Bill C-51 (Historical)
Economic Recovery Act (stimulus)
An Act to implement certain provisions of the budget tabled in Parliament on January 27, 2009 and to implement other measures
This bill was last introduced in the 40th Parliament, 2nd Session, which ended in December 2009.
Jim Flaherty Conservative
This bill has received Royal Assent and is now law.
February 16th, 2012 / 3:30 p.m.
Ted Menzies Minister of State (Finance)
Thank you, Mr. Chair.
It is indeed an honour to be sitting directly in front of you, instead of beside you, and cheering you on in your balanced decisions, to which we listened many days and many nights at this committee. I enjoyed it all.
Welcome to the new members here.
It is great to be back, and great to be back to speak to what I think is a well overdue option for our pension or income retirement system in Canada.
I should mention that I'm here with some very learned people, some from our Department of Finance—Diane Lafleur, Leah Anderson, Lynn Hemmings, and Yasir Syed—and as well from OSFI, or the Office of the Superintendent of Financial Institutions, a couple of experts, Carol Taraschuk and John Grace. John Grace and I and Lynn covered a lot of miles developing this new concept. They have been a tremendous help. Bill C-25, the Pooled Registered Pension Plans Act, is the reason we are here.
Mr. Chair, Canada's retirement system is recognized around the world by such experts as the OECD as a model that succeeds in reducing poverty among Canadian seniors and in providing generous levels of replacement income to retired workers. Simply put, our system is the envy of the world. The introduction of the pooled registered pension plan, or, as it has come to be known, the PRPP, will only build on this well-earned reputation.
The success of this model rests on the strength of the three pillars. The first pillar is made up of the old age security, or OAS, as well as the guaranteed income supplement, often referred to as the GIS. These programs provide a basic minimum income guarantee for seniors and are funded primarily through taxes on working Canadians. Our government has a responsibility to ensure that programs such as these are available for the next generation of Canadians as well. That's why our government will take a prudent, balanced, and responsible approach to making sure that OAS remains sustainable.
The second pillar is the Canada Pension Plan as well as the Quebec Pension Plan. These are mandatory public target benefit pension plans that provide a basic level of income to Canadian workers when they retire. There are currently 16.5 million workers contributing to either CPP or QPP. With these programs paying $44 billion in benefits per year to now more than 6.5 million Canadians, the CPP is the centrepiece of Canada's pension system. I'm proud to say that it is fully funded, it is actuarially sound, and it is sustainable for the long term.
The third pillar is composed of tax-assisted private savings opportunities to help encourage Canadians to accumulate additional savings for retirement. It includes registered pension plans and registered retirement savings plans. In total, the cost of tax assistance provided on retirement savings is currently estimated at $25 billion per year.
How do the PRPPs fit into what, as I say, is a good system already?
In 2009 a joint federal-provincial research working group conducted an in-depth examination of retirement income adequacy in Canada. While the working group concluded that Canada's retirement system is performing well, it also found that some modest- and middle-income households may not be saving enough for retirement.
Of particular concern were the following findings. Participation in employer-sponsored registered pension plans was declining. The proportion of working Canadians with such plans has declined from 41% in 1991 to 34% in 2007. Also, Canadians are not taking full advantage of other retirement savings options, such as the RRSP. Currently there is over $600 billion of unused room in RRSPs.
Through you, Mr. Chair, let me reassure the committee that our government recognizes the importance of ensuring that all Canadians have adequate income for their retirement. The report by the working group sent a clear signal that a gap exists on the voluntary side of Canada's retirement system.
With this information in hand, our government took immediate action to fill that gap. Over the past two years, our government's commitment to strengthen Canada's retirement system has taken me to every province and territory and countless communities across this country. In my travels, I've consulted with many Canadians, met with our provincial and territorial counterparts, and held discussions with small and medium-sized business owners as well as self-employed Canadians.
At our federal-provincial-territorial finance ministers meeting in December of 2010, after examining the various proposals that came out of the consultations, the federal, provincial, and territorial governments unanimously decided to pursue the pooled registered pension plan framework. This decision was taken because the PRPP was considered an effective and appropriate way to target those modest- and middle-income individuals who may not be saving enough, and in particular those who currently do not have access to an employer-sponsored registered pension plan.
What then are the PRPPs? They are in fact a large-scale, broad-based pension arrangement. They will be available to employees with or without a participating employer. As well, they will be available to the self-employed. This is particularly important as, incredibly, over 60% of Canadians do not now have access to a workplace pension plan. In short, PRPPs will provide these Canadians with access to a low-cost pension arrangement for the very first time.
