Bill C-290 (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 an individual whose employer, and certain employees of that employer, failed to make the contributions required to be made to a registered pension plan.

The House resumed from June 18 consideration of the motion 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 a committee.

Income Tax Act

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

Madam Speaker, I am pleased to have the opportunity to respond to Bill C-290, the proposal for a refundable tax credit related to pension income.

This extremely flawed proposal raises a number of concerns, primarily the one that was referred to earlier. This proposal would easily cost $10 billion, which is a very substantial sum, especially considering the significant pressure on fiscal resources at the present time.

I would refer back to a question by my colleague from Mississauga—Erindale. He asked the honourable sponsor of this bill, the member for Richmond—Arthabaska, if he had put in a request to the Parliamentary Budget Officer to have a costing done on this proposal. The hon. member was unable to or did not provide an answer as to whether he had or had not.

As we know, part of the mandate of the Parliamentary Budget Officer is to cost out private members' bills, proposals that private members bring forward, to see whether they require a royal recommendation, which I would suggest this one does, but also to tell the House whether this is a reasonable request. The number we have now is $10 billion. We did not receive an answer and I would encourage the hon. member to proceed with that process.

He suggested that $10 billion was too large an amount. The critic for the Liberal Party, the member for Markham—Unionville, also suggested it was too large an amount. However, they did not back that up with anything, other than saying that number was wrong. There are facts available. The Parliamentary Budget Officer could provide those facts and I would encourage the hon. member to do it. If he thinks the number is not accurate, then he should ask the Parliamentary Budget Officer to provide us with the realistic number.

Not only that, the bill would reduce the employer incentive to properly fund and manage its pension plans to control financial risks. Overwhelmingly, the benefit of a small group of taxpayers would benefit, while the costs would be borne by all taxpayers. This ignores the strengths of our present retirement income system.

It also fails to take into account our government's action to improve the retirement savings system for Canadians.

First, this proposal would entail substantial costs, as I say, a projected $10 billion. Not only would it provide a refundable tax credit for pension income shortfalls, but it suggests that it would in fact 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 pension compensation arrangement. As a result, the proposed credit would cost about, as I say, $10 billion annually. Clearly, such a costly measure would be untenable.

Second, by providing a partial government-backed guarantee for pension benefits, we would be creating a disincentive for employers to properly fund and manage their pension plans to control financial risks.

Third, such a guarantee would raise issues of fairness because the costs would be borne by all taxpayers, while benefiting a minority of those participating in pension plans. For example, RRSP savers or those in defined contribution pension plans who do not achieve the pension income they expect because of poor investments could demand similar compensation.

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

Madam Speaker, I am pleased to support Bill C-290, tabled by the hon. member for Richmond—Arthabaska.

We worked hard on this issue together, and we met the former workers of Atlas Steel and the Jeffrey mine on several occasions. I also want to mention that we had an exceptional partner from the Bloc Québécois, namely the hon. member for Chambly—Borduas, who helped us a lot with his experience in this area, and who supported us, as did the researchers working for the Bloc Québécois. We also consulted senior officials from the Department of Finance and from the House, as well as our law clerks, who provided advice to us.

The Conservative member who spoke earlier said that today's bill was a botched piece of legislation. He asked whether we had consulted people. Does he think that one can table a bill here, in the House of Commons, without checking the facts? Before a bill can be introduced, it must comply with the financial regulations, and also with the other regulations. It is a requirement. It is an obligation. We did what we had to do and we were advised by senior officials from his government, from Parliament, and by law clerks who told us that this legislation is very consistent with Canadian laws. Therefore, our bill is financially and legally acceptable.

I also want to congratulate the hon. member for Richmond—Arthabaska, who, earlier, conveyed so well the trauma of these former workers, because of the awful situation that they are experiencing. They have been receiving a pension for 10 to 12 years and then, all of a sudden, that pension is reduced by one third. We are not talking about a commitment that had been made, but could no longer be met: that pension fund was started many years ago.

