House of Commons Hansard #13 of the 36th Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was debate.

Topics

Canada Pension Plan Investment Board ActGovernment Orders

4:05 p.m.

The Speaker

In my opinion the yeas have it.

And more than five members having risen:

Canada Pension Plan Investment Board ActGovernment Orders

4:05 p.m.

The Speaker

Call in the members.

(The House divided on the motion, which was agreed to on the following division:)

Division No. 6Government Orders

4:50 p.m.

The Speaker

I declare the motion carried.

The House resumed from October 7 consideration of the motion that Bill C-2, an act to establish the Canada Pension Plan Investment Board and to amend the Canada Pension Plan and the Old Age Security Act and to make consequential amendments to other acts, be read the second time and referred to a committee; of the amendment; and of the amendment to the amendment.

Canada Pension Plan Investment Board ActGovernment Orders

4:55 p.m.

The Deputy Speaker

When the House last considered the matter, the hon. member for Renfrew—Nipissing—Pembroke had the floor. He has four minutes remaining in his speech.

Canada Pension Plan Investment Board ActGovernment Orders

4:55 p.m.

Liberal

Hec Clouthier Liberal Renfrew—Nipissing—Pembroke, ON

Mr. Speaker, it is a pleasure for me to be in this hallowed House participating in this debate.

It is rather interesting to note that the party opposite has a void in its argument on the Canada pension plan debate and it was evinced by their void in not being here for the democratic vote. Hopefully we will not be indulging in this vituperative political rhetoric but I guess they will persist. It reminds me of last night when I left this hallowed Chamber and thought of the viciousness of their attack. It made me think that this is the last refuge for the vaguely talented on the opposite side.

Having said this I notice that one of their main points of contention in the debate is that this is a payroll tax. That is utter rubbish and nonsense. It is a pension plan. It is a contribution to a pension plan. It is not in any way shape or form a payroll tax.

We do have an employment insurance tax but we are doing everything we possibly can, and have done so since we were elected, to reduce the employment insurance tax not once, not twice but thrice. We will continue to reduce the employment insurance tax whenever we have the opportunity and the fiscal responsibility to do so.

One thing that we will not reduce is our commitment to Bill C-2. Why? Because this has not been a cursory commitment. This has not been a commitment just in the last week, the last month, the last year or the last five years. This has been a commitment for about 40 years. One of the great icons of Canadian political history and it certainly endeared myself to him to know that he was also one of the great icons of the Liberal Party, the late Paul Martin Sr., was part and parcel of the genesis of this wonderful bill.

It is rather remarkable to know that a very close relative of Paul Martin Sr., our current finance minister, continues that strong legacy. I am sure that Paul Martin Sr., being up in the hallowed house in the celestial heavens with the other saints of political history such as Sir Wilfrid Laurier and Mackenzie King and Lester Pearson, would be smiling broadly knowing that his legacy has lasted with the truly great finance minister in this Liberal Party.

I notice that members of the Reform Party used an acronym, CPP. We know it stands for Canada pension plan, but they cared to indulge in some kind of fanatical rhetoric. I do not remember it because it is not worthwhile remembering what that acronym stood for. I would say to hon. members that perhaps CPP stands for a commitment to Paul's plan. We are committed to the duty of government and we most certainly recognize the fact that the challenge of any government is to build a road for its citizens that will lead to a sense of self-satisfaction, a sense of self-esteem and a sense of fulfilment.

This coruscating Bill C-2 most certainly rises to that challenge. May I even be so bold as to say that this is a bodacious bill. Hon. members can look up that word.

I notice I have one minute left, Mr. Speaker. One further minute to expound upon the great magnanimous qualities of Bill C-2. This bill not only rises to the challenge, it supersedes it. It eclipses the challenge not only for today, not only for tomorrow, but for weeks and possibly decades to come.

Canada Pension Plan Investment Board ActGovernment Orders

5 p.m.

The Deputy Speaker

I should remind hon. members that it is contrary to the rules to refer to the absence of members from the Chamber. I would ask hon. members to bear that in mind in the course of their remarks.

Canada Pension Plan Investment Board ActGovernment Orders

5 p.m.

Reform

Bob Mills Reform Red Deer, AB

Mr. Speaker, the last member gave us a history lesson. Let us just review very quickly some of the history since 1993. We nearly lost Canada in a Quebec referendum. We are $100 billion deeper in debt. There are $26 billion in increased taxes. Youth unemployment stands at 17%. Patronage appointments abound everywhere. We have job equity. The deception is that somehow our financial problems have been fixed although we have a $50 billion interest payment. Now comes the most severe tax grab that we have ever had where the tax will be raised from 5.6% to 9.9% of a person's income.

To show the total disrespect for democracy, we now have closure being used on this bill that affects almost all Canadians.

Let us go back in history to 1966 when this experiment in socialism was started. We were told that deductions would never go above 5.5%. However, with mismanagement we now have a pension plan that is underfunded by $560 billion.

Let us talk about the pension plan as hon. members across the way want to keep talking about it. Let us talk about young people. They are the people who are going to be affected by this the most but let us also include seniors who have children and grandchildren.

We are going to destroy the incentive of these young people. We are going to rob them of their jobs because of these payroll tax deductions. The small businessman is going to be put further down the line and his chances of survival are that much less.

During the last election I made up a little card. This little card refers to exactly what this plan is all about. I talked to many young people, particularly, in the workforce at their places of work. I said to them “Let us think about what this plan is really about. In the next six years you are going to go from a $935 maximum deduction if your income is $35,000 to a point where you are paying $1,645. Your employer will have to match it. This is roughly $3,300. If you are 30 years old you are going to paying that $3,300 for 35 years until you are 65. At the end of that time you will get $8,800 provided you don't have too high an income. If you have too high an income the government is going to claw it back from you. Maybe what you are doing is really investing $3,300 a year for 35 or more years to get nothing”.

What would be a better way? Obviously, a better way would be to take that $3,300 and invest it in almost any kind of securities or program if it was compulsory. If it was at only 6%, at age 65 that very same person would have a $275,000 nest egg and would have an annuity that would pay $26,000 until death.

