston Fréchette and their two teams. They looked for a legal way to provide the workers with partial compensation for their losses. Today, after consulting experts, legislative drafters and House experts, they have finally found a solution to recover some of the loss. They will get that solution if every member of this House sets partisanship aside and understands the need to be compassionate and provide these people with social justice. This gesture, which would cost the government barely a few million dollars in the early years, would allow these people to obtain some compensation for their losses.

Today, I am calling on the Conservative members from Quebec to influence their government. I have chosen to sit as a sovereignist MP with a vision of Quebec sovereignty. They have chosen to sit within a party in power that claims to better defend the interests of Quebec. Well, ladies and gentlemen, now you have the opportunity to prove it.

I am calling on the members for Lévis—Bellechasse, Beauport—Limoilou, Pontiac, Beauce, Jonquière—Alma, Lotbinière—Chutes-de-la-Chaudière, Louis-Hébert, Roberval—Lac-Saint-Jean, Mégantic—L'Érable, Charlesbourg—Haute-Saint-Charles and Louis-Saint-Laurent. They have said they might have some influence. Perhaps the critic and parliamentary secretary who spoke earlier might change his mind when the second hour of debate takes place in early June.

I hope this bill will be referred to committee by a unanimous vote. I ask them to use their influence. It is time for these members to prove they do have some influence and to act to change the parliamentary secretary's speech and their party's vision.

The Liberal members have agreed to refer this bill to committee, and I thank them. The NDP members have also agreed, and I thank them. Of course, the Bloc Québécois will support this private member's bill, and I ask the Conservative members to do the same.

I repeat, this is not a partisan gesture, but an act of human compassion and social justice. I therefore ask that all members support this bill and that, during the next hour of debate in early June, there be only speeches in support of this bill in this House so that we can act to reassure these people following the injustice they suffered a few years ago.

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

Mr. Speaker, I rise today to speak to Bill C-445, An Act to amend the Income Tax Act, specifically to provide a tax credit, which we have been hearing about in this debate, for the loss of retirement income. It was introduced by the member for Richmond—Arthabaska and I appreciate that member's concern for the workers of his province and how this bill may help all workers across our country.

However, before I get into my remarks, recently in this debate we heard from the Conservatives a list of all of the things that they have done for seniors. I have one more thing for them to put on their list and that is the $1 billion they owe seniors from the CPI mistake that was made a number of years ago. Each and every senior who is owed that $500 for each year should be addressed by the government and should receive the money. If they owed the government money, they certainly would have somebody knocking on their doors.

Back to Bill C-445, it would grant a refundable tax credit equal to 22% of the reduction in pension benefits experienced by beneficiaries, other than trusts, of registered pension plans who suffer a loss of pension benefits, normally when their pension plan is wound up in whole or in part. It applies to both defined benefit and defined combination plans. This bill certainly will catch the ear of Stelco workers in Hamilton who went through the CCAA bankruptcy protection recently. They saw the sale by their employer of their company and all the insecurity about their pension and benefits. They had to deal with this stress for two years.

Seniors who have already retired and those who are about to retire have worked hard. They have played by the rules all of their lives and now they need their pension plans. They need their income to retire in dignity and respect. They too often find their retirement benefits reduced through no fault of their own.

I will not suggest this bill would address fully the problems they will face but it offers some modest fairness for retirees.

In addition to Bill C-445, we in the NDP call on the federal government to explore other options to help retirees which should be based on the premises: that all workers deserve decent pension coverage, that all workers deserve to get the pension they have earned, that we show respect for today's and tomorrow's retirees, that retirement investments must work for and not against workers, and that the government has a national job strategy so that dignified retirement is possible.

A recent polling of Canadians found that 73% are worried about not having enough money to live on after retiring. Canadian workers worry about the solvency of their private pensions. They worry about the adequacy of both CPP and public income supports.

They know, for instance, that inflation does far more damage to retirees than any other group of Canadians. Over 250,000 seniors today live under the poverty line, under that cutoff point. Too many retirees are living in poverty. It is the responsibility of the government to protect seniors and not leave them hung out to dry.

A particularly alarming statistic is that one-third of seniors, most of whom are women, have little income outside of OAS and GIS, and have an average annual income of around $12,000. How are these seniors expected to live in dignity on barely $1,000 a month?

How are they expected to afford to stay in their family homes or expensive senior retirement residences or afford the cost of living and utility bills, not to mention the high price of gasoline for those who can still afford a car?

How are they expected to afford the medications each month, especially since the government will not provide a national pharmacare program? How are seniors expected, after all of those expenses, to meet the high cost of food?

