Mr. Speaker, I am pleased to rise today to offer the New Democrats' perspective on Bill C-25. However, before I do that I want to refresh the memory of the House and Canadians who may be watching.
In June 2009, the House unanimously passed an NDP opposition day motion that laid out how the House should address the pension crisis that was rising rapidly at that time in our country. We will no doubt remember that the motion spoke of the need for a national pension insurance plan to protect workers' deferred wages; that their pension plans would be protected if their companies were to collapse. We also started a conversation at that time regarding a phased-in increase with the goal of doubling the Canada pension plan.
In that opposition day motion, but first in the platform of the NDP in the May election, was an increase to the guaranteed income supplement, a significant increase to raise seniors on GIS above the poverty line. That was for 250,000 Canadians, most of them women. Our party ran an election platform that showed Canadians what our s intentions were for Canada's retirement security program. Nowhere in the Conservatives' platform was there a plank that indicated to Canadians that, once elected, the Conservatives would be changing the eligibility for old age security from 65 years old to 67 years old.
Last week, at the Davos convention, the Prime Minister told Canadians, along with a stunning PMO release, that many Canadians would need to work an extra two years before receiving old age security. Seniors pay taxes all of their lives expecting to have OAS as part of their retirement income. Now, the Prime Minister, apparently, wants to move the goalposts on them. What about single unemployed women? Those are the women who live in poverty under the GIS. They will now need to stay on some sort of provincial assistance for an additional two years because they are already in poverty and need Canadians' help.
I wonder if the government has considered the statistic that people in the bottom 20% of the workforce pass away five to six years earlier than those in the top 20%. In fact, that very condition exists between Ancaster—Dundas—Flamborough—Westdale and Hamilton East—Stoney Creek where the life expectancy differs because of people's poverty rate. Did the government consider that half of all low-income men will collect OAS-GIS cheques for only a short period of 10 years? Raising the retirement age would clearly have a negative impact on those persons aged 65 who are in poor health and unable to continue working.
What about the cost? The latest actuarial reports on the OAS-GIS project that the number of recipients will increase from 4.9 million today to 9.3 million by 2030. I think the opposition and the government agree on that statistic. However, the increase to the projected total cost is much more modest, which is from 2.4% of GDP to a peak of 3.2% of GDP by 2030, and that is because the economy is expected to grow.
However, we need to think about this for a moment. We have a government that, since taking power, has decreased corporate taxes by $16 billion a year. That is $16 billion taken out of the fiscal capacity of this place to make determinations for things that Canadians need and there is nothing Canadians need more than old age security protection.
Therefore, it should be of no surprise to anybody that, if the moneys coming in are removed, somewhere along the line we need to face the problem of what we need to pay out. We should never ever put that burden directly on our seniors, as suggested by the Prime Minister last week.
One may ask what all this has to do with Bill C-25. That is a fair question. The NDP believes that seniors' retirement income security is about far more than one plan or another option. We believe that we need to have a broader conversation on pensions and that Canadians want us to look at pensions as a whole. It is not to cut them but to ensure they are there to protect our seniors in years to come.
I will now speak specifically and more directly to Bill C-25. I would suggest that Bill C-25 appears to have been hastily put together. In fairness to his work, I know the minister of state did travel the country, as I did, listening to seniors. However, there also was a corresponding campaign across this country coming from labour, seniors groups and political parties, most notably the NDP, talking about increasing the Canada pension plan and the need to build the foundation because 12 million Canadians today do not have any savings or pensions and we need to build that foundation to protect them in the future.
The proposal in Bill C-25 would not even guarantee an actual pension. I would suggest that, at best, we should be referring to this as a pension scheme, not a pension plan. It is true that it would be a savings scheme that would pool the funds of members' accounts to achieve lower costs in relation to investment management and plan administration. However, a cautionary word must be put into this at this point. The fees to be applied by the plan managers would not be capped by this legislation. The experience elsewhere in the world is that the fees often erode pension savings to the point that they do not even keep pace with inflation. Clearly, the bill is designed to appeal to the self-employed and workers at small and mid-sized firms, companies that often lack the means to administer a private sector plan.
Another caution is that this plan would be just another kind of defined contribution plan. Employees would contribute a portion of their salary into the retirement scheme where it would be invested in stocks, bonds and mutual funds. Does that sound familiar? It sounds like an RRSP to me. Some companies with a clear conscience that want to see that their employees are well taken care of, although they are not required to do so, may choose to make matching contributions. However, I would suggest that in the climate of the business community today they cut every corner they can.
I want to caution again that this defined contribution plan would in no way guarantee how much money would be left when people retire. As with an RRSP, the market risks would be borne entirely and solely by the individual or the employee. PRPPs would be managed at a profit by regulated financial institutions like banks, insurance companies and trust companies.
As I already cautioned, Bill C-25 places no caps on administration fees or costs. It is flawed in that it merely assumes lower costs will emerge through competition in the market. Did people's telephone bill go up? Did their cable bill go up over the last 25 years since the market was deregulated? Of course they did. PRPPs allow for but do not require matching funds from employers so I believe they simply will not contribute.
Another caution for Canadians is that, unlike CPP, PRPPs would not be indexed to inflation. Provinces and territories would determine whether it would be mandatory for employers or employees of certain sized companies to offer PRPPs. Pooled registered pension plans, as envisioned in Bill C-25, would fail to protect retirement security because they would encourage families to gamble even more of their retirement savings in a failing stock market. If that market goes up, yes, they go up, but if it goes down, they go down with it.