What kind of investment are we asking our young people to make? We are asking them to be robbed. We are asking them to be part of this deceptive scheme that will take six years to implement.

Let us come to the present. The government is saying “We are very early in our mandate and so let us get the dirty things done quickly and then maybe people will forget about it. Maybe the electorate will forget about it”. All of us in this House had better dedicate ourselves to making sure that the electorate knows what kind of robbery this is for our young people.

I would like to read some quotes. I really think these are fitting. Mr. Axworthy, who was a member of Parliament, was quoted on April 1, 1993 as saying “It displays the utter disdain with which this government treats the Canadian people,” when he talked about closure. The House leader said on November 16, 1992 as quoted in Hansard “I am shocked. This is just terrible. This time we are talking about a major piece of legislation. Shame on those Tories across the way for using closure”.

Mr. Speaker, with all respect I must quote you on April 23, 1993 from Hansard when you said “This is not the way to run Parliament. This is an abuse of the process of this House”. I say to the government, it is a disgrace what it has just done, using closure on a piece of important legislation. Mr. Speaker, we agree with you totally. I tell you, they should go up in our caucus room because you are right.

We know that you are close to the people of your riding and to the people of Canada, Mr. Speaker. That is what the people are saying about this charade that we saw taking place today.

The government will continue to move closure. That is the sad part about it. This is just the beginning. In the last House the government used closure 29 times, the most in the whole history of Parliament.

The last member said “Hey, this is an honourable place”. This place has lost its democratic reason to exist. This place is a disgrace because of those people across the way.

I trust that all of us are going back to our ridings and I trust that the people in those ridings are going to say “How can you shut down debate? How can you not listen to us telling you about this robbery that is going to take place of every Canadian?”

What are the options? The government would like us to think that there are none. But let us just quickly talk about those. There are many options. Within six years I believe the government will admit it was wrong. Of course it will not be the government at that point but when the government members are sitting across here they will say “That was probably the worst mistake we made in this House”.

What are the options? The options are obvious. Let young people set up a private plan. Let us take a look at what Britain is going to be doing. It is going to that sort of a plan. The U.S. is pretty much committed to going to that plan within the next two years. Australia and New Zealand have already done it. Chile has been on that plan for 16 years. Let us examine those. Let us see what other countries are doing so that we can do the same for the people of Canada. There are options out there.

So that the hon. finance minister cannot continue to misquote the Reform position, let us tell people today that all of those people who have paid into the CPP will be paid out in a credit system whereby they will get a prorated pension plan for the years of contribution.

It will take time to phase in this plan but we have to start it now. All of us know that in time if we stay with the plan we have we will be going back for more contributions, more money, more tax grabs.

We have to look at these options. We have to present them in the House. They need to be debated here, but the government has closed down that option. As we heard from the finance committee they do not even have it in their schedule to discuss this.

As we know from the last Parliament. the government will think nothing of using closure in committee, using closure at third reading and ramming this legislation through because it has a deadline of January 1. When the workers start to realize that their contributions have gone from $935 to $1,645, we had better believe they are going to let people know and we better believe they will let the members across the way know. Four years from now it should be time and it should have moved well enough along that the results will be at the ballot box.

In conclusion, today has been a dark day for our country. It has been a dark day for young people. It is up to us to communicate that across the country. All of us on this side of the House had better dedicate ourselves to that job.

Canada Pension Plan Investment Board ActGovernment Orders

5:10 p.m.

Liberal

Dan McTeague Liberal Pickering—Ajax—Uxbridge, ON

Mr. Speaker, most in the House, indeed most Canadians, will understand very clearly the commitment that the government made to ensure that down the road we have a pension system that is not only fair to people today, but is fair to those who will need it later.

It is not news to members, certainly on this side of the House, of the wisdom that was shown by the hon. Minister of Finance in providing a new regime that will ensure sustainability of the pension system. Most of us here campaigned on this. It was an issue we discussed in the last Parliament.

It is very clear at least from the perspective of many members, certainly from Ontario and right across the country, that what we said is what we are about to do. I have no trepidation in saying that in years to come I will be glad and so will many of my constituents that the benefits and fruits of this nation will be shared for generations to come.

I do not think one has to go too far to understand how we wound up in a situation where the initiative of this government and of several provincial governments who agreed to this formula came about.

The reality is that over the years this was a situation that we allowed to happen. We simply allowed it to transpire. We knew that the demographics of this country were changing.

With the benefits of a health care system brought by, in many respects, the father of the hon. member and finance minister, and as a result of the medicare system which this party introduced many years ago, people are living longer. The standard of living is high, very much as a result of the progress and the initiatives taken by the Liberal Party of which I am a proud member.

In order to sustain that program, in order to ensure that we have a viable pension system, someone had to take the bull by the horns.

I am therefore rather proud of the initiatives taken by this government to ensure the survival of our pension program.

No one in the House will be surprised to know that if nothing had been done by the government in Bill C-2, it is conceivable that in a few years the pension system, the program that helps our seniors, the disability benefits, the maternity leave which many, including my wife, take, would not be there. It would not be there in our time, in our generation, and perhaps even within the life of this Parliament.

I have heard hon. members opposite lamenting and saying “This could have better invested. We could have done a lot of other things differently,” but the reality is that I do not think we walk around with a crystal ball in our hands anticipating what the problems are in the future.

When we strip away the politics of all of this, when we take away the partisanship that often clouds a decision that has to be taken, we find that what is being done is necessary.

As members know, I did not take my MP pension. Yet I believe it is very important to understand that most people of our generation would appreciate and would applaud what this government is doing today.

I am pleased to speak to the issue. I am pleased to speak to the very necessary changes that are about to take place over the next little while.

We are in a period of transition. It must be clearly understood that, if we want to move into the new decade, the new millennium that is approaching, it is absolutely vital that we recognize problems before they arise.

The provinces that were involved in the negotiations dealing with the changes to CPP earlier this year also recognize and gave approval to the need to move ahead. I do not think that what we are doing here is extraordinary.

I know there are those who believe that we should be doing other things, that there are all sorts of wonderful proposals out there. It is far different to be sitting in the opposition knowing that you do not have to take seriously the reality of government than it is to be in a position where you are governing and you have to make decisions that will count, decisions that will stick and decisions that will sustain themselves over the years to come.