Since the middle 1990s, according to the National Advisory Council on Aging, seniors' income levels have reached a ceiling and are no longer keeping pace with the rest of Canadians. In fact, the mean income of seniors rose only $4,100 compared to other Canadian households, which rose $9,000 between 1997 and 2003. Thirty per cent of families today have no private pension assets at all.

In this age of insecurity and tremendous job loss in our manufacturing sector, as well as the pulp and paper sector, the federal government must look beyond today and beyond the next election cycle. It is time for some long range planning in conjunction with our defined pension plans as to how to support workers in their retirement years.

In my riding of Hamilton East—Stoney Creek, I hear repeatedly about the moneys owed to seniors that I spoke about before. Regarding the error in the cost of living, we should imagine what a $500 per year repayment would do for somebody with an income of $12,000 per year and what it would mean to them.

The Conservative government has handed corporate Canada $14 billion in tax breaks each and every year, and only a pittance to seniors. When seniors owe tax to the government, they have to pay or they are charged interest that compounds daily. However, when the government owes money to seniors, it simply dismisses those seniors and tells them that they do not matter.

The Conservatives tout their two point cut to the GST and the $60 billion they took out of the fiscal capacity of the Government of Canada to respond in a reasonable way to the plight of seniors. Seniors across Canada have to choose between buying medication and eating. That is disgraceful and the government should be ashamed.

The government should cancel the corporate tax cuts and use the money to give seniors a reasonable raise in their CPP benefits. The Conservatives should follow the lead of the NDP and start a national prescription drug program for all Canadians.

The Conservatives should follow through on the promises they already made to seniors and implement the seniors charter, created by my colleague from Hamilton Mountain.

In June 2006, nearly two years ago, the House passed the NDP's seniors charter, which called for the government to work with the provinces to rectify decades of underfunding of seniors programs. The seniors charter called for the recognition of older Canadians as creative, active and valued members of our society.

The charter would have enshrined the right of every senior living in Canada to the following: income security, through protected pensions and indexed public income support that provides a reasonable state of economic welfare; housing, through secure, accessible and affordable housing; wellness, through health promotion and preventive care; health care, through secure, public, accessible, universal health care, including primary care, dental care, home care, palliative care, geriatric care and pharmacare; self development, through lifelong access to affordable recreation, education and training; government services, through timely access to all federal government programs and services, including family reunification.

It would create a seniors advocate to: conduct public education and awareness initiatives on the rights of seniors; ensure that all new and revised policies and programs affecting seniors receive public input from older persons; require that all new policies and programs affecting seniors are announced with specific timelines for implementation; act as an ombudsman for seniors with respect to all government services and programs in making recommendations as appropriate that assist seniors; and that would advocate and report annually to Parliament on government policies and programs affecting seniors, including the effectiveness of federal funding related to the needs of older persons.

I wonder how many members present have had to eat cat food. I read an article on how seniors choose cat food because of its low price in order to get some protein because they simply cannot afford to purchase groceries. That is one of the great shames in this country. We have to do better. The government has to do better for our seniors and this is a national disgrace that can no longer be ignored.

[Ted Menzies, Conservative, Parliamentary Secretary to the Minister of Finance]

Mr. Speaker, I appreciate the opportunity to speak to Bill C-445, a proposal for a refundable tax credit for shortfalls in pension income, which has been introduced by my good friend, the member for Richmond—Arthabaska.

The intention of the member's proposal is somewhat laudable. It seeks to assist Canadians who have seen their retirement incomes negatively impacted by a failed business. Unfortunately, it is fundamentally flawed to such a degree that we cannot support it.

The biggest problem with Bill C-445 is its annual cost, as was referred to previously by my colleague in a question, which is estimated to be approximately $10 billion. Clearly, were Bill C-445 to be enacted, it would have a negative impact on Canada's fiscal position.

This proposal also raises serious concerns with respect to pension and tax policy, while also failing to take into account the multitude of prudent ways we are improving Canada's retirement income system. Again, as previously mentioned, Bill C-445 relates to the tax treatment of pensions and savings, an area that this Conservative government has recognized as a key priority, an important element for economic growth as well as an improvement for living standards.

As I am sure the House is well aware, our Conservative government has implemented an ambitious and aggressive agenda to reduce the tax burden on Canadians by cutting corporate taxes and personal income taxes, cutting the GST and many more. Tax cuts have prompted Canada's competitiveness and improved our standard of living, but tax cuts also spur investment while creating jobs, encouraging economic growth and allowing the freedom for Canadians to save.