By pooling pension savings, PRPPs will offer Canadians greater purchasing power. Basically, Canadians will be able to buy in bulk. This means more money would be left in their pockets for their retirement. The introduction of PRPPs also marks a significant advancement for small and medium-sized businesses. Small and medium-sized businesses have, until now, experienced a significant barrier in being able to offer a pension plan to their employees. Under a PRPP, most of the administrative and legal burdens associated with a pension plan will be borne by a qualified, licensed, third-party administrator.
We all understand that Canadians want their governments to work together to deliver results for them, and the PRPP is a prime example of what we can accomplish for Canadians when we do just that. Bill C-25 represents the federal portion of the PRPP framework and is a major step forward in implementing PRPPs. Once the provinces put in place their PRPP legislation, the legislative and regulatory framework for PRPPs will be operational. This will allow PRPP administrators to develop and offer plans to Canadians and to their employers.
Working together, I am confident we can get this important new retirement savings option up and running for Canadians as soon as possible. Let me quote Dan Kelly, the vice-president of the Canadian Federation of Independent Business:
This can't come soon enough from our perspective. We think this has great potential.
Before I take questions from committee members, I cannot stress enough how the introduction of the PRPP is just the most recent example of this government's continuing commitment to ensuring that Canadians have a dignified retirement.
I would like to take some time before you today to highlight some of the actions our government has taken to secure retirement income for Canadians. Financial literacy, for example, is an area where we are working to improve retirement income outcomes. Obviously, a strong system depends on the ability of its users to make informed decisions. That is why our government launched the task force on financial literacy to make recommendations on a cohesive, national strategy to improve financial literacy across Canada.
Since 2006, our government has increased the age credit amount by $1,000 in 2006 and then another $1,000 in 2009. We've doubled the maximum amount of income eligible for pension income credit, up to $2,000.
We introduced pension income splitting. We increased the age limit for maturing pensions and RRSPs to 71, up from 69 years of age before.
All told, we have provided about $2.3 billion in annual targeted tax relief to seniors and pensioners.
In addition, Budget 2008 introduced the tax-free savings account, which is particularly beneficial to seniors, as it helps them meet their ongoing savings needs on a tax-efficient basis after they no longer are able to contribute to an RRSP.
Our record also includes important improvements to several specific retirement income supports. In Budget 2008, we increased the amount that can be earned before the GIS is actually reduced. We raised that to $3,500 so that GIS recipients will be able to keep more of their hard-earned money without any reduction in their GIS benefits. Also, Budget 2008 increased flexibility for seniors and older workers with federally regulated pension assets that are held in life income funds.
In May 2009, Bill C-51 reformed aspects of the CPP to increase flexibility and fairness in the plan and allow it to better reflect the way Canadians live, work, and retire.
In Budget 2011, we announced a new GIS top-up benefit for the most vulnerable seniors. Seniors with little or no income will receive an additional annual benefit of up to $600 for seniors and $840 for couples.
The next phase of Canada's economic action plan provides an additional $10 million over two years to enhance the New Horizons for Seniors program. This additional funding is enabling more seniors to participate in social events, pursue an active life, and contribute to their community. The program provides funding for projects to expand awareness of elder abuse, promote volunteering and mentoring, as well as encourage social participation of seniors.
Clearly, Mr. Chair, our records show our government is committed to the financial well-being of Canada's seniors, a commitment we've demonstrated since our first budget.
The PRPP is only the latest example of our government's continued commitment to helping Canadians realize their retirement dreams. The introduction of the PRPP not only fills a gap in Canada's retirement system but makes a system that is the envy of the world even stronger.
Thank you, Mr. Chair. I'd be happy to take questions.
March 16th, 2010 / 10:25 a.m.
Leona Aglukkaq Nunavut, NU
Thank you for the question.
First, with respect to the area of food safety, our government is committed to addressing the concerns identified in the report by Sheila Weatherill in order to minimize risks to food in the future. We are working to implement all the recommendations identified in the report.
Our government is working towards a strong, safe, and effective system through the modernization of food and drugs legislation. Former Bill C-51 was an important step. But given food safety issues such as the listeriosis outbreak, among others, it was imperative that we take a more critical look at the proposal in order to be confident that the legislative modernization this government is proposing is the best for Canadians. We'll continue to work to address that through the Public Health Agency and in partnership with the provinces and the territories.