I should also point out to the Conservative member who spoke earlier that it is not 1,000 or 10,000 plants that are affected in Canada, but only two, namely Atlas Steel and the Jeffrey mine. So, this is very much an isolated problem. If these people find themselves in this situation, it is because of government measures that allowed contributions to be stopped for a while in these plants, in an attempt to save the companies. However, we did not manage to save them and they went bankrupt, with the result that the fund found itself in a deficit and that these people's pensions had to be cut by one third.

So, this measure would not cost $10 billion. In one case, we are talking about some 300 workers, and 800 or 900 in the other case. The tax credit that the government would provide has been estimated at about $1.7 million. This amount would gradually diminish because, like everyone else, these people are going to die some day. They have already reached a certain age, since they are retired. So, at some point, this measure would no longer cost anything.

We want to correct a mistake that was not made by workers who might have gambled their money away, or made bad investments. No, the mistake was made by a government. So, we must correct it with the help of a government. We got the support of the Quebec government. If this bill is adopted here, it will also be passed by the Quebec National Assembly, with the result that these 22% would become 44%. This would help workers recover a significant part of their annual loss, as the member for Richmond—Arthabaska explained in the example that he provided earlier.

I want to thank the Liberal member who spoke a little while ago. He raised questions—and we will be able to answer those questions when the bill is referred to committee—but he has nevertheless agreed, in good faith, to referring this legislation to committee. In order to do so, the bill must get the support of a majority in the House at second reading.

He agreed to that on the Liberals' behalf. We will check and discuss it in committee. It will take about a week and we will have a chance to hear from witnesses.

I would also like to thank my NDP colleague who expressed himself so honourably earlier when he said that the bill was timely and would give us cause to consider pension funds as a whole. That might not happen when we discuss this particular bill, but it might be a starting point for us to do some more looking into the complex world of pension funds.

I would also like to express how disappointed I am in the Conservative members from Quebec. I have not heard a single Conservative member discuss this issue or stand up in support of it. This is an issue that affects Quebec workers, some of whom have cousins, brothers and sisters in my riding. It also affects the people in their ridings. The Quebec members have not said a word. That is remarkable. Every time we talk about social measures, compassionate measures, measures to help people in need, they are nowhere to be found. But when we talk about protecting oil companies by giving them $2.5 billion, they give the minister a standing ovation. They are in league with those profiteers.

I have a question that I want to ask them one by one. I want to ask the member for Lévis—Bellechasse, who is always ready to take a stand when it comes to helping the well-off, the member for Beauport—Limoilou, the member for Pontiac, the members for Beauce, Jonquière—Alma, Lotbinière—Chutes-de-la-Chaudière, Roberval—Lac-Saint-Jean, Mégantic—L'Érable, Charlesbourg—Haute-Saint-Charles and Louis-Saint-Laurent, what are you waiting for? You made a choice. I made the choice to come here and stand with the other members of the Bloc Québécois to defend the interests of Quebeckers, including the Atlas Steel and Jeffrey mine workers and other workers. I am here to stand up for National Assembly consensus issues, such as demanding $2.6 billion in equalization—which is what Ontario and Nova Scotia got—and whatever else might be in Quebec's interest. You made a different choice. That was your right, and when you made that choice, you were saying: “I will get elected as a member of the party in power and I will be able to influence decisions made by the party in power when I am part of that caucus”.

Well now, it is time to act. So far, the 10 Conservative members from Quebec have not said a word. As the second hour of debate on this issue will not take place until October, you will have until then to think about whether you are representing Quebec's interests here in Ottawa.

[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]

Tory times are tough times, as my colleague so wisely says, Mr. Speaker.

As long as Canada has a Conservative government, Canada will have a Conservative deficit. Because we have a big, fat, juicy Conservative deficit, Bill C-290 would reduce taxes for today's pensioners, but our children and grandchildren would pay those taxes down the road. If we are going to ask a teenager in Richmond—Arthabaska to pay taxes 10 years from now in order for a senior in Prince George to use this tax credit today, we should know how much tax we are talking about. Before a third reading vote, it would be vital that members know how much revenue the bill would cost the government, and more important, our children.