Personal savings provide Canadians a means to invest in their own future and improve their standard of living. Savings also bring the peace of mind that comes with the knowledge that funds will be available in the event of an emergency or for future endeavours like starting a small business, purchasing a home, or a child's education.

Our Conservative government has taken major steps to improve incentives for Canadians to save. Most significantly I would point to the introduction in budget 2008 of the tax-free savings account, commonly known in the House as TFSA, whose introduction has been heralded in nearly all corners as an exceedingly positive initiative, perhaps the single most important personal savings vehicle since the introduction of RRSPs in 1957.

Indeed McGill University Professor William Watson praised it as a “great step forward for the country...almost all Canadians will now be able to shelter all their savings from tax”.

TFSA will be a flexible, registered, general purpose account that will allow Canadians to earn tax-free investment income. As the TFSA matures over the next 20 years it will permit over 90% of Canadians to hold all of their financial assets in tax efficient savings vehicles in combination with existing registered plans. In 20 years, relative to the size of today's economy, the tax relief provided by the TFSA will grow to over $3 billion annually.

In addition to the landmark TFSA, our Conservative government has introduced a number of tax measures to improve the pension and RRSP system, such as: doubling the amount of eligible income that can be claimed under the pension income tax credit to $2,000, the first increase since 1975; increasing the maximum age to 71 by which Canadians must convert their RRSPs to registered retirement income funds and begin receiving pension payments; permitting employers to offer more flexible phased retirement programs in order to retain older, experienced workers and ease succession planning pressures; increasing the age credit amount; and permitting pension income splitting. The cumulative effect of these important measures represents nearly $1.6 billion in tax relief every year for pensioners and seniors.

Clearly, this Conservative government has worked to improve the tax treatment of pensions and RRSPs and to make our retirement income system even more effective in meeting the needs of Canadians, and we will do more. However, we must make certain that policies are prudent and consistent with sound pension and tax policy principles.

Regrettably, Bill C-445's proposal to introduce a refundable tax credit for pension shortfalls is neither the most prudent nor the best way to promote the security of pension benefits. It would create undesirable economic incentives for pension plan sponsors and would be an improper use of the tax system. As well, it would be exceedingly costly and unfair in its application.

I will now expand on the points to which I have just alluded.

Bill C-445 would go far beyond its proposed intent. It would not provide a refundable tax credit in respect of shortfalls in pension income but would instead effectively provide a refundable credit on the full amount of pension benefits received by most retirees.

This is because, as drafted, the proposed credit would be based on the difference between the pension benefits payable to an individual from a registered pension plan and the amount of benefits received by the individual from a retirement compensation arrangement. As a result, the proposed credit would be extremely costly. In fact, it would cost about $10 billion annually. I am assuming that this is why the Speaker ruled earlier today that this private member's bill does require a royal recommendation. I would concur with his decision.

Such a costly measure clearly would not be supportable. Let us make no mistake: it would put Canada into deficit and would put at risk the fiscal health of future generations of Canadians. Regardless of whether Bill C-445 has been drafted properly, its underlying objective is to provide a government-backed guarantee for pension benefits. This would not be good tax or economic policy and would not be fair to the taxpayers of the country.

The tax system is not intended to ensure or compensate individuals for the loss of pension benefits due to the underfunding of pension plans. Indeed, the proposed refundable credit would set a significant precedent for government compensation of shortfalls in expected retirement income in other situations.

Let us consider the example of an RRSP saver or an individual in a defined contribution pension plan who does not achieve the pension income he or she expects because of poor investment performance. Bill C-445 would mean he or she could request that a similar credit or other compensation be provided to help offset such shortfalls.

There are a number of other significant concerns with the proposal. For example, it would effectively mean that the federal government would provide compensation for shortfalls in pension income for provincially regulated plans. Moreover, providing a government-backed guarantee is not the best way to protect pension benefits.

The best way of ensuring that promised pension benefits are secure is to have healthy plans with good supervision. Providing any kind of guarantee or compensation for pension benefits, whether through the tax system or otherwise, is potentially costly for taxpayers. In addition, it raises issues of fairness, given that the costs would be borne by all taxpayers while the benefits would accrue only to a minority of those participating in pension plans.

Therefore, I urge members not to support this fundamentally flawed proposal.

[André Bellavance, Bloc, Richmond—Arthabaska, QC]

moved that Bill C-445, An Act to amend the Income Tax Act (tax credit for loss of retirement income), be read the second time and referred to a committee.

