This bill was last introduced in the 42nd Parliament, 1st Session, which ended in September 2019.
Bill Morneau Liberal
This bill has received Royal Assent and is now law.
This is from the published bill. The Library of Parliament often publishes better independent summaries.
Part 1 of this enactment amends the Canada Pension Plan to, among other things,
(a) increase the amount of the retirement pension, as well as the survivor’s and disability pensions and the post-retirement benefit, subject to the amount of additional contributions made and the number of years over which those contributions are made;
(b) increase the maximum level of pensionable earnings by 14% as of 2025;
(c) provide for the making of additional contributions, beginning in 2019;
(d) provide for the creation of the Additional Canada Pension Plan Account and the accounting of funds in relation to it; and
(e) include the additional contributions and increased benefits in the financial review provisions of the Act and authorize the Governor in Council to make regulations in relation to those provisions.
This Part also amends the Canada Pension Plan Investment Board Act to provide for the transfer of funds between the Investment Board and the Additional Canada Pension Plan Account and to provide for the preparation of financial statements in relation to amounts managed by the Investment Board in relation to the additional contributions and increased benefits.
Part 2 makes related amendments to the Income Tax Act to increase the Working Income Tax Benefit and to provide a deduction for additional employee contributions.
All sorts of information on this bill is available at LEGISinfo, an excellent resource from the Library of Parliament. You can also read the full text of the bill.
The Assistant Deputy Speaker NDP Carol Hughes
Does the hon. member have unanimous consent to share his time?
Canada Pension PlanGovernment Orders
October 21st, 2016 / 10:30 a.m.
See
context
Some hon. members
Agreed.
The Assistant Deputy Speaker NDP Carol Hughes
Resuming debate, the hon. member for Edmonton Manning.
Ziad Aboultaif Conservative Edmonton Manning, AB
Madam Speaker, apparently the government distrusts the ability of Canadians to plan for their own retirement. There is no other reason for this ill-conceived tax hike that the members opposite like to pretend is not a tax on Canadians.
When the Canada pension plan was first introduced in 1965, it was intended to assist those Canadians who were not already part of workplace pension plans. The government apparently felt that such a plan was necessary to assist Canadians in their retirement planning.
The world has changed since then, but the Liberals still believe that we are living in 1965. They still believe that it is the role of the government to tell people what they can do with their money. They still believe that Canadians are not capable of determining for themselves what they will need financially when they retire and of preparing for retirement on their own.
As a result, we have this bill, Bill C-26, which will take money from the pockets of hard-working Canadians who have been given no choice in the matter. The benefits of this tax hike, if any, and do not be fooled when they tell us that it is not a tax hike, by the way, will happen at some point in the far future. These changes do nothing to help today's seniors who may be struggling to make ends meet.
Why do I say that this is a tax hike when the government says it is not? As the cliché goes, if it walks like a duck and quacks like a duck, then it is a duck. If the government taxes money from us and gives nothing in return, that is a tax.
The Canada pension plan receives money from two sources: employers and employees. They make equal payments into the fund, but at the end, only one of them receives a pension from those payments, and that is employees. For the employer, CPP is just one of many costs of doing business. The government, with these changes, is increasing the tax load on employers while pretending that it is not a tax.
I was a small businessman before the people of Edmonton Manning gave me their trust as their representative in Ottawa. I know what it means to be an employer and to have to pay my employees. I know first hand how much government red tape is involved in running a business. Liberals can call this increase in CPP whatever they like, but business owners know the truth. This is a tax grab. The Liberals can put all the lipstick on this pig they like, but at the end of the day, they are telling business owners to pay more money, with absolutely nothing in return.
The return for the country is something different. When business owners are faced with an increase in costs, adjustments have to be made somewhere else. The government is mandating this increase in taxes, for nebulous benefits at some point in the future, but business owners have to deal with this tax now. As I see it, they are faced with two choices in this situation. With this increase in costs imposed on them by the government, they will have to find other areas to cut back. One way would be to freeze or even cut wages so that the employers' tax burden does not increase. How this helps employees I do not know.