We have one of the youngest communities, myself and the hon. member for Whitby—Ajax who I am very pleased to say has done a spectacular job as a member of Parliament and previously as a councillor. I know we share in the common view that short term pain sometimes means long term gain, but in this instance we are not talking about gain for some. I think that is what separates us from the opposition, the Reform Party.

We are here to ensure there is a modicum, a standard and a benchmark by which Canadians at the lower end of the economic spectrum will never be let down. That is a commitment that goes to the core of the Liberal Party.

It is one of the reasons that we also understand that we cannot get mired down in some of the wacky ideas that we can somehow spend our way out of these problems. We understand people. We understand the economics of the country in the 1990s as we go into the new millennium. We also understand that if we want to sustain and we want to maintain programs that help people in a way that ensures equality, we have to take decisions that are sometimes tough decisions.

I am prepared to say today as a member who is often very outspoken on a number of issues that this is an initiative that I can support. I support it because, and it may be trite to say, it is the right thing to do. Members from across this country in years to come, in particular some of the members on the other side who are a little lighter in age as I am—well, I do have until next week at which point the age of wisdom kicks in—will appreciate that colleagues of their own, friends of theirs and neighbours will be taken care of and the initiatives taken by this government at this time in our lives helped. They helped to bring people together, they helped to make sure those people had the very basics.

I noticed a smile from my hon. colleague in the New Democratic Party. I can say that it is very very good to see so many shining beaming faces. It is great not to be a rookie. I know that hon. members in the short term will be very happy after the next election because I am sure that a pension will not be too far away for them. There will be an opportunity for them to enjoy the very things we are putting forth today.

The economy is growing. There is no doubt the result of the decisions taken by the Minister of Finance with respect to bringing down interest rates is giving the engine of the economy the kind of drive that is taking place. In communities where we once saw many closed shops and people out of work, we are now seeing a full recovery in bloom. That did not just happen by accident.

We could also compare ourselves with what happened provincially with our counterparts in the province of Ontario who believe that to slash and burn is the way to go about things and at the same time wind up at the end of the day continuing to perpetuate a deficit. We chose the balanced approach and we found lo and behold after our commitments in 1993 and 1997 that the balanced approach does indeed work.

There will no doubt be much controversy surrounding any decision taken by a government that dares to lead and dares to challenge the wisdom of those who would like to say “Let us leave things the way they are, let us maintain the status quo”, but this is a government that is prepared to move ahead. This is a government and a minister that are prepared to seize the agenda for the future and to seize an agenda that puts in its first instance all the interests of Canadians, particularly those who are the most vulnerable in our society.

I was just told by the member for Whitby—Ajax that that is the Liberal way. I could not put it more eloquently and I terminate on that. Let us move ahead with this bill.

Canada Pension Plan Investment Board ActGovernment Orders

5:15 p.m.

Bloc

Stéphan Tremblay Bloc Lac-Saint-Jean, QC

Mr. Speaker, I am pleased to have the opportunity to speak on this bill, an act to establish the Canada Pension Plan Investment board and to amend the Canada Pension Plan and the Old Age Security Act and to make consequential amendments to other Acts.

In February of this year, the Minister of Finance introduced in this House the first version of the legislation on the Canada pension plan. Its provisions were improved through the observations and comments made.

The changes put forward by the federal government were approved, as the act provides, by at least two thirds of the provinces representing two thirds of the population of Canada. In all, eight provinces, including Quebec, approved the proposed changes. Only British Columbia and Saskatchewan abstained.

Bill C-2, which the Minister of Finance introduced on September 25, provides for a reform of the Canada pension plan, among other things. There are three main thrusts to the reform. The first is to increase funding of the system, to take it from two to five years, as proposed by the minister.

The second thrust is to maximize the rate of return through the establishment of a Canada pension plan investment board.>

Finally, the bill will change certain benefits, such as disability benefits.

Bill C-2 must follow the parliamentary process and be passed by Parliament in order to come into force. Next the supporting orders in council must be approved by two thirds of the provinces representing two thirds of Canada's population. The Minister of Finance expects all these changes to take effect on January 1, 1998.

In order to assess this reform, let us take a brief look at the history of the Canada pension plan. It was established in 1966, and nine provinces joined, Quebec having its own retirement pension plan, the Quebec pension plan, commonly known as the QPP, which, incidentally, is also under review.

The Canada pension plan pays out approximately $17 billion a year in benefits. This amount includes survivor and disability benefits. The value of the pension fund is equivalent to 2 years benefits, or roughly $39 billion. Of course, this reform will have far-reaching effects on the premiums paid by those contributing to the Canada pension plan.

Employer-employee premiums will increase over the next six years to reach 9.9%, while the maximum contribution will rise from $975 to $1,635. Nevertheless, the actuarial report on which the government based its reform shows that, at this rate, the fund may run dry by the year 2015 and contribution levels should be 14% instead of the current 5.85%. That is a 240% increase. You will understand that, between a 240% increase and the proposed 73% increase, I definitely prefer the latter.

While being strongly in favour of this legislation, I must say that the reform affects Canadians more than Quebeckers, since very few Quebeckers get CPP. As of last August, there were between 12,000 and 13,000 Quebeckers in this situation. These beneficiaries are Quebec residents who worked all their lives in another province and who only contributed to the CPP, such as a person living in Hull but who worked in Ontario and paid contributions in that province; members of the Canadian Armed Forces and the RCMP who reside in Quebec but paid contributions to the Canada pension plan, to the extent that they only contributed to that plan; and those people who receive CPP benefits but have settled in Quebec.

As the critic on youth issues, I took a close look at the first two points I mentioned earlier, namely the funding of the plan and its optimal rate of return. The latter will be easier to achieve through the Canada pension plan investment board. This board is essentially similar to Quebec's Caisse de dépôt et placement, except that it will not have any economic mandate.

Its primary responsibility will be to achieve the best possible rate of return, so that today's young people stand a better chance of enjoying a retirement pension.

Moreover, having a reserve equivalent to five years of benefits instead of just two will provide a major fund with more money than is currently the case, thus ensuring that Canadians, and particularly people of my generation, will receive retirement benefits when the time comes.