Anybody who has watched their RRSPs plummet over the past year knows exactly how risky savings tied to the stock market can be. Telling families that investing in the same system that is already failing them shows how out of touch with Canadians the Conservatives truly are. The NDP has for the past three years championed a suite of retirement income security proposals, the first, as we have indicated, being that they should increase the Canada pension plan over a period of time that would double the benefits to $1,920 a month in 30 years. Growing the CPP is simply the best, lowest cost pension reform option that is available to us today.
The government must also amend federal bankruptcy legislation to move pensioners and long-term disability recipients to the front of the line of creditors when their employer enters court protection or declares bankruptcy. We have seen company after company across the country take the savings of its workers and treat it is as a secondary fund to pay off its bills.
As I said in my opening remarks, the bill seems to have been hastily thrown together in response to pressure from labour and other groups. However, according to the Conference Board of Canada, something we must keep in mind is that 1.6 million Canadians live in poverty and 12 million Canadians lack a pension plan. By OECD standards, Canada's CPP/QPP system is relatively miserly. Other countries similar to Canada provide far more generous public guaranteed pensions. Social security in the United States has benefits of about $30,000 a year. The maximum benefit in Canada is less than $12,000 per year. Even if we add old age security to that, which is, at a minimum, $7,000 a year, the total is still far below U.S. social security. Most workers have no RRSPs because they cannot afford it. In fact, only 31% of eligible Canadians actually use their ability to invest in RRSPs.
Meanwhile, the latest numbers for the return on CPP investments show that the CPP barely lost ground by 1%, while the stock market fell by 11%. There goes the pooled retirement pension plan down 11%.
The Minister of State for Finance stated that one of the places the government studied was Australia. Australia had a similar plan to PRPPs, but the plan was mandatory, with an opt-out provision. The Australian super fund required employers to enrol their workers in one of the many defined contribution plans offered by the private sector. A recent review commissioned by the Australian government, after 12 years' experience, reported that the Australian super fund did not even match inflation, again, because the fees being charged were eroding it.
For six years, the Conservatives have done next to nothing by way of securing retirement for Canadians. Bill C-25 is yet another hastily thrown together half measure in lieu of real action. Canadians want and deserve better. The government, once again, with these fees, almost like bonuses to the executives, has put the interests of Bay Street ahead of the interests of hard-working Canadian citizens.
We on this side of the House often hear comments about our ability or our chance to govern. If the NDP were to govern, it would ensure that our pension plans would be there to give retirement security to seniors, as they deserve. Canadians do not want their retirement savings subject to the market. If they did, they would invest in RRSPs. It is very clear they need protection.
For some of the reasons that I have just spoken of, New Democrats will not support this savings scheme, because the Conservatives are offering it up instead of taking real action on both protecting existing pensions and enhancing retirement security for those who lack a workplace pension plan at all.
PRPPs are not pensions. While the government claims a PRPP will provide Canadians with lower fees to potential economies of scale that do not exist with RRSPs, there is no data that proves that. In fact, less than one-third of the people entitled to contribute to RRSPs do not do so.
Over 24% of those surveyed use the TFSAs for retirement savings. Yes, that is one tool in the toolbox. However, it is time for the government to take real action to provide retirement security for those 12 million Canadians I referred to earlier, the 12 million who have no savings, who have no pension and who, God bless them, have a very bleak future. Canadians do not need yet one more private plan: a voluntary savings scheme. Voluntary savings have not worked, for a lot of reasons.
This scheme, if enacted, will do little or nothing to improve the ability of Canadians to foresee their future and live in dignity. Expanding CPP on the other hand, would not cost the government any more than the proposed PRPP. Expanding CPP would not entail transferring huge management fees to private institutions because we have the CPP Investment Board already managing the funds.
The PRPP, as outlined in the bill, fails to extend coverage to those who are unable to afford a pension in the first place. I repeated that several times in my speech because that is the essence of the problem facing many Canadians today. They have very little hope for their future in retirement.
I would like to read from the Calgary Herald, November 27, 2010, which says:
The CPP already covers almost all Canadian workers and thus spreads the risk and management fees. It is fully portable, offers guaranteed income to all retirees, and is the only risk-free investment broadly available to workers. Private RRSPs and employer pension plans have proven much riskier than initially billed. Those who are in company pension plans are likely in a defined contribution scheme, where the amount that goes in is predetermined, but the payout is based on how well the fund is invested and ultimately performs. Nortel workers know only too well how that worked.
Professor Jon Kesselman, Canada Research Chair, Public Finance, Simon Fraser University School of Public Policy, says:
Expanding the CPP is the best option for improving Canadian workers’ retirement income security; it can ensure results that none of the many alternative reform proposals for private schemes can provide.
CARP, which has made many presentations to our finance committee over the years, and the director of political advocacy at CARP, Susan Eng, writes:
CARP remains committed to improving retirement benefits for the current crop of seniors, including increasing CPP, OAS and GIS payments, getting a moratorium on RRIF withdrawals, making access to Tax-Free Savings Accounts retroactive and lobbying to remove the HST on seniors’ energy bills.
At this point I will stop with the other commentary and add that the government has been clearly and repeatedly on notice in the House, since 2009, of a crisis situation for the pension security for Canadians going forward. It is not that this was a surprise out of the blue.
We heard commentary earlier today from the member for Burlington, who talked about the fact that we needed the agreement of the provinces in order to move forward on the Canada pension plan. It is smoke and mirrors because we do need a majority of the provinces. Going into Kananaskis, six finance ministers from across the country wrote to our finance minister in support of expanding the CPP.
There are issues for the provinces, but in the last round of talks between the finance ministers and the Minister of Finance, there was very little said or done on the Canada pension plan. There is room for action on the Canada pension plan and very clearly the NDP believes that is the vehicle of choice and it is the most secure vehicle for moving forward.