The alternative is that they will freeze hiring or even lay off employees. Personnel costs are a big part of doing business, and it does not make sense that the government would increase this burden on business owners. This extra tax is putting thousands of Canadian jobs at risk.
In 2015, the Canadian Federation of Independent Business looked at a similar CPP hike scenario. They found that it would eliminate 110,000 jobs and permanently lower wages by nearly 1%. It is not alone in predicting the negative consequence of an increase in CPP premiums. The Fraser Institute found that a 1% point increase in the CPP contribution rate reduces private savings by 0.9 points. That does not provide much benefit.
What does this tax mean for working Canadians? The government tells us that we should be happy, that there will be more money for us when we retire.
It assumes that Canadians are not using savings vehicles, such as the registered retirement savings plan or the tax-free savings account. That is perhaps why the Liberals reduced the TFSA contribution levels set by the previous Conservative government.
When these changes are introduced, Canadians will take home less pay every week. The government wants us to think that it is not much, that we will never notice it, but every penny less in a person's pocket makes a difference to that person.
What would the effects of this tax be as people see their pay reduced? With less money coming in, it would take that much longer for new graduates to pay off their student loans. That, in turn, would delay their ability to buy their first house. That would have an impact on the economy that perhaps the government has not thought enough about. Conservatives want to encourage Canadians to save, but by reducing their pay, we would take the opportunity away from them.
Through this tax increase, Liberals are saying they do not trust Canadians to be smart enough in how they spend their own money, so they will do it for them. Canadians have already shown that they know how to handle their own money. They do not need the government to do it for them.
We already have a retirement system that is the envy of the world. Canadians are saving more today for retirement than ever before, without this tax grab. Poverty among seniors has dropped significantly in recent years. According to Statistics Canada, the share of Canadian seniors living on low income has dropped from 29% in 1970, when the CPP was in its infancy, to 3.7% today. It is among the lowest in the world. Conservatives believe that Canadians should be able to manage their own money. It is not the role of government to do so.
Furthermore, Liberal promises on financial matters are somewhat suspect. It was only a year ago that the Prime Minister was promising to hold the budget deficit at $10 billion. We all know how quickly that promise was broken. How can the government expect Canadians to believe anything it says about CPP benefits in 2050? If the government were truly serious about helping Canadians to save for their retirement, it would reinstate the TFSA contribution levels set by the Conservative government. Treat Canadians like adults and let them choose how to save for their retirement.
It appears as if the government has decided that the CPP should be the only method of retirement savings that Canadians use, but that was never the intention. In 1964, the Liberal minister responsible for introducing the Canada pension plan said that CPP “is not intended to provide all the retirement income which many Canadians wish to have. This is a matter of individual choice and, in the government’s view, should properly be left to personal savings and private pension plans." That was a good idea then, and it is a good idea now. It is time for the government to show Canadians the respect they deserve. For the good of Canada, it should abandon this bill.
John Oliver Liberal Oakville, ON
Madam Speaker, this is a big issue in Oakville. I knocked on doors, met with people in Oakville, and heard many concerns raised about whether people will have sufficient funds to retire on. I heard about trouble with savings due to some of the low-quality, poorer jobs that people are experiencing right now across Canada. I also heard a concern about private plans moving to defined contribution and the risk of investment, and the individual discipline to put the money into retirement instead of with the plan.
Can the member reflect on the benefits of a defined benefit plan versus the defined contribution, which is a significant advantage of the Canada pension plan?
Ziad Aboultaif Conservative Edmonton Manning, AB
Madam Speaker, if we are going to call this a business case, a lot of risks are being taken. Those risks are not the choice of Canadians but would be imposed by the government on the Canadian people. It is very hard to measure when there are really no benchmarks.