During the second reading of Bill C-290's predecessor, the Parliamentary Secretary to the Minister of Finance suggested that the cost would be upward of $10 billion a year. That number is suspiciously round. It is reminiscent of the alleged $50 billion deficit created by the finance minister, and I suspect it may be equally inaccurate. When the government says $10 billion, it may be $10 million or $2,000. The government is not good with numbers.

It is our position that the bill should be sent to committee. Then we can hear from real experts, finance department officials, not the Minister of Finance and his friends, as to what the costs of the bill are in reality.

Let us be clear: there is no doubt that we need to take action on pension reform in this country. Today, at the finance committee, we heard from Nortel employees and retirees. As we all know, Nortel is currently in bankruptcy protection and there are some serious concerns about the pensions of current and former employees. They have concerns that their underfunded pension plan does not have preferred creditor status in bankruptcy negotiations.

We also heard from many experts at the finance committee that the 110% maximum funding limit on pension plans acts against the interests of retirees. For this and many other reasons there is much more work to be done on the subject of pensions.

Few things could be more nerve racking than having one's pension reduced, especially in the years when one cannot return to the workforce to supplement that lost income. While that reason alone is sufficient, I believe that the principle of the bill certainly merits further study. Therefore, we in the Liberal Party believe that the bill should be sent to the finance committee where members can determine if it is the best way to go about helping retired individuals whose pension benefits are reduced.

[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.

[Bob Dechert, Conservative, Mississauga—Erindale, ON]

Madam Speaker, I appreciate the opportunity to speak about this Bloc proposal.

Bill C-290 proposes a costly refundable tax credit related to pension income at an estimated cost of about $10 billion per year. Such a costly measure would be untenable at any time, but it is particularly unsupportable in the current fiscal context. However, the cost of this proposal is not its only problem. It also raises serious issues, such as serving as a disincentive for employers in financial difficulty to properly manage their pension plans to control risks.

Clearly, having adequate retirement savings is important to all Canadians. While Canada's retirement income system is strong, with a balanced mix of public and private retirement savings programs, with both compulsory and voluntary components, our government has sought, and will continue to seek, improvements.

Indeed, our Conservative government has introduced a litany of tax-cutting measures to provide much needed relief to seniors and those saving for retirement.

We doubled the amount of eligible income that can be claimed under the pension income tax credit to $2,000. It is the first time the credit amount has been increased since it was introduced in 1975.

To improve work and savings incentives, we increased the maximum age to 71 by which Canadians must convert their RRSPs to registered retirement income funds and begin receiving pension payments.

We brought in tax changes to permit employers to offer more flexible phased retirement programs in order to retain older experienced workers and ease succession planning measures.

We introduced the landmark pension income splitting, a move that Cynthia Kett of Stewart and Kett Financial Advisors Inc. called “a huge gift from the government that more and more senior Canadians are taking into consideration in their financial and retirement planning”. And we increased the age credit by $2,000.

Our Conservative government's tax-cutting agenda since we formed government in 2006 has provided nearly $2 billion in tax relief every year for Canadian pensioners and seniors.

Additionally, we provided a 25% one-time reduction in the required minimum withdrawal amount for registered retirement income funds for 2008. This will provide approximately $200 million in tax relief to RRIF holders, while allowing retirees to keep more of their savings in their RRIFs sheltered during an extraordinary drop in market conditions.

We also recognize that Canadians need stronger incentives to help meet ongoing savings needs. As a recent HSBC Insurance Agency survey indicated, almost half of Canadians think, “The best way the government can support aging people planning for their retirement is to give them tax breaks and to allow them to look after themselves”.

This is one of the many reasons our government introduced the historic tax-free savings account, or TFSA. The TFSA is a flexible savings vehicle that complements existing registered savings plans by allowing Canadians to earn tax-free investment income to more easily meet their lifetime savings needs.

Starting this year, Canadians 18 or older can contribute up to $5,000 annually to a TFSA, with unused room being carried forward. While contributions to a TFSA are not tax deductible, all investment income, including capital gains, earned in the account will be tax-free even when withdrawn.