With respect to drug safety, on various occasions, the committee has discussed a need for change to the Food and Drugs Act and has raised concerns such as the need for better control over clinical trials, including a drug approval process and implementing a life-cycle approach to licensing. These were addressed in former Bill C-51, and the government remains committed to these improvements.
The final point with respect to consumer product safety is that our government is committed to protecting Canadians, particularly our children, from unsafe consumer products. The Speech from the Throne recently reconfirmed the Government of Canada's intention to respect the wishes of Canadians by reintroducing the proposed Canada Consumer Product Safety Act in its original form, which was Bill C-6 at the time. If passed, the proposed act will modernize the government's approach to consumer product safety, with important powers such as the ability to order mandatory product recalls and to quickly remove unsafe products from our store shelves. The existing act has not been updated in over 40 years. The proposal is important in order to ensure that we keep pace with our major trading partners.
In closing, I would like to say this. The legislation is so outdated that Canada depends on another country for information on unsafe products that are sold and used in our population. It's unacceptable that we continue to rely on other jurisdictions in regard to the harm being caused by unsafe products in Canada to Canadian children. I'll use the crib as an example, or the unsafe stroller that amputated the fingers of children, and so on. We are determined to work through the reintroduction of this legislation so that we have legislation that will allow us to protect the health and safety of Canadians.
December 4th, 2009 / 8:40 a.m.
Yves Lessard Chambly—Borduas, QC
Thank you, Mr. Chair.
I would like first of all to thank you all for your contribution to our study.
The evidence we have received to date is very enlightening. It will certainly be useful for the analysis and the findings in our report. You are bound to find it useful as well.
If I may, I will ask all my questions at once. You will want to listen carefully to each question because of the time it takes for translation. I think we will save time that way.
I would like to make two statements, two reminders. The first is of course the undertaking Canada made in 1989 to eliminate poverty by the year 2000. We know the situation today; we have failed. If we acknowledge that there is poverty, we have to admit that there are factors which make poverty worse. Each of you mentioned a number of aggravating factors, such as Employment Insurance regulations that eliminate as many people as possible. One of those factors is the fact that almost 10 years ago, the federal government withdrew from social housing, for example.
I personally am very touched by your evidence, Dr. Prentice. It in fact echoes other evidence about the fate of women and children. I am a firm believer that the solutions lie in better living conditions for women and children. When we improve the conditions in which women live, we improve the conditions in which children live. I think there is a direct link. Not recognizing that amounts to not recognizing the realities of life.
However, many measures work against women. One of the latest measures, for example, is the removal of women's right to go to court seeking pay equity as part of a quest for equity. There are better things in life; that is not an example. As Mr. Cohen said, the same year the undertaking was made, the Unemployment Insurance Act was amended in order to eliminate as many people as possible.
I gave this introduction to impress upon you the fact that our vision also includes a set of factors which create poverty and make poverty worse.
My first question is to you, Dr. Prentice. You say that work, here, is sometimes a factor in poverty. You gave as an example the gap between men and women. In Winnipeg, the gap is $7,000, and in Manitoba as a whole, it is almost $9,000. This shows that in Winnipeg, women perhaps earn a bit more and the gap is wider elsewhere. What do you mean when you say that beyond that gap, work also creates poverty in some cases?
The other question is for you, Mr. Cohen. When you did your analysis of poverty, one of the examples you gave was Bill C-51 concerning the extension of benefit periods. However, your comments were aimed specifically at people whose jobs are precarious. I am sure that — because you are very involved in the issue of unemployment — you are perfectly aware that people with precarious jobs are all excluded from Bill C-51. It's actually after five years, seven years, and so on. You know the conditions. There are no measures, and it is temporary.
I would like hear a bit of what you have to say about that, about employment insurance. What measures would be appropriate for this program to help put an end to poverty?
Ms. Fernandez, I believe it was you who were talking about detailed federal strategy. We have seen that exercise before, and we know the outcome today. On that subject, I am going to put the following question to each of you.
What should be done differently to ensure that we succeed this time? Are we not going to take the same dynamic and end up 10 years, 15 years or 20 years later in the same situation?
Canada Post Corporation Act
November 30th, 2009 / 6:15 p.m.
Paul Szabo Mississauga South, ON
Mr. Speaker, I thank the member for his animated presentation because it is actually time that we became a little animated about what is happening.
We are even seeing it to some extent in regard to the CBC. The member may recall that there was a provision in the last budget, Bill C-51, whereby the borrowing authority of CBC was being increased and everybody thought that was a good thing. However, it was being increased simply because the government would not provide the resources necessary for CBC to continue to deliver services to Canadians. With that borrowing authority the government is actually cashing in the leasing revenues on buildings that it owns but does not use just to provide the cash flow that it needs. It is done just to survive. I characterize that as one of the next steps in the privatization of the CBC.