A lot of what the minister said earlier did not make sense. Is he calling growth artificial inflation, in terms of making more money by taxing people and considering that growth? Canadians are taking a lot of risks. If this is a business case, it is a failure. We have to look at it very carefully, consult more, and allow Canadians to have more input, so it can be safe and sound and work for Canadians.
Scott Duvall NDP Hamilton Mountain, ON
Madam Speaker, what has happened is that there is a pension gap and a crisis of Canadians being able to save less for their retirement, which was worsened considerably under the Stephen Harper government.
Can my colleague explain to this House what lessons his party has learned from these failures?
Ziad Aboultaif Conservative Edmonton Manning, AB
Madam Speaker, I am very surprised that the hon. member is talking about failures.
When we introduced the TFSA, that was a pleasure for every Canadian. We have heard that from Canadians. We have done lots in that fashion to make sure that Canadians save more and are more secure.
I am not sure what the member is referring to as failures.
Marilyn Gladu Conservative Sarnia—Lambton, ON
Madam Speaker, I was alarmed to see that Finance Canada did an analysis of this proposed CPP premium increase that said it will hurt the economy. It will reduce jobs, reduce GDP, reduce business investment, reduce disposable income, and reduce private savings.
With all of these negative impacts that are going to happen over the next eight years and no benefit for anybody for 40 years, I wonder if the member could comment on what he thinks about this plan.
Ziad Aboultaif Conservative Edmonton Manning, AB
Madam Speaker, that was a wonderful question.
As I said, the additional risks that Canadians are taking in this fashion are that they do not know the result, and they do not know the outcome of this risk that is being taken.
As for the future, I do not think anyone will be around. I hope everyone in this room will live for over 100 years, but I do not think anyone will be around to see if this is going to work. That is why the government is doing what is it doing. That is a very unfortunate method of doing politics in Canada.
Mike Bossio Liberal Hastings—Lennox and Addington, ON
Hon. member, I would invite you to come to my riding and—
Mike Bossio Liberal Hastings—Lennox and Addington, ON
Madam Speaker, I would invite the hon. member to come to my riding to meet some seniors who are suffering today from a lack of savings and the pension plan that they have.
Given the precarious nature of employment today amongst our youth, and the massive increase in the cost of housing, my own son has been working two and three part-time jobs to try to get by. This is not a tax. It is an investment in future generations of Canadians that will allow them to live better than our seniors are living today.
Does the member deny that these facts exist? Is he completely out of touch with reality?
Ziad Aboultaif Conservative Edmonton Manning, AB
Madam Speaker, as a member, I also represent people. I have seniors in my area.
I am a businessman, and this does not make any sense for any businessman. It is a tax on businesses. It is a tax on Canadians. Let Canadians save for themselves instead of taking this money away from them without their consent and without their knowing what risks they are taking.
Luc Berthold Conservative Mégantic—L'Érable, QC
Madam Speaker, I am pleased to rise and speak here today. I thank the members for allowing my colleague to share his time time with me. My colleague gave an excellent speech outlining our position on Bill C-26, introduced by the Minister of Finance.
Seniors today should be worried about what the Minister of Finance said in the House earlier this morning in his speech on Bill C-26. He claimed that they were very clear during their election campaign that they wanted to enhance the CPP. Now that we have seen the Liberals in action for a year, can we really take that kind of statement at face value? Definitely not.
Besides, what are seniors and Canadians in general supposed to think when a party says, during an election campaign, that it is going to enhance the CPP? What does this mean for the seniors in the riding of my colleague from Oakville, who said himself that people in his riding have lower incomes and there are needs to be met? They thought they would benefit right away if they voted for that party.
When people are promised an enhanced pension plan, they expect that promise to be kept sooner rather than later. They expect the government to get to work on it immediately, even if it does not make sense. They expect the party in question to keep its promises. CPP expansion will begin to be implemented in 2019 and be fully phased in by 2025.