Although our party is in favour of this reform, I would like to mention a few observations and questions that will have to be addressed at the committee stage.

To begin with, we all agree that premiums will increase under this plan. These increases will be absorbed in part by my generation. Will young people also see a decrease in their pension benefits? Given comparable premiums in constant dollars, will the pensions young people receive on retiring be comparable to those of people now receiving benefits under the plan? I would like these questions to be addressed, for there is a cloud hanging over intergenerational equity.

As party critic, and as a young person myself, I find it interesting that the focus is on the future to ensure that future generations will have the same rights as today's generation.

To give a better idea of where I am coming from, I would like to describe briefly the situation facing this country's youth. Each year the rate of unemployment is somewhere between 16 and 17% and the activity rate for young people between the ages of 15 and 24 is dropping. All the Liberal promises to create jobs for young people are slow to materialize, as is very clear from the rate of unemployment and the decreasing activity rate among young people since this government came to power. The Bloc Quebecois is strongly in favour of responsibility for youth employment programs being returned to Quebec and will do everything in its power to bring this about.

I have said this over and over again, and I will keep saying it for the rest of this Parliament.

Because of the Conservatives' successive restrictions on unemployment insurance and the Liberals' employment insurance reform, fewer young people are able to take advantage of this program. This is yet another reform that served present generations in the past, but that will be inaccessible to my generation in the future.

Employment insurance, as it is now known, is a measure that is almost completely inaccessible. There are, of course, certain interesting adjustments, but for seasonal workers or young people graduating from university, this reform is completely inaccessible.

In addition, the principle followed by the Liberals with regard to premiums is simple: hold the line on premiums but cut back on accessibility. Increases in tuition fees are the result of cuts to provincial transfer payments for post-secondary education that were imposed by this government. Finally, poverty is an ever-increasing problem.

I am greatly concerned about the future, about environmental questions, about a lot of issues, but one in particular which this House must discuss, namely the widening gap between the rich and poor.

For some years now, since 1980, in fact since the fall of the Berlin Wall, we have seen that capitalism is growing by leaps and bounds. The rich are getting richer and the poor are getting poorer, with the government across the way and its reforms, particularly the employment insurance reform, which is impoverishing the poor still further. I think this is cause for concern.

I recently saw statistics indicating that the number of millionaires in the world has doubled. This is cause for concern. This is probably one of the consequences of the notion of the global village, the world market, which makes it easier for the rich to get richer, and more easily.

Markets are opening up increasingly toward Asia. The world is becoming one huge global market. Will this accentuate the difference between the rich and the poor? I am sounding an alarm, and I believe that considerable thought must be given to this. I think we shall be able to find a way out, but at what price? Tenacity and perseverance will be needed.

What I wanted to show with my speech is that the Bloc Quebecois is not here to oppose anything that moves, everything the government does. On the contrary, we are delighted with the pension reform. As a member of the Standing Committee on Human Resources Development, I shall make it my duty, along with my colleagues, to ensure that all the reforms will apply equally to the coming generations and that everyone will be able to benefit from these services.

Canada Pension Plan Investment Board ActGovernment Orders

5:30 p.m.

Liberal

Jean Augustine Liberal Etobicoke—Lakeshore, ON

Mr. Speaker, I am pleased to participate in the debate to amend the Canada pension plan.

In Etobicoke—Lakeshore there are many seniors who have written, who have spoken with me and who have attended consultation meetings where we discussed the changes and the need for changes to the Canada pension plan. The plan is a primary source of income on which many Canadians rely in retirement.

Indeed, Canadians are greatly concerned about any changes to the plan which might have an adverse effect on their economic stability.

As members of Parliament, it is our duty to ensure that the financial future of all Canadians is secure and that Canadians will continue to have confidence in the Canada pension plan. The Liberal government is taking the responsibility for the future direction of the plan seriously by initiating the proposed changes. The changes are reflective of the Liberal government's belief in assisting, providing and protecting those in need.

I support Bill C-2, the legislation to amend the plan because that legislation will ensure that we have an improved and effective public pension plan that protects individuals in retirement. In an age where a wide variety of financial instruments are available to Canadians to prepare for retirement, not all Canadians can afford or have the protection of RRSPs.

Experts on CPP have drawn the government's attention to the fact that in light of national realities such as an aging population, the decline in population growth, that the plan needs to be tailored to match the demographic realities of our country. We are facing up to the demographic realities by securing the future of the CPP.

The proposed changes were the result of a lengthy consultation process with provincial and territorial governments, professionals in the actuarial and insurance professions, representatives of social planning organizations, seniors, young people and other Canadians.

From this process, one thing was clear: Canadians want a national pension plan even if changes are necessary to ensure its viability in the future.

It has been established by repeated government studies that payouts lagged behind the contributions. We need to have payouts and contributions in line so that Canadians can have a plan beyond the year 2015. This means that in order to maintain the current benefit structure, contribution rates need to increase by 14% of income by the year 2030.

It is interesting that the consultation which I held in Etobicoke—Lakeshore, individuals were talking about 15%. A 14% increase in CPP premiums is a rate that most Canadians would find difficult to manage. There needs to be a middle ground in relation to what Canadians are willing to pay into and receive from the plan.

Under the legislation, marginal increases to contribution rates will be slowly phased in over a seven-year period. Contributions will be increased by .4% of income this year and will go to 9.9% of income by the year 2003 as compared with the current rate of 5.85%.

As evidenced, the increase in contribution rates will not be dramatic and therefore Canadians can have a secure CPP that is affordable.

I would like to reiterate the facts of the proposed changes that the hon. Minister of Finance has given on numerous occasions in the last Parliament and which are echoed in this Parliament by many colleagues. My constituents would like to hear that current benefits such as CPP retirement pensions, disability benefits, survivor benefits or combined benefits are not affected by the amendments in Bill C-2. Any Canadian over age 65 as of December 31, 1997 who elects to receive CPP as of this date their pension will not be affected. Likewise all benefits under the CPP except death benefits will be fully indexed to inflation. If Canadians choose to retire at age 60 or 65 or up to age 70, these ages of eligibility for retirement will remain unchanged.