With regard to Canada Post and the re-mailer situation, I would like to ask the member if he could inform the House of a bit of the history. I ask because was told by someone, and I just want to just confirm it, how the re-mailer situation arose and what options may be available to address it either by remediation of a mistake that happened before, or by some sort of arrangement made on a one time basis to grandfather current provisions as opposed to trying to unravel what has been done.
November 24th, 2009 / 3:55 p.m.
November 19th, 2009 / 5:10 p.m.
Actuary, Confédération des syndicats nationaux (CSN)
I would just like to add one thing about the CPP and the QPP. Two reforms have been announced: one has been announced in relation to the Quebec Pension Plan, and Bill C-51 has already been passed.
If different approaches are taken, the two plans may end up not being quite so similar. Indeed, the differences between CPP and QPP have been fairly insignificant thus far. One of the important points to make is that the CPP is on a more sound financial footing than the QPP, because Quebec's population is aging more quickly than that of the rest of Canada. The effect of an aging population is thus a lot more pronounced in the Quebec Pension Plan than in the Canada Pension Plan. That may require different kinds of changes.
November 19th, 2009 / 4:45 p.m.
November 19th, 2009 / 3:50 p.m.
Danielle Casara Vice-President, Fédération des travailleurs et travailleuses du Québec
First of all, the FTQ would like to thank the Committee for giving it this opportunity to appear today to express our views on women and pension security.
The FTQ is the largest central union body in Quebec, with more than half a million members, one third of whom are women. As a result, the FTQ represents the largest number of unionized women workers in Quebec. It is also the most representative union body, in that our members work across the full spectrum of economic sectors, including for the federal government. Together we have developed expertise in the area of pension plans, both public and private. We have been part of every single one of the struggles that resulted in improvements to pension plans in Quebec.
Over the years, the FTQ has become more and more active in this area, holding meetings with affiliated unions and training sessions, in order to mobilize our members around this important issue. The FTQ is also involved at the political level and regularly makes its views known by presenting briefs at parliamentary committees or lobbying politicians on this issue.
The FTQ is appearing today to reflect our view that public plans must be maintained and enhanced, rather than cut back, given that they are already too modest. The FTQ noted with dismay that Bill C-51 passed with lightning speed. We can only deplore the lack of extensive public consultations on the proposed changes and the insidious manner in which cuts to the Canada Pension Plan, or CPP, were slipped into a budgetary type of bill.
Furthermore, now that Bill C-51 has passed, there is a greater probability that the Quebec government will also start cutting the Quebec Pension Plan, especially in relation to people who retire between the age of 60 and 65. We think it is important to highlight the fact that the financial status of the Quebec plan seems to be even more precarious, as a result of demographics and a less robust labour market than in the rest of Canada, which means that the Quebec government may have to increase contributions in order to ensure its viability.
As stated by the Minister of Finance last May, as part of the triennial review of the plan, the CPP “[...] remains on a sound financial footing”. That is why they “[...] agreed that the contribution rate would remain unchanged at 9.9% of pensionable earnings”.
In light of that, we are extremely concerned about the lack of transparency surrounding the work led by Mr. Jack Mintz, who is to present his report at the next annual meeting of the Finance Ministers in December in Whitehorse. That group has the mandate—and you know this better than we do—to propose a new vision to Finance Ministers of what the Canadian retirement system should look like based on the current reality. We would therefore like to use our remaining time to share our thoughts on what the Canadian retirement system should look like, particularly from the standpoint of women.
In terms of goals, the Canadian retirement income system should ensure that all women have a decent minimum income, that they are able to maintain their standard of living during retirement and that this income will be protected from inflation, particularly considering the fact that, as a result of their family responsibilities, women more often end up leaving the labour market or slowing down. In any case, women already earn less than men do right from the outset.
For the FTQ, the key to proper coverage for women is improvements to public plans, which alone can attain the objectives cited above, especially considering women's high level of dependency on public plans. Indeed, on average, women derive 54.4% of their retirement income from public sources, compared with 38% for their male counterparts. For additional information, you may wish to look at the table appended to our brief.