Mr. Speaker, I hope that you do not get the feeling that I am always talking, since I just spoke during another debate. I want to say that this bill is particularly close to my heart and that I am moved today as I speak to this issue, not only because this is my bill, but because a number of people worked on this bill. These people deserve our consideration, and that is why we drafted such a measure.

I will briefly explain Bill C-445, An Act to amend the Income Tax Act (tax credit for loss of retirement income). This enactment amends the Income Tax Act to provide a refundable tax credit to a taxpayer in respect of whom an employer and the employees failed to make the contributions required to be made to a registered pension plan. It was introduced at first reading on May 17, 2007. Today, nearly one year later, we are ready to debate it at second reading. It is making good progress. We hope that the bill will move quickly through Parliament so that the people affected get what is coming to them.

I will give a brief account of how this bill came to be. In my riding, the Jeffrey mine, a chrysotile mine, went bankrupt, throwing many people out of work. Unfortunately, their retirement fund also disappeared like snow in the sun because there was a loophole when the company went bankrupt. People lost a great deal of money in all this. For years, Jeffrey mine retirees used every possible means to obtain some compensation. The Government of Quebec gave a certain amount of money at a given point, but it was a one-time contribution that did not cover their losses.

What could be done? These people came to see me to determine what could be done. At the same time, retirees from Atlas Steels, in Sorel, also went to see their MP, who will speak in a few moments. We worked together, along with the member for Chambly—Borduas who worked very effectively on this file, to see what could be done at the federal level to help these people.

Mr. Gaston Fréchette, chair of the Jeffrey Mine retirees subcommittee in Asbestos, in my riding, represents more than 1,000 retirees who worked at the mine. There are about 1,200 in all. In addition, Mr. Pierre Saint-Michel is the chair of the Atlas Steels retirees group, which has just under 300 members. These people and their supporters—there are many—truly worked with us. Mr. Fréchette came up with the idea of a tax credit. We met with them here and we held press conferences in Asbestos and in the riding of the member for Bas-Richelieu—Nicolet—Bécancour, who also participated in these discussions. Together, we came up with the basis for Bill C-445.

When I said that this was an issue close to my heart and that I was moved speaking about the bill, it is because I saw these people wrack their brains, approach us and ask what we could do to help them. And then they worked on the bill with us so that we could introduce it. I would therefore like to thank not only Mr. Fréchette and Mr. Saint-Michel but all those individuals and retirees who helped out. I would like to extend a very warm thank you to the members for Bas-Richelieu—Nicolet—Bécancour and Chambly—Borduas because, without them, there would not be a bill.

I would like to briefly explain what this bill will do once it comes into force. As I was saying, it would create a refundable tax credit for loss of retirement income. Many retirees have seen their income drop because their retirement fund was running a deficit when their company ceased operations. That is what happened to people who retired from Atlas Stainless Steels, which belongs to Ontario's Slater Steel, and from the Jeffrey mine in Asbestos, closer to home. To help retirees caught in this situation, we propose creating a refundable tax credit for loss of retirement income.

This refundable tax credit, which would amount to 22% of lost income, would not affect retirees' income, whether or not they pay income tax. The credit would also be transferrable to a surviving spouse and would apply to both money purchase and defined benefit plans. Accordingly, a retiree whose income drops from $30,000 to $20,000 would receive 22% of the $8,000 lost, which would be a non-taxable amount of $1,760.

We do not believe that retirees should have trouble making ends meet because they are not receiving the retirement income they contributed to for years. That is what happened to retirees from Atlas Stainless Steels in Sorel-Tracy, whose income has dropped between 28% and 58% since July 1, 2005, and is still dropping.

Passing this bill will make it possible for all retirees caught in this kind of situation to recover part of the money lost. Take, for example, retirees from the Jeffrey mine. Since 2003, they have lost $55 million from their pension fund and $30 million in benefits.

Of course, this bill would not be retroactive. My colleagues should understand that when it comes into force, this bill will apply to the previous tax year. We will not be able to go any farther back than that.

Retirees whose complementary pension fund is smaller than it should have been will be compensated, as will surviving spouses, when they are entitled to part of the income.

The tax credit is 22%. Some may wonder where we came up with that figure. It corresponds to the federal marginal tax rate that applies to the middle class. For people whose income is between $36,000 and $72,000, the tax rate is 22%. That is where we came up with that percentage.

The tax credit is refundable so that everyone can take advantage of it, even those whose incomes are very low and who do not pay taxes. It is a matter of social justice for us. We thought about this. I know that this morning, a ruling was unfortunately made concerning royal assent. From what I understand, if the tax credit had not been refundable, the decision would have been different. We are bound by the royal assent, but I hope that the government will listen to reason.