These are the principal tenets of the CPP that will remain intact. As the government embarks on rebuilding a sound CPP plan, Canadians who are not now in receipt of CPP need to know that there will be future changes. Future beneficiaries who will be in receipt of retirement pensions will see a change in benefits because calculations will be based on five years of pensionable earnings instead of the current three years.

The disability component of CPP will be affected by the proposed changes. An applicant who is eligible to receive disability benefits would have to contribute to the CPP in four of the last six years instead of two of the last three years or five of the last ten years which is the current contribution requirement. Benefits for these applicants will be calculated based on the applicant's maximum pensionable earnings at the time of disablement instead of at age 65. I know that these are issues that many of us deal with in our constituency offices.

Changes will be made to payments of death benefits. CPP contributors will continue to receive death benefit payments under the plan, but again the benefit will continue to be based on six months of retirement benefits. They will see a decrease and this decrease is due to the fact that we want to address the problem of income disparity by ensuring that low income Canadians are not adversely impacted by the proposed changes.

These proposed changes to the CPP will ensure that Canadians will continue to have an economically viable and stable pension plan that meets their future retirement needs. The intent of these changes is to give us better options and to ensure the viability of the plan.

I call on all members at this point in time to support this initiative for the benefit of all Canadians.

Canada Pension Plan Investment Board ActGovernment Orders

5:35 p.m.

NDP

Yvon Godin NDP Acadie—Bathurst, NB

Mr. Speaker, I would like to take this opportunity to congratulate you on your appointment as deputy chairman of the committees of the whole House.

I would also like to take the opportunity to thank the people in my riding of Acadie—Bathurst for their support and their trust in the June 2 federal election. Their support underscores their belief in the government management and the importance of an open democracy, and I will certainly not discuss this today.

Acadie—Bathurst has a population of nearly 100,000 people of all ages and interests. Its linguistic attributes, with anglophone and francophone populations, mark it as a particular spot in Canada.

Mining, forestry and the fisheries are very active and the main driving force of the local economy. Natural resources are however very unstable. The pulp and paper industry has experienced certain difficulties. Nevertheless, things in this industry are on a better footing these days.

The fishing industry is not so well off. Since 1984, fishing has produced little, and this situation has had an alarming effect on communities.

As things currently stand in my region, the future looks vulnerable and difficult. This is why I wish to react to the changes proposed to the Canada pension plan. Bill C-2 proposes increased contributions, the creation of an independent agency to administer the plan and a reduction in benefits to those least well off in our society.

In his press release on the new bill, the Minister of Finance said that the changes would ensure the plan's long term viability, while making it fairer and more affordable for future generations of Canadians.

The Minister of Finance has an odd sense of fairness. He is targeting Canada's most vulnerable people—older women and people with a disability—in favour of his friends on Bay Street in Toronto.

The New Democratic Party finds this option unacceptable. We will not go for the Liberal and Reform Party position, which would increase inequity within Canadian society. The NDP believes that the voters must be consulted before any changes are made to the pension system.

The people of Canada are the ones who will have to live with these changes. They must be given an opportunity to express their views. When one is elected to this House, one is supposed to be able to participate in the debates, and I am really ashamed of what has happened here today.

The changes proposed in this bill hurt Canadians. First, Bill C-2 reduces benefits in several ways. It makes it more difficult to qualify for disability benefits and imposes stricter rules for combining disability and survivor benefits.

Under the existing legislation, one must have worked during at least four out of the past six years to be eligible for CPP disability benefits. If this bill is passed, one will be required to have worked during two of the past three years or five of the past six to be eligible for disability benefits. With the proposed changes, some people who are currently eligible would no longer be eligible.

Another problem is the whole issue of survivor and death benefits. At present, the maximum is set at $3,580 for a person receiving survivor benefits. These have been reduced to $2,500 with the maximum being frozen, and this will be especially harmful to widows and separated women who live alone for a longer time.

Bill C-2 also freezes the low level of earnings that is exempt from CPP contributions. This back door increase of CPP contributions is regressive because it affects people with low levels of earnings the most. The year's basic exemptions, the first $3,500 of earnings, is no longer indexed to inflation which means that the low income workers, many of whom are women, would have to pay more in contributions.

The bill also includes amendments to the CPP's financial provisions and changes the plan into an additional tax and a make-work project for bankers, who are good friends of the Liberals.

Bill C-2 speeds up the planned increase in the contribution rate to the CPP. The rate, which is currently set at 5.85%, will rise to 9.9% by the year 2003, a 73% increase over a six year period. This rapid increase in the contribution rate is a concern for several reasons.

First, the CPP will be refinanced at the expense of low income people, particularly women. To shift responsibility for refinancing the CPP to those who are least able to do so, as our Liberal friends are proposing, is irresponsible and will have a harmful impact on future generations.

This tax will also have to be paid by small businesses, many of which will have a hard time meeting a 73% increase. It will prompt some of them to go underground when it comes to managing their business or hiring employees. Creating an environment that makes the underground economy more attractive is harmful to all Canadians, and this concerns me a great deal.

In addition to their ill-conceived idea of increasing contributions at the expense of the poor, the Liberals will establish the Canada pension plan investment board, whose role will be to manage the reserve fund so as to maximize revenue. However, the Liberals are not telling us that the board will not have the mandate to promote investments in our domestic economy. I support job creation programs, but I have a serious problem when I see that friends of the Liberals, namely bankers, are the ones who will benefit, while ordinary Canadians are still waiting for the Liberals to fulfill their commitments and create jobs for them.

This government keeps promising jobs for all Canadians, but its proposed changes to the CPP's financial provisions mean more power for the big wigs and more hardship for ordinary people.

Let me give an example. Why does the government accept that, when an accident occurs in the workplace, the CPP provides benefits for the injured worker, instead of the workers compensation board? It is a way of abusing the system and still keeping an eye out for their friends.

We must also come to the defence of the universal public pension system. An older population does not mean we must adopt an individualized approach or that we must privatize our public pension system. On the contrary, our European friends offer good examples of societies with older populations that now have public pension plans.

The Liberals have manufactured a crisis around the CPP in order to be able to attack the concept of the universality of our pensions and to save money on the backs of society's weakest members.

