House of Commons Hansard #39 of the 36th Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was cpp.

Topics

Canada Pension Plan Investment Board ActGovernment Orders

11:20 a.m.

Reform

Philip Mayfield Reform Cariboo—Chilcotin, BC

Madam Speaker, in light of those comments I will reserve my comments to later.

Canada Pension Plan Investment Board ActGovernment Orders

11:20 a.m.

The Acting Speaker (Ms. Thibeault)

Resuming debate on Group No. 3.

In accordance with yesterday's agreement, the motion in Group No. 3 is deemed to have been put and a recorded division is deemed to have been demanded and deferred.

The House will now proceed to debate Group No. 4. Pursuant to agreement made earlier Motion No. 9 is deemed proposed and seconded.

Canada Pension Plan Investment Board ActGovernment Orders

11:20 a.m.

NDP

Lorne Nystrom NDP Qu'Appelle, SK

moved:

Motion No. 9

That Bill C-2 be amended by adding after line 29, on page 28, the following:

“53.1 Notwithstanding any provision in this Act or any other Act, a provincial government is entitled to borrow funds from the assets managed by the Board at the lowest rate of interest available to the federal government.”

Madam Speaker, Group No. 4 has only one motion which I have moved. I want to spend a few moments on it this morning in the House.

Motion No. 9 reads as follows:

That Bill C-2 be amended by adding after line 29, on page 28, the following:

“53.1 Notwithstanding any provision in this Act or any other Act, a provincial government is entitled to borrow funds from the assets managed by the Board at the lowest rate of interest available to the federal government”.

I alluded to this motion when I was making some comments on Motion No. 8 in the previous grouping.

The interesting thing about the Canada pension fund today is that the two year reserve, which is around the $40 billion mark, can be borrowed by provincial governments at the federal government long term bond rate.

If we look at the last 30 years, the federal government's long term bond rate has been a pretty good deal for a number of provinces. Over the last while many of them have not had the same credit rating as the federal government because of economic difficulties or their sheer size.

I am joined in the House this morning by my friend from New Brunswick. Over the years New Brunswick has a rather high unemployment rate as a small province with a small population. Its credit rating has probably always been lower than the federal government's credit rating. Therefore it is more expensive for the province of New Brunswick to borrow money for its schools, hospitals and universities other than from the federal government.

One goal of the Canada pension plan was to set aside its reserve for about two years and to allow the provinces to borrow moneys from it at the federal government rate. That made it cheaper for the province of New Brunswick to build schools, hospitals and universities. It could borrow money from the fund at a lower interest rate than if the fund had not been there. The federal government bond rate was at a lower rate of interest than New Brunswick could borrow money elsewhere.

The same thing was true in my province of Saskatchewan. It has been very helpful in terms of the infrastructure we have built in our province over the years.

It was also true for the province of Manitoba, the Atlantic provinces, not just New Brunswick, but Newfoundland, Prince Edward Island and Nova Scotia too, as well as every other Canadian province. It is a good thing, a positive thing. I recall very well—I heard the debates in the 1960s—that it was in 1966 that this bill became reality in Canada. It was under the Liberal Prime Minister, Lester B. Pearson.

Liberal Prime Minister Lester Pearson, in a minority parliament in those days, supported particularly by the NDP, people like Tommy Douglas and David Lewis, brought the country the pension plan. One of its objectives was to provide the fund at lower interest rate to the provinces so they could build their infrastructures, become stronger provinces and build stronger economies.

Now that will disappear. That is one of the changes in the CPP legislation that I am personally very concerned about. Now every province will be on its own. That may not be a problem.

Alberta has a very strong and robust economy and a very good credit rating today. It will be a problem for Newfoundland that does not have a good credit rating. It will be more expensive for Newfoundland to go to the market for long term debt to build a university or to build the infrastructure than it will be for Ralph Klein in the province of Alberta.

If the government is worried about national unity, about building a strong federation and about doing some things at the federal level that help all Canadians regardless of where they live, surely to goodness this is one part of the bill that should be changed by the federal government across the way. If we are looking at equality for all our citizens and at equality of opportunity or condition for all our citizens, surely to goodness this is one of the changes the government should look at in terms of the Canada pension plan.