In a nutshell, women need public plans. The last 40 years have shown the limitations of a system that relies on the voluntary participation of employers in supplemental pension plans, or on the capacity of all taxpayers, whatever their income level, to save enough for their retirement. In actual fact, according to statistics published by the QPP, the coverage rate of supplemental pension plans in Quebec is stagnant at about 40% of all workers. We know that a very small minority of taxpayers—the most wealthy ones—are alone in claiming the lion's share of the RRSP tax deduction.
The most significant reform that could be introduced would involve increasing the CPP/QPP replacement rate, which is currently 25%, ideally to 50%, as proposed by the Canadian Labour Congress. That change would be capitalized and be implemented gradually over a period of 30 to 40 years.
Because the CPP/QPP coverage rate is almost universal, in the short term, this reform would raise the income level of women in retirement. There is no doubt that current provisions related to the care of children under seven and the non-inclusion of the lowest income years for the purposes of calculating the pension—15% which will soon be 17%—should be maintained and should apply to this new component. The FTQ is also in favour of raising the amount of maximum pensionable earnings from 100% to 125%, or even 150% of the average industrial wage, so that an enhanced CPP would cover a larger proportion of the working population.
Incidentally, the positive effect of this approach would be to significantly enhance income security prospects, on retirement, of workers with non-standard jobs, the majority of whom are women, as you know.
For the FTQ, any expansion of CPP/QPP should involve defined benefits, but certainly not defined contributions, and even less so a voluntary contribution plan. We are of the view that only a public defined benefit plan would guarantee women income security over their lifetime, the risks of which would be assumed by successive cohorts of plan contributors.
On that specific issue, the FTQ shares the opinion of Mr. David Denison, President and Chief Executive Officer of the CPP Investment Board, who recognized the major weaknesses of a defined contribution plan, and I quote:Contributors would be individually subject to market risk during their contributory years, and especially to the prospect of not having enough savings to ensure an adequate level of retirement income if they reach retirement age after a period of poor investment returns, such as we have recently experienced;Likewise, contributors would individually bear the risk of outliving their savings; andThe task of explaining investment options and investment performance to millions of individual account holders would be demanding and could still fail to generate suitable investment choices and outcomes.
Having said that, if it was decided to increase the CPP/QPP replacement rate, the FTQ would, in principle, have fewer objections to the idea of introducing a voluntary contribution component to the CPP/QPP, as a means of complementing the 50% replacement rate that would be guaranteed under CPP.
Beyond the benefits for all working women, we expect that the gradual introduction of this measure would mean less pressure on those employers who sponsor supplemental pension plans, as these plans would play a reduced role in terms of future service at least, because of the higher replacement rate under the public plans.
If the FTQ's preferred option were to be selected, we think it would be necessary to enhance benefits under the basic plans during the transition. For example, the Canadian Labour Congress is recommending that the Guaranteed Income Supplement be increased by 15% so that no senior has to live in poverty. Indeed, the FTQ wants to commend the federal government for raising the income exemption from $500 to $3,500 for GIS. However, we believe that exemption should not be limited to employment income, but rather, apply to all income.
We would also like to point out that, for a Quebec woman taxpayer over the age of 65 with an income of between $17,000 and $21,000, a $1,000 withdrawal from her RRSP currently results in a reduction in the GIS amount and increased taxes and contributions of $800, leaving her only $200 net after all is said and done, which is hardly likely to encourage someone to save for retirement.
In conclusion, the FTQ shares your concern with respect to the importance of ensuring that the Canadian retirement system provide income security and respect the dignity of Canadian workers who retire. We would just reiterate our strong preference for extensive public consultations in Canada with respect to potential solutions, and we resolve to make an active and constructive contribution to that consultation process.
Thank you very much for your kind attention.
November 17th, 2009 / 5 p.m.
Cathy McLeod Kamloops—Thompson—Cariboo, BC
I appreciate both those comments, and I think they're both very valid. I remember Terry Toller, who did consumer education in grade nine, teaching how to do your income tax returns and skills that we never forget.
I want to get one quick question in. The one thing I am a bit confused over are the changes under Bill C-51. As I understand, they are just actuarial adjustments. So come 50 and your decision to retire at 60, 65, or older, it's not that there are reductions; it's that there are adjustments in terms of the equity since it's paid out over a much longer time. Could someone straighten me out on that?
November 17th, 2009 / 4:30 p.m.
Irene Mathyssen London—Fanshawe, ON
That's very interesting.
Madame Lizée, I have a question for you. You talked about the concern you had about the increased penalty for early retirement, and we see that in Bill C-51. I wondered if you had a concrete proposal, any idea about how we could encourage people to retire later without penalizing those who retire early. Was there something you had in mind in regard to that?