Important TFSA features for retirees include the fact that TFSAs have no upper age limit and that neither investment income earned in a TFSA nor withdrawals affect a senior's eligibility for federal income tested benefits, such as OAS or GIS. It is little wonder then that renowned financial author Gordon Pape has proclaimed that TFSAs are “a welcome tax shelter for Canadian seniors”.

Clearly, our Conservative government has worked aggressively to ensure that the retirement income system is responsive to the needs of savers, pensioners and seniors. We will continue to build upon and enhance the system in a way that supports its objectives, consistent with sound pension and economic policy principles.

This brings us to the Bloc's flawed proposal outlined in Bill C-290.

The measure proposed here would go far beyond its stated intent. Not only would it provide a refundable tax credit in respect of shortfalls and pension income, but it would also 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 cost approximately $10 billion per year. This represents a major and ongoing cost, and one that is clearly irresponsible in the current fiscal context. For this reason alone, I submit that the proposal should not be supported.

Regardless of whether the bill has been drafted properly to achieve its intended result, its objective is to provide a partial government-backed guarantee for pension benefits. Such a guarantee would reduce the incentive for employers to properly fund and manage their pension plans to control financial risks. This is because sponsors may exercise less due diligence with respect to prudential goals, knowing that benefits are backstopped to some degree by the government.

The fact that pension plan sponsors would not be required to contribute anything whatsoever to cover the cost of this refundable credit would exacerbate this effect.

Moreover, this proposal would place on the federal government's shoulders the responsibility for providing compensation in respect of all pension plans that reduce pension benefits. It is important to note that the federal government is only responsible for pension benefit standards for plans sponsored by federally regulated employers. Indeed, nearly 10% of all pension plan members participate in federally regulated plans.

Since provinces are responsible for the protection of pension benefits for plans sponsored by provincially regulated employers, the onus placed on the federal government for such compensation would be unjustified.

Furthermore, 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, which 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, would be extremely costly for taxpayers. It also raises issues of fairness, since the costs would be borne by all taxpayers while the benefits would accrue only to a minority of those participating in pension plans.

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 be an improper use of the tax system. It would also be costly and unfair.

Therefore, I strongly urge members not to support this proposal as drafted.

[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.

Private Members' Business

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

Mr. Speaker, on June 2, you read a statement concerning certain bills which would infringe on the financial prerogative of the Crown and might therefore require royal recommendation. At that time, you specifically referred to my bill, Bill C-290, which is why I wanted to speak briefly. I am responding to your invitation to make representations to you on the matter.

I know that the Parliamentary Secretary to the Leader of the Government in the House of Commons spoke to this matter this morning, stating that my bill did require royal recommendation. You will not be surprised to learn that I do not share that opinion. I totally disagree and, I repeat, I will be brief in stating my point of view.

Hon. members need to understand that my bill amends the Income Tax Act to provide a refundable tax credit to an individual whose employer, and certain employees of that employer, failed to make the contributions required to be made to a registered pension plan. The bill seeks to help retired workers whose retirement income is reduced by the closure or bankruptcy of their company.

I am sure I will be able to convince you with my arguments. According to a ruling by the Chair on October 16, 1995, relating to Bill S-9, reducing income tax does not contravene Standing Orders 79 and 80. The Speaker at that time made the following ruling:

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.

Thus, it seems to have the same tax effect given that we are reducing the state's tax revenue with our bill, as allowed by the Standing Orders. The Speaker should consider the fact that this measure does not seek to create a specific program to help workers who may have lost their retirement funds but rather to allow citizens who have paid taxes all their lives to benefit from tax credits.

This tax measure will reduce the tax burden of individuals who have lost their retirement income because their retirement fund was inadequate at the time the company they worked for ceased operations.

Take, for example, the 1,200 retired employees of Jeffrey Mine in Asbestos, which is in my riding. Since February 2003, they have lost no less than $55 million in retirement funds and $30 million in benefits. A retired worker who normally would have been entitled to $30,000 now only receives $22,000. Once the bill in question, Bill C-290, goes into force, that worker will receive 22% of the lost $8,000, or the non-taxable amount of $1,760.