The Canadian public pension system is a crucial part of the Canadian social security net. The CPP and the OAS have been particularly important for lower and middle income seniors. It embodies the values Canadians share and ensures a fair redistribution of wealth.

Thanks to public pensions Canada has made tremendous gains in overcoming poverty among senior citizens and has provided much better prospects for retirement with dignity. In the three decades since the CPP was adopted, the poverty rate among Canadians 65 and older fell to 10.9% in 1995 from 33.5% in 1980.

The battle against poverty among seniors is far from over. Today one of every five elderly persons still lives in poverty. In 1993 the poverty rate for seniors increased over the previous year in almost every province. Scaling back CPP and OAS benefits will hurt low and middle income seniors. We have a responsibility to present and future senior citizens to oppose this legislation and protect our public pension plan.

The health of the CPP is directly tied to the rate of economic growth and a good level of employment, which increases the government's revenues. This government's many cuts, high interest rates, the present high rate of unemployment, and modest incomes have done more damage to the CPP than the aging of the population.

It is terrible to see a government that calls itself democratic refusing to let the debate continue, in this House, to get to the bottom of things. It is unacceptable. We were elected to this House to debate legislation. The CPP is of real importance to all Canadians, and the Liberal government turned its back on them today by refusing to allow the debate to continue. That is regrettable. What the Government of Canada has done today is truly shameful.

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5:45 p.m.

Liberal

John Maloney Liberal Erie—Lincoln, ON

Mr. Speaker, I am pleased to be able to join in the debate on the Canada pension plan.

In February of this year the Liberal government acting with the provinces took the lead to place the Canada pension plan on a solid financial footing. The recent changes to the Canada pension plan will do two important things. It will secure its sustainability and will stabilize the contribution rates.

We should not forget that the plan is jointly managed by the federal and provincial governments, and changes can only be made to it if approved by two-thirds of the provinces representing two-thirds of the population. All provinces, with the exception of British Columbia and Saskatchewan, support the reforms. Yes, let us look at it. The reforms are supported by Newfoundland, Nova Scotia, New Brunswick, Prince Edward Island, Quebec, Ontario, Manitoba and Alberta.

The consultation process was very extensive. During the 33 sessions held in 18 cities throughout the country, more than 270 formal presentations were held to find out what Canadians thought should happen to their plan. Canadians had no hesitation. They asked to have the plan preserved, its finances strengthened and its investment practices improved.

Those who advocate scrapping the CPP and moving to a privatized system with mandatory retirement savings plans do not understand two things. First, Canadians want the CPP to remain. Second, the CPP provides protection not available through private RRSPs, such as disability benefits, provision for women of childbearing age and survivor and death benefits.

The CPP premiums are insurance premiums paid by working Canadians into a public pension plan from which they draw benefits when they retire. To insinuate otherwise by calling the rate increase in contributions a tax grab is misleading and confusing. The CPP revenues are not revenues of the Government of Canada. The fund is jointly administered by the federal and provincial governments for the benefit of citizens, not for the benefit of governments.

Critics who maintain that the CPP is an insufficient public pension plan conveniently forget that it is only one of three pillars of our retirement system. The old age security and guaranteed income supplement system and private retirement savings plans such as RRSPs are the other two pillars. Action has already been taken by this government to consolidate the OAS and GIS into what we call the proposed seniors benefit which is designed to help those most in need. Taken together, these systems provide a good balance of government and individual responsibility for retirement income security.

These changes in the CPP reflect the long held Liberal values of providing stability for and protecting those in need. It is a balanced approach.

Today the 5.85% legislated CPP contribution rate is shared equally between employees and employers. Contributions are levied on earnings between $3,500 and $35,800. Under the existing legislation, rates were to rise to 10.1% by the year 2016. Yes they were to rise to 10.1%, although people forget that. However the chief actuary of the CPP indicated that without these changes the CPP fund would be depleted by the year 2015 and contribution rates would have to increase to 14.2% by the year 2030 to cover escalating costs. Clearly the CPP was not sustainable and something had to be done.

The federal and provincial ministers agreed on a three part approach to restore the financial sustainability of the CPP and make it fair and affordable for future generations. They did this by moving to fuller funding by accelerating contribution rate increases now so they will not have to exceed 10% for future generations. We have come in at 9.9% They are improving the rate of return for the CPP fund by investing it prudently and by having a diversified portfolio of securities at an arm's length from the government. They are slowing the growth in costs by tightening the administration of benefits and changing the way some are calculated.

Speaking about fuller funding, when the CPP was introduced in 1966 it was financed as a pay as you go system. The prospects of rapid growth in real wages and labour force participation promised that the CPP could be sustained and remain affordable. As well, building up large reserves in a world of real low interest rates would not have been much help. The pay as you go CPP system made sense given those circumstances.

Since then however the slowdown in wages and workforce growth and higher real interest rates have completely changed the circumstances in which the CPP must be financed. The pay as you go financing is no longer fair, appropriate and possible. Building up a larger fund, fuller funding, and earning a higher rate of return through investment in the market will help pay for the rapidly growing cost that will occur once baby boomers begin to retire. Accordingly the CPP will move from a pay as you go financing system to fuller funding to build up substantially larger reserve of funds. The fund will grow in value from about two years of benefits currently to about four or five years of benefits.

Indeed contribution rates will rise in steps over the next six years from the current rate of 5.85% to 9.9% of contributory earnings and then remain steady, instead of rising to 14.2% by the year 2030 as projected by the chief actuary. In dollar terms an employee earning $35,800 a year now pays about $945 in annual contributions. In 2003 that employee will contribute about $1,635. This is $450 more than what is currently legislated for that year. However by 2030 an employee would be paying $565 less a year than if we had not acted now.

Increasing rates more rapidly now will cover the cost of each contributor's own benefits plus a uniform share of the unfunded burden that has built up. These costs will not be passed on to future generations.

At present the CPP has a fund equal to about two years of benefits. Funds not required immediately to pay benefits are invested in non-marketable provincial government securities. Provinces pay interest at the federal long term bond rate when the bonds are purchased.