We made this choice thinking of the poorest members of society. We knew that some people had lost their retirement income, and that some of them had even less money than others. A non-refundable tax credit would have benefited only those with more money. Some people would have been eligible, but I think, unfortunately, that most of our retirees would not have been able to take advantage of the tax credit. That might have been a step in the right direction, but I think it would have been unfair to do it that way. That is why we went with the idea of a refundable tax credit in the bill.

I just explained that low-income people would have essentially been left out. The elected members, at least these three members, as well as the people from the two retiree committees I mentioned earlier, felt that the bill should apply to everyone, especially the least well off. I would like to congratulate the members of the retiree committees who were also thinking of their less fortunate colleagues.

We have to determine how many people this will affect in Quebec. I have heard rumours that the government thinks this measure would take a big chunk out of the consolidated revenue fund. I can say that in Quebec, we have found only two cases where the bill would help now-retired victims of business closures. I am referring to the two cases we have been talking about since the beginning of this debate— Atlas Steels in Sorel and the Jeffrey mine in Asbestos. These are victims of very exceptional cases—I do not know if we can call them very exceptional, but exceptional at the very least—that should never happen again.

Take Quebec for example, again. The Quebec government changed its legislation to require improved capitalization of money purchase benefit plans. And there should not be many cases that come up in Canada either. In Ontario, there is a government fund set up to replenish the pension plans of employees who find themselves in a similar situation. Luckily, governments have made adjustments so that there will not be any more situations like those that the retirees in Asbestos and Sorel have had to deal with.

We are now seeing measures like this in a number of provinces. Perhaps there are former workers from the St. Anne Nackawic Pulp Company Limited in New Brunswick who might be eligible—our research service looked into this. We could study the file in committee, since we have not been able to determine if this is the case or not. More examples like this could come up, but it would not involve many workers.

But even though this may not affect many people, we cannot simply wash our hands of it and stop worrying. Quite the opposite. One thing is certain: we are talking about very few cases and about exceptional situations. The fact that they are exceptional does not mean that they are any less important for the people involved.

We are talking about people who contributed to their employer's pension fund their entire lives only to end up with almost nothing once they retire.

The intention of Bill C-445 is not to hand out a lump sum payment, but to provide an annual payment equivalent to 22% of the loss. If we take the actuarial deficit of the two retirement funds for the people we are talking about, we expect this to cost roughly $1.7 million in the first year for Quebec. Obviously, that amount will decrease over the years as the number of former employees decreases. For all of Canada this measure is estimated to cost between $3 million and $5 million, again if we take the example of the retirees I am referring to. More may be discovered with the current provincial measures, and if we look back, but note that this measure is not retroactive. In cases such as Singer and others, retirees have been compensated. At first we thought about including those cases in our bill, but they are different cases. This exception really only concerns two industries, two companies in Quebec and maybe one in New Brunswick.

Why does this issue concern the federal government? The federal government has a constitutional right to legislate while respecting the supremacy of provincial and Quebec legislation, of course, with respect to old age pensions and additional benefits, including survivor benefits and disability benefits, regardless of age. That is one of the reasons. The compensation set out in Bill C-445—and I wish to emphasize this—is provided as a tax credit. It has no impact on other government program benefits, does not interfere in any way in provincial social programs and is therefore very respectful of the division of powers. The Bloc Québécois would never show up with a bill calling on the federal government to interfere in provincial jurisdictions. That is why I wanted to emphasize this, in case that was what anyone was thinking, but that would surprise me. Most parties here understand what I am saying. The government has a say in this type of procedure.

There are other reasons as well. With a monetary policy that produces recurring deficits and a fiscal policy that does not allow the government to build up a surplus in good years, Ottawa is also responsible for providing relief for retirees who have to pay the price. These are good reasons why the federal government has a role to play in this issue.

I should mention that the coverage by the local press has been very interesting, and I want to thank the local media that have taken an interest in the cause. I will give just one example, because I want to give my colleague from Bas-Richelieu—Nicolet—Bécancour a chance to make his speech. The local media in my riding have covered the story of the Jeffrey mine retirees for a long time. They are involved in an ongoing legal battle, but that is something quite apart from what we are discussing today. This is an issue that regularly makes the news.

I want to read from the May 26, 2007 issue of Les Actualités, the Asbestos newspaper, which refers to this issue and gives a good summary of the situation. I am reading from the front page:

The 1,200 Jeffrey mine retirees who have been fighting for four years to obtain redress after losing their group insurance are beginning to see the light at the end of the tunnel. A bill that would create a refundable tax credit for the loss of retirement income has just been introduced in the House of Commons.