In closing, passage of this bill will mean that all retired employees who find themselves in this type of situation can recover a portion of amounts lost through tax credits. It is important that we mention this fact. This would only result in a reduction in the government's revenue and not in a new social program.

I will conclude by saying that I am convinced this explanation will allow you, Mr. Speaker, to reconsider the need for obtaining a royal recommendation for Bill C-290.

Royal Recommendation--Bill C-290

[Tom Lukiwski, Conservative, Parliamentary Secretary to the Leader of the Government in the House of Commons]

Mr. Speaker, I rise on a point of order.

On June 9, 2009 you made a statement with respect to the management of private members' business and noted the spending provision in three private members' bills appeared to infringe on the financial prerogative of the crown. At that time you invited members to make arguments on whether these bills required a royal recommendation.

One of the bills is Bill C-290, An Act to amend the Income Tax Act (tax credit for loss of retirement income), which will be debated later today. Notwithstanding the possible merits of Bill C-290, the bill would create a new refundable tax credit for the loss of retirement income, and I believe it would require a royal recommendation.

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, also known as the CRF. As a result, any legislative proposal to create a refundable tax credit requires a royal recommendation.

Two recent rulings in the House of Commons and the Senate concluded that creating or increasing a refundable tax credit would require a royal recommendation.

On June 4, 2007 the Speaker of the House ruled that a proposed amendment to Bill C-52, An Act to implement certain provisions of the budget tabled in Parliament on March 19, 2007, to create a refundable tax credit could not be selected at report stage because the amendment required a royal recommendation.

On May 11, 2006 the Speaker of the Senate ruled that private member's Bill S-212, an Act to Amend the Income Tax Act (Tax Relief) 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 CRF; they are expenditures of public money.

Since Bill C-290 would create a new refundable tax credit, it must be accompanied by a royal recommendation.

Private Members' Business

[The Speaker, Liberal, Peter Milliken]

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

As members know, after the order of precedence is replenished, the Chair reviews the new items so as to alert the House to bills which at first glance appear to impinge on the financial prerogative of the Crown. This allows members the opportunity to intervene in a timely fashion to present their views about the need for those bills to be accompanied by a royal recommendation.

Accordingly, following the May 27 replenishment of the order of precedence with 15 new items, I wish to inform the House that 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; Bill C-308, An Act to amend the Employment Insurance Act (improvement of the employment insurance system) standing in the name of the member for Chambly—Borduas and Bill C-395, An Act to amend the Employment Insurance Act (labour dispute) standing in the name of the member for Berthier—Maskinongé give the Chair some concern as to the spending provisions they contemplate.

Hon. members who wish to present their views regarding the need for a royal recommendation to accompany these bills, or any of the other bills now on the order of precedence, are encouraged to do so at an early opportunity.

I thank the House for its attention.

Income Tax Act

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

moved for leave to introduce Bill C-290, An Act to amend the Income Tax Act (tax credit for loss of retirement income).

Mr. Speaker, I am pleased to be back here once again introducing a bill to create a refundable tax credit of 22% for loss of retirement income.

Retired employees of the Jeffrey mine in Asbestos in my riding and of Atlas Steels in Sorel-Tracy, in the riding of the member seconding this bill, my colleague from Bas-Richelieu—Nicolet—Bécancour, saw their retirement income drastically reduced after their former employer went bankrupt. We are trying to help these people with this bill, which I will remind everyone, passed second reading in the last Parliament. I would like to thank my Liberal and NDP colleagues, who have agreed to support this bill in order to refer it to committee. We had made significant progress. Unfortunately, an election was called, which forces us to start over with this bill. We are going to keep at it. The Conservative Party, the government, is the only one that has refused to support our bill. We will try, in good faith and with open minds, to convince them to support these people who were shortchanged when these businesses shut down. They deserve justice and dignity. That is why we are fighting for them.

Obviously, I would like to thank the hon. members for Bas-Richelieu—Nicolet—Bécancour and Chambly—Borduas who have worked hard with me and with the retired employees in order to develop this bill which is so important for them.

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