Fuller funding of the CPP means that the fund will grow substantially from about two years of benefits to about four or five over the next two decades. A new investment policy is required to secure the best possible return for contributors. A higher investment return on the fund will keep contribution rates down.

Thus our ministers have agreed that the CPP funds will be invested in a diversified portfolio of securities in the best interests of contributors and beneficiaries, much like private sector plans. The fund will be managed professionally at arm's length from government by an investment board accountable to both the public and government through regular reports. The board will be subject to investment rules similar to other pension plan funds in Canada. The foreign property limits of the pension funds will also apply to the CPP fund.

When the provinces now borrow from the CPP, they will pay the same rate of interest that they do on their market borrowings. This is a very welcome step.

Let us review some of the changes to the benefits and their administration I indicated earlier. The formula for adjusting previous earnings in calculating retirement benefits will be based on the average of the year's maximum pensionable earnings over the last five years instead of the three currently, prior to starting the pension. The amount of the pension will continue to depend on how much and for how long a person contributes to that plan.

To be eligible for disability benefits, workers must show greater attachment to the labour force. They must have made CPP contributions on earnings over $3,500 in four of the last six years prior to becoming disabled. Prior to 1987 disabled coverage was available to those who had contributed for at least five of the last 10 years.

Retirement pensions for disability beneficiaries will be based on the maximum pensionable earnings at the time of disability and then fully price indexed to age 65. This measure is consistent with how other CPP benefits are calculated and will apply only to the people not yet over the age of 65.

The death benefit will be equal to six months of retirement benefits, up to a maximum of $2,500. Currently the maximum is set at 10%, $3,508 in 1997. The option of eliminating the benefit was rejected.

Stewardship and accountability was a concern that has been responded to. To improve stewardship for the CPP and provide for more accountability so that the sustainability of the CPP will no longer be at risk has been accomplished as follows. Federal-provincial reviews will be required every three years instead of every five. Any future improvements will be fully funded.

There have been criticisms to which I would like to respond. Some say these payroll taxes are job killers and why are we planning on increasing the CPP contributions by almost 70% over the next six years.

Governing is about making choices and sometimes these choices are difficult. If the CPP is going to be there for young generations, we have no choice but to start paying our way for the CPP now rather than passing on an insupportable burden to our children. As I pointed out, if we did nothing, CPP contributions would rise to 14.2% by the year 2030. We have held them to 9.9%. The increase in the contribution rate is being phased in over six years to minimize the impact on the labour market.

Unlike the CPP contributions that are a savings toward pensions, EI premiums are an additional payroll tax that finance current expenditures. We have also said that we will bring down the EI premiums as soon as and as fast as it makes sense, and we are doing that as well.

This legislation represents a significant step forward to fulfilling our commitment to a secure Canadian retirement income system. These changes will strengthen our pension system so it will continue to give Canadians the opportunity to build sufficient incomes for their retirement.

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5:55 p.m.

Progressive Conservative

Scott Brison Progressive Conservative Kings—Hants, NS

Mr. Speaker, my party is profoundly disappointed with the lack of vision demonstrated by the government with Bill C-2.

With Bill C-2 the government had an opportunity to demonstrate courage and vision for Canadians. The government had an opportunity to stop taxing, especially payroll taxes which are killing jobs in Canada. They have been demonstrated around the world as being the single biggest impediment to the growth of jobs not just in the Canadian economy, but in the U.S. and the U.K. economies.

Even the Netherlands in 1983 had an unemployment rate in excess of 13%. In 1983 the Government of the Netherlands recognized that high taxes kill jobs. As such the government reduced payroll taxes, reduced general taxation and reduced regulations on small business. It has achieved a reduction of 15% to the extent that now in the Netherlands the unemployment rate is less than 7%.

This demonstrates what vision and leadership can provide to Canadians and what we need to do to ensure the sustainable growth of the Canadian economy.

I come from a small business background. Most of my family has been in small business for the last three generations. One thing we recognize in small business is when we only have so much coming in, in terms of general revenue, we can only afford to do so much with that amount. It is not a limitless pit as the government might feel.

It stands to reason when payroll taxes are increased small businesses will not be able to hire as many people as they would otherwise want to hire.

Subsidies designed by the government to entice people toward particular actions and to move them in particular directions are the exact opposite of taxes. This in itself should demonstrate to the government that reducing payroll taxes would help stimulate growth in the Canadian economy.

Bill C-2 and the $11 billion tax grab on ordinary Canadians without reducing employment insurance premiums will create further impediments to job growth. This is unacceptable to Canadians, especially to young Canadians.

When I speak to the students with whom I went to university and hear their stories of graduating with degrees and significant student loan debts, my heart goes out to them. I feel very badly for their circumstances. While the government through words says that it shares this pain and wants to do something about it, when given the opportunity to act decisively it consistently fails to demonstrate the vision these young people need.

Trade is a tenet of our party's policy. It is something that we have been consistent on in terms of supporting the values of free trade. We have consistently recognized the importance and the opportunity that trade provides to Canadians. In a country where trade provides 40% of our GDP we should recognize that when we overtax Canadian companies and individuals we create a significant impediment to our ability to help companies to be competitive internationally. This will create a further disincentive to the creation of jobs.

We are a trading nation, yet we have higher payroll taxes than our major trading partners. Perhaps this explains why we in Canada have over twice the unemployment rate of the U.S. We have a significantly higher unemployment rate than that of the U.K. We have three times the unemployment rate of Japan.

How will young Canadians move forward with a government that continues to hold them back?

Bill C-2 is another example of a government that does not trust its own people to make decisions with its own money. When government takes money from people through taxation, it is essentially saying that it is in a better position to determine what to do with that money than the individuals. The government has demonstrated unequivocally that they have not earned the right to make those decisions.

Consistent with that lack of trust in the Canadian people, the government continues to fail to give them an opportunity where they invest their RRSP savings. To limit Canadians opportunities to invest internationally and to maximize their returns to provide for their families for their futures is unconscionable.

In this day and age we have an opportunity through history to learn the lessons of economics, especially the economics over the last 30 years. It demonstrates without hesitation or equivocation how taxation or any barrier placed by government on small and medium size business, especially in a trading environment, prevents jobs.