This was very good news.

In conclusion, I want to extend my warmest thanks to Gaston Fréchette, the chair of the Jeffrey mine retirees subcommittee, for raising awareness in this House. He decided to send letters—signed also by the president of the Sorel retirees—to all the members to make them aware of this issue. Mr. Fréchette, who is one of the retirees, also called all the members from Quebec, regardless of their party, to ask them to support this bill. That is what I am also doing today. I am calling on my colleagues to do justice to these people and support Bill C-445.

Bill C-445—Speaker's Ruling

[The Speaker, Liberal, Peter Milliken]

I am now prepared to rule on the point of order raised by the government House leader and minister for democratic reform on April 8, 2008 concerning the requirement for a royal recommendation for Bill C-445, An Act to amend the Income Tax Act (tax credit for loss of retirement income) standing in the name of the member for Richmond-Arthabaska.

I would like to thank the hon. government House leader as well as the hon. member for Richmond--Arthabaska for their contributions on this issue.

In his intervention, the hon. government House leader stated that refundable tax credits are direct benefits paid to individuals regardless of whether tax is owed or not and are paid out of the consolidated revenue fund. He argued that a legislative proposal creating such a tax credit therefore needed to be accompanied by a royal recommendation.

In support of his argument, he pointed to a Speaker's ruling of June 4, 2007, which did not select a report stage amendment to Bill C-52, the Budget Implementation Act, 2007, that sought to create a refundable tax credit because it required a royal recommendation. He also referred to a ruling of May 11, 2006 from the Speaker of the Senate that ruled out of order Bill S-212, an Act to amend the Income Tax Act (tax relief) on the basis that it increased a refundable tax credit.

In response, the hon. member for Richmond--Arthabaska argued that legislation proposing a reduction in taxes has always been permitted under our parliamentary rules, even if this leads to reimbursements being made to taxpayers.

To support his arguments, he pointed to a ruling by Mr. Speaker Parent of October 16, 1995 regarding Bill S-9, An Act to amend the Canada-United States Tax Convention Act, 1984.

The Chair has carefully reviewed Bill C-445, the previous rulings that were cited as well as the comments from the hon. members and believes that the central issue in the present case is whether the creation of the tax credit found in Bill C-445 is strictly an alleviation of taxation or an authorization to spend for a new and distinct purpose. If it is the latter, the bill would need to be accompanied by a royal recommendation before the third reading motion can be proposed to the House.

The bill standing in the name of the hon. member of Richmond--Arthabaska seeks to amend the Income Tax Act by providing for a tax credit to a taxpayer in respect of whom an employer and the employees failed to make required registered pension plan contributions. Whether or not the tax credit is refundable or non-refundable is the key issue in determining the need for a royal recommendation.

Non-refundable credits are deducted from a person's tax payable rather than being calculated separately: they simply reduce the amount of tax payable by an individual. The amount of the credit is limited to the amount of the tax payable.

This is not the case for refundable tax credits, which are unique in the Income Tax Act: they provide for a taxpayer to receive an amount from the government due to a low amount of taxable income and tax payable. Such credits are calculated separately on an income tax return because they are not simply alleviations of taxes otherwise payable.

Bill C-445 is proposing a refundable tax credit. The Chair is of the opinion that the bill would not only alleviate taxation but also potentially allow monies to be disbursed from the consolidated revenue fund, in the event the taxpayer had taxable income for the year that yielded taxes less than the amount of the credit.

The circumstances of Bill C-445 are quite different from those referred by the hon. member for Richmond--Arthabaska in the ruling concerning Bill S-9. There, reimbursements were limited to tax payable. By making a tax credit refundable, Bill C-445 could lead to refunds that are greater than taxes paid. Such spending, for a new and distinct purpose, would need to be accompanied by a royal recommendation.

Accordingly, the Chair will decline to put the question on third reading of this bill in its present form unless a royal recommendation is received.

The debate, later today or on Monday, is currently on the motion for second reading and, as usual, this motion will be put to a vote at the close of the second reading debate.

I thank the hon. government House leader and the member for Richmond—Arthabaska for their comments on this matter.

Royal Recommendation — Bill C-445

[André Bellavance, Bloc, Richmond—Arthabaska, QC]

Mr. Speaker, I would like to correct an injustice or perhaps an error on the government's part. In response to the statements made by the Leader of the Government in the House of Commons and Minister for Democratic Reform when he rose on a point of order on Tuesday, April 8, 2008, I would suggest to the Chair that Bill C-445 does not require a royal recommendation.