When we talk about a long-term strategy, as the Minister of Finance did this morning, we have to put ourselves in seniors' shoes. “Long term” does not mean the same thing for someone who is 75 that it does for someone who is 50. Who are the seniors, who were misled by this government, that are really going to benefit from the CPP expansion? That is what we have to ask ourselves. The scary thing is what the Liberal government is not saying. What they are saying is nothing to worry about because they cannot be believed anyway, but what they are not saying is even scarier.
If during the last election campaign the Liberals had told seniors they were going to improve their pension plan in seven or eight years, not a single senior in my riding would have voted for them. In my riding, the average income is not very high. We have gone through some serious crises in the Thetford Mines region, including the asbestos crisis. Incomes are not very high, the miners do not have a lot of money, and out of the blue they are told that their pension plan is going to go up. Who would not want a better income, especially those who make lower wages?
Unfortunately, that is not what the Liberals intend to do. What is more, they are going to increase taxes for the these people who have limited means, stripping them of their benefits. The government raised taxes right away, and these people will be the first victims of the arrogance of the Liberals, who make all sorts of promises they may well never deliver on. I hope that we will be back in 2019 to clean up their mess. If they are allowed to continue for another four years, it will be terrible and there will be no turning back.
It is important to stick to the facts. The government has been in power one year. It is against that backdrop that they introduced Bill C-26 today. The government broke its promise to have a modest deficit and is borrowing three times the amount that it said it would. Last week, TD Bank reported that the deficit could reach $34 billion because of the economic situation.
What exactly is the economic situation? They promised to create jobs; they did not. They did not even keep their promise to improve the lives of Canadians, because the best way to do that is to give them jobs.
That is the reality. Obviously, I am concerned about the announcement that the Minister of Finance made this morning, but what is even more worrisome is that our Prime Minister is not at all concerned. There is no problem. Yes, perhaps the deficit will be $34 billion because the economic conditions are not good. Yes, the rate of growth is lower than expected and that is not good, but it is not a problem. Canadians will pay for it later.
Will there be any money left in the coffers to pay for the promises that the government made to seniors in Bill C-26? The government does not have an answer to that question because it has been improvising on everything from the start.
The government broke its promise to reduce small business tax rates. What will be directly affected by Bill C-26? Small businesses, which will also have to increase their CPP contributions. The government is promising to help businesses and create jobs, but the reality is once again a different story. The government wants to promise the best of everything; it does not talk about the worst, but imposes the worst anyway. That is the reality of the Liberal government.
Today, I can say, without question, that the Liberal government has betrayed seniors with the false promise that it would immediately improve their lives. That is the reality. When the government promises people who are 75 or 80 years old that it is going to increase their pension benefits, those people do not expect to have to wait until they are 87 for that to happen.
I heard my colleagues opposite telling us that this is going to help low-income seniors. Wrong. The increased benefits will help those with higher incomes. Those with low incomes will not benefit at all from these changes to the Canada pension plan. That is something else that is being left unsaid by the Liberal government.
We will have to learn to always read between the lines of what the Liberals are saying. Unfortunately, that is what Canadians will be learning the hard way in the coming weeks and months.
Still, people can take comfort in knowing that we are here. Our new finance critic, the member for Louis-Saint-Laurent will keep a very close eye on this government, which has no qualms about imposing new taxes on the middle class and businesses. It has no problem letting the deficit grow ever larger so it can achieve its objectives. The worst part is that it does not seem too worried about it.
Higher CPP benefits mean more money coming out of hard-working Canadians' paycheques. Maybe it will help them someday when they retire, but the way things are going now, we should all be leery of the Liberal government's grand promises. As a matter of fact, I have no faith in their projections, which are not even valid for a week, let alone until 2025. Something is going to happen. The Liberals will change things, tweak things. Why? Because they messed up the math. Their projections are inaccurate, and they will not be able to keep their promises.
What really worries me is what the Liberals are going to do if they do not have the money. I would not be surprised if they use that tried and true Liberal tactic: instead of a small increase, there will be a big increase, and it will cost all of us a lot more, and poor people will still have no more than they did before.