This government cannot claim ignorance to these facts. I find it unacceptable that this government continues to move in this direction without recognizing this. My constituents and in particular the small business community have expressed this to me. I come from Atlantic Canada where many small businesses are struggling to survive. They would very much like to expand and hire more people but this government continues to put barriers in their way to this type of job growth.

Flexibility of the workforce is very important. As we enter the 21st century it is critical that governments understand that people and businesses need more flexibility in hiring practices and the transferability of benefits, all the things that economists agree on. We have not yet been able to convince this government and instead of listening and responding to the needs of Canadians and to basic economic truths, it is going to ram Bill C-2 through this House and continue to force Canadians to endure longer sustained high unemployment in this country.

We do believe in ensuring a sustainable future for the Canada pension plan. There are some members of this House who do not think it is important to protect 225,000 disabled Canadians through the Canada pension plan. However we recognize that the Canada pension plan is an important vehicle for those people in our society who need us to provide a level of support for them because they cannot provide that for themselves.

For many Canadians the single biggest difficulty that lies in front of them is a government that refuses to allow them access to the tools of job growth. Small business, especially a small business that is involved in international trade, is going to be and should be the engine of job growth in this country. Why this government insists on preventing small business people and young people from taking their rightful place in the international business community instead of providing them with opportunities to succeed and to ensure that future generations of Canadians are successful, we do not understand.

It takes courage sometimes to make the right decision. It takes vision and it takes a level of understanding and intelligence. We sincerely hope that the Canadian people in the next election will try to seek the type of leadership that will provide Canadians with this type of government.

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6:05 p.m.

Liberal

Elinor Caplan Liberal Thornhill, ON

Mr. Speaker, it is an honour and a privilege to rise in this House and speak to an issue that I believe was of concern to all of the residents of Thornhill, the young and the old.

As I begin, I would like to tell this House a little bit about the riding of Thornhill. Thornhill is a newly created riding, created by redistribution. For the very first time since the 1970s, we see Thornhill put back together again. The provincial government had divided Thornhill.

If one visits the riding one will find that old Thornhill straddles both sides of Yonge Street, part of it in the town of Vaughan and part of it in Markham. Now for the very first time with the creation of the new federal riding of Thornhill, Markham, Vaughan, Concord and all of the wonderful communities within those entities have come together under the name of Thornhill.

Thornhill is a vibrant riding with many businesses. I have to say that the businesses are very aware of the need for fixing the Canada pension plan and the problems that have plagued the Canada pension plan for many years. Each one who works in a business or who owns a business understands the importance of the Canada pension plan to Canadians and to Canadian values.

Within Thornhill is a very young community. As I knocked on doors and met people from all over the world, one of the things that was clear was that people in Thornhill are concerned about whether or not we will have in place in the future programs and plans like the Canada pension plan to protect them when they get sick and need disability insurance. Many were aware of the problems that have existed for some time with Canada pension plan. Many were aware of the need for the plan to be fixed.

I approached Bill C-2 from the following perspective. The first question I asked was, is there a problem? The answer to that question is yes, there is a problem. The problem is not a new one. It has existed for a long time. We could stand, we could point fingers and we could say “During the years of the Conservative government it did nothing to fix the plan”. That would not be productive, although it would be true.

The response of the government has been that there is a problem. What did it do about that? It did two things. The first thing it did was consult Canadians to make them aware of the problem. The people of Thornhill are very aware that there are problems with the Canada pension plan. They are aware that if it is left untouched and unchanged, the plan will implode. It will not be there for future generations.

I do not think that many of the young people in Thornhill believed that the Canada pension plan would ever be there for them. The seniors in Thornhill were very concerned because they said “How will changes to this plan impact me?”

It is important that these questions be answered. Not only did the government consult widely with Canadians, it also sat down with the provinces. While the Canada pension plan is a federal pension plan in the eyes of the people, the reality is that it is a federal-provincial plan. Changes can only occur if a majority of the provinces approve and recognize that a significant majority of the people of this country approve the changes. In other words the federal government could not unilaterally make these changes.

To those constituents in Thornhill who, when I knocked on their doors, said “Isn't it possible for governments to work together,” I say to them and to everyone in the House that Bill C-2 is an example of governments working together.

Was it unanimous? Absolutely not. Did they get a national consensus? Yes, I believe the governments did. A majority of the provinces, including Ontario, representing a significant majority of the population of Canada, have signed an agreement to make changes to the Canada pension plan that will solve the problem. The plan will be fixed and I will be able to say to the next generation, to the young people of Thornhill and to the young people of Canada, that the Canada pension plan will be there for them in future generations.

That is the commitment of the government and that is what Bill C-2 accomplishes. It fixes a problem that has been identified and it ensures that the plan is viable into the future.

The next test and the next question that I asked on behalf of the people of Thornhill was “Is this done fairly? Is it done with accountability to the people who rely on this plan and want to know that it is there?”

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6:15 p.m.

The Deputy Speaker

Order, please. I regret to interrupt the hon. member but as it is now 6:15 p.m. Pursuant to order made earlier this day, it is my duty to interrupt the proceedings and put forthwith every question necessary to dispose of the second reading stage of the bill now before the House.

The question is on the subamendment. Is it the pleasure of the House to adopt the subamendment?

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6:15 p.m.

Some hon. members

Agreed.

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6:15 p.m.

Some hon. members

No.

Canada Pension Plan Investment Board ActGovernment Orders

6:15 p.m.

The Deputy Speaker

All those in favour of the subamendment will please say yea.

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6:15 p.m.

Some hon. members

Yea.

Canada Pension Plan Investment Board ActGovernment Orders

6:15 p.m.

The Deputy Speaker

All those opposed will please say nay.

Canada Pension Plan Investment Board ActGovernment Orders

6:15 p.m.

Some hon. members

Nay.

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6:15 p.m.

The Deputy Speaker

In my opinion the nays have it.

And more than five members having risen:

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6:15 p.m.

The Deputy Speaker

Call in the members.

(The House divided on the amendment to the amendment, which was negatived on the following division:)

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6:45 p.m.

The Speaker

I declare the subamendment lost.

The next question is on the amendment. Is it the pleasure of the House to adopt the amendment?