It is important to understand that this bill amends the Income Tax Act to provide a tax credit to a taxpayer in respect of whom an employer and the employees failed to make the contributions required to be made to a registered pension plan. This bill seeks to help retirees who have lost retirement income.

According to a ruling by the Chair on October 16, 1995 about Bill S-9, a tax reduction would not contravene Standing Orders 79 and 80. The Chair at the time said this:

The bill will also have the effect of granting some tax relief retroactively and there may be some reimbursements payable for taxes paid under the law as it now reads, should Bill S-9 be passed by the House and receive royal assent.

The bill does not appropriate tax revenue, but rather exempts or reduces taxes otherwise payable, in some cases retroactively.

...

In conclusion, Standing Orders 79 and 80 have not been contravened, as Bill S-9 neither imposes a tax nor appropriates money for any purpose. Since the bill relinquishes funds it might otherwise have gained, it is not appropriating money but forfeiting revenue it would have raised without such changes.

It seems to us that this is the same, because it would reduce the tax revenues, as permitted by the Standing Orders. The Speaker will have to consider the fact that this measure seeks not to create a specific program to help workers who have lost their pension funds, but to enable citizens who have paid taxes their whole lives to benefit via tax credits.

This fiscal measure will result in a reduced tax burden on individuals whose retirement income was downsized because their retirement plan was in a deficit situation when the company that employed them ceased operations.

Take, for example, the 1,200 Jeffrey mine retirees in Asbestos, in my riding. Since February 2003, these retirees have lost no less than $55 million from their pension fund and $30 million in benefits. As a result, a retired worker who was supposed to collect $30,000 can now collect only $22,000. When my Bill C-445 comes into force, retirees will receive 22% of the $8,000 lost, a $1,760 tax credit.

I could also have talked about the workers at Atlas Steel in Sorel, who are struggling with the same problem.

If this bill is passed, all retirees who have been victims of this kind of situation will be able to get back some of the money lost as tax credits—that is important to mention. This will amount to reduced revenues for the state, not a new social program.

In conclusion, I am sure that this explanation will enable the Speaker to reconsider the need for a royal recommendation on Bill C-445.

Mr. Speaker, I have faith in your good judgment. I believe that you will come to an enlightened decision in favour of workers, justice and democracy.

Royal Recommendation--Bill C-445 and Bill C-490

[Peter Van Loan, Conservative, Leader of the Government in the House of Commons and Minister for Democratic Reform]

Mr. Speaker, I rise on a point of order. I want to speak to the question of the need for a royal recommendation on two private members' bills.

On March 11, 2008, you noted that the spending provisions in two private members' bills appear to infringe on the financial initiative of the Crown. You invited members to make arguments on whether those bills require a royal recommendation. That is what I intend to do at this time.

The two bills are Bill C-445, An Act to amend the Income Tax Act (tax credit for loss of retirement income), and Bill C-490, An Act to amend the Old Age Security Act (application for supplement, retroactive payments and other amendments).

Let me begin with Bill C-445. This bill would create a new refundable tax credit for the loss of retirement income.

Refundable credits are direct benefits paid to individuals regardless of whether tax is owed or not and are paid out of the consolidated revenue fund. As a result, any legislative proposal to create a refundable tax credit requires a royal recommendation.

I would draw to the attention of the House two recent rulings wherein the Speaker of the House and the Speaker of the Senate concluded that creating or increasing a refundable tax credit requires a royal recommendation.

On June 4, 2007, there was a Speaker's ruling that a proposed amendment to Bill C-52 to create a refundable tax credit could not be selected for report stage because the amendment required a royal recommendation.

On May 11, 2006, the Speaker of the Senate ruled that Bill S-212 was out of order because it would have increased a refundable tax credit. The Speaker of the Senate stated:

--bills proposing to alter refundable tax credits need a Royal Recommendation.

This is because the payouts that will be made to taxpayers, who are entitled to claim them, must be authorized. This authorization is the Royal Recommendation. These payments can only be made from the Consolidated Revenue Fund; they are expenditures of public money.

Since Bill C-445 would create a refundable tax credit, it needs to be accompanied by a royal recommendation.

Now, in regard to Bill C-490, this bill proposes a number of changes to the old age security program which would result in increased spending and would therefore require a royal recommendation.

Clause 1 of Bill C-490 would apply to a person who ceases to have a spouse or common law partner because of the spouse's or common law partner's death and would provide that person with the old age security pension that would have been payable to the person's spouse or common law partner, for a period of six months. This extension of benefits would be a new program requirement, which would result in additional spending.

On December 8, 2004, a Speaker's ruling in the case of Bill C-278 concluded that a similar extension of benefits for the employment insurance program constituted a new and additional requirement for spending, and therefore required a royal recommendation.

Clause 2 of Bill C-490 would eliminate the requirement to make an application for a supplement for old age security benefits. Formal application is needed since the information available from the Canada Revenue Agency is sometimes insufficient to determine eligibility. This change would result in benefits under the old age security program being provided to persons who otherwise would not be eligible to receive them. This would be a new program requirement that would require additional spending.

On October 24, 2005, a Speaker's ruling with respect to a provision in Bill C-301, dealing with other proposed retroactive payments under the old age security program, concluded that:

Bill C-301...proposes to alter the process by which compensation is awarded to old age security recipients in the manner that retroactivity is handled.

Clauses 2, 3 and 4 remove the requirement that the recipient must make an application before they can receive a payment...This changes the conditions of the compensation process and creates new or additional spending.

Clause 3 of Bill C-490 would increase the guaranteed income supplement monthly benefit by $110. The Department of Human Resources and Social Development estimates that this change could cost up to $2 billion a year. This would constitute additional spending for a new and distinct purpose and would therefore require a royal recommendation.

Clause 6 of Bill C-490 would provide for retroactive payments where a person has not received a supplement, or a portion of a supplement, to which that person would have been entitled under the act.

On October 24, 2005, a Speaker's ruling on the retroactivity of payments in the case of Bill C-301, respecting the monthly guaranteed income supplement under the Old Age Security Act, concluded that:

--retroactivity is limited by the date upon which the application was made. Late applicants may only be eligible for the period dating from the application. It would appear then that this modification authorizes increased spending which would require a royal recommendation.

The Department of Human Resources and Social Development estimates that Bill C-490's provision of unlimited retroactivity for guaranteed income supplement monthly benefits could represent an initial lump sum payment to beneficiaries of up to $6 billion.

In conclusion, Bill C-490 would result in increased spending for the old age security program in the new and distinct ways I have just outlined. The bill therefore requires a royal recommendation.

Private Members' Business

[The Speaker, Liberal, Peter Milliken]

The Chair would like to take a brief moment to provide some information to the House regarding the management of private members' business.

After a replenishment of the order of precedence, the Chair has developed the practice of reviewing the items there so that the House can be alerted to bills which, at first glance, appear to infringe on the financial initiative of the Crown. The aim of this practice is to allow members the opportunity to intervene in a timely fashion to present their views about the need for a royal recommendation.

Accordingly, following the March 3 replenishment of the order of precedence with 15 new items, I wish to inform the House that two bills give the Chair some concern as to the spending provisions they contemplate. They are: Bill C-490, An Act to amend the Old Age Security Act (application for supplement, retroactive payments and other amendments), standing in the name of the member for Alfred-Pellan; and Bill C-445, An Act to amend the Income Tax Act (tax credit for loss of retirement income), standing in the name of the hon. member for Richmond—Arthabaska.

I would encourage hon. members who wish to make arguments regarding the need for a royal recommendation in the case of Bill C-490 and Bill C-445, or in the case of any of the other bills now on the order of precedence, to do so at an early opportunity.

I thank the House for its attention.

The Chair has notice of a question of privilege from the hon. member for Ajax—Pickering. I will hear him now.

Income Tax Act

[André Bellavance, Bloc, Richmond—Arthabaska, QC]

moved for leave to introduce Bill C-445, An Act to amend the Income Tax Act (tax credit for loss of retirement income).

Mr. Speaker, it is a privilege to introduce this bill today on behalf of thousands of retirees who have been cheated because their employer failed to assume its obligations with respect to their retirement plan, or because it stopped fulfilling those obligations.

In particular, there is the case of retirees from the Jeffrey mine in Asbestos, in my riding, Richmond—Arthabaska, and retirees from Aciers Inoxydables Atlas in Sorel-Tracy, in the riding of my colleague from Bas-Richelieu—Nicolet—Bécancour, whom I would like to thank for his support in this matter.

I would also like to thank my colleague from Chambly—Borduas, who met with these retirees, and drafted this bill with them—which is important to note—to provide a refundable tax credit for the loss of retirement income.

Of course, I hope to have the support of all members of this House to help these retirees, who have become victims, recover part of the money they have lost.

(Motions deemed adopted, bill read the first time and printed)