One of the reasons the governments of B.C. and Saskatchewan did not agree to the changes in the CPP was that it set up a balkanized Canada in terms of interest rates. It seems to be very bizarre that a so-called Liberal government would do this. Now provinces will be at the mercy of bond rating agencies like Moody's of New York. They will determine how much the taxpayers in Manitoba, New Brunswick or Newfoundland have to pay when they borrow money to build a project.

They will be at the mercy of Moody's or other bond rating agencies such as the Dominion Bond Rating Service. The bond rating agencies will fly into a province with their books and their own technocrats and sit down to determine at what rate of interest the provinces can borrow money. That decision is out of our hands as parliamentarians. It is out of our hands and in the hands of a few foreign bankers and bond raters. It does not matter what political party is in power, we are at the mercy of these people.

I know how important it was in Saskatchewan a few years ago when the province was in great debt and suffering from a humungous deficit. The bond rating companies had the province on the verge of bankruptcy. We are at the mercy of these New York bankers. They set the rates. What has happened in the last few years is that the province has recovered. It has a balanced budget, the debt is going down and the credit rating is going up.

How can a Liberal government put the provinces at the mercy of these speculators from New York and elsewhere? That is exactly what is happening in this bill.

Our amendment today is restoring to the Canada pension plan the same provisions that have existed since 1966 that will allow the provinces to borrow from the fund at the federal government's long term rate. The federal government's long term rate is a rate that is attractive because the federal government is large, it is credible, it has a good credit rating. It is the economy of the whole country that is supporting this credit rating.

It is only fair that the federal government accept this amendment. Accept the wisdom of a Lester Pearson, accept the wisdom of a Paul Martin, Sr. when they had a vision of trying to build a co-operative federalism where Canadians were equal and had equality of condition whether they lived in New Brunswick, Newfoundland, Quebec or Saskatchewan.

Where is that Liberal vision of old that wanted to offer this equal opportunity right across the country? Why is it the new Liberalism in this country has the vision of a Brian Mulroney or the Leader of the Opposition where it is dog eat dog? Why is that happening?

I do know there are many Liberal backbenchers who are very uncomfortable with this new very conservative model of Liberalism. In fact somebody said that we have probably the most conservative government now in the history of the country sitting across the way.

Brian Mulroney did not try to do this. Brian Mulroney did not try this when he was Prime Minister of this country. If he had, the Liberal Party would have been up in arms. The rat pack would have been up in arms in this House. It would have denounced that government as right wing extremists and sellouts, balkanizing the country, a supermarket of Canadians where Canadians are different classes in different parts of the country.

Now the Liberals are in power. Now the sons and daughters politically of the Liberals of old, of the Pearsons and the Martins and the Pickersgills of old are changing that Liberal vision that talked about equality of condition.

I think this is a fundamental amendment to a fundamental part of the bill. I wish we had the independence and the freedom in this country where parliamentarians on the government side could get up and speak their minds and vote freely and independently and accept some of the amendments being put forth by members of this House.

People are getting cynical of this whole process. They get cynical when they see this kind of thing happening. They get cynical when they see this kind of radical departure and change and not so much as a peep from the Liberal members sitting opposite. Not so much as a peep.

I know how concerned everybody is about national unity and keeping this country together and creating equality of condition. Equality of opportunity is supposed to be a great principle of Liberalism in Canada. Can the Liberals explain why they are going to treat a Newfoundlander different from an Albertan? Why they are going to treat an Ontarian different from somebody from New Brunswick? Why they will treat a Manitoban different from someone in British Columbia?

We are going to have the balkanization of this country in terms of lending rates. That is not fair. That is not just. That is not equality. That is not the kind of vision of a country I want to build.

In the province of Quebec with the Caisse de dépôt et placement du Québec there are not different lending rates for different regions. There is one lending rate right across the province of Quebec for their particular fund and their particular investment board and agency. This will not be the case now in the rest of the country. This will not be the case at all. That concerns me as a Canadian.

If I were Brian Tobin, the premier in Newfoundland, I would be up in arms denouncing the Minister of Finance and the minister of human resources for saddling him with a regime that will make it more expensive for him to borrow money for his schools and his hospitals than for Ralph Klein in the province of Alberta.

Canada Pension Plan Investment Board ActGovernment Orders

11:35 a.m.

Progressive Conservative

Jean Dubé Progressive Conservative Madawaska—Restigouche, NB

Madam Speaker, I have listened very carefully to the hon. member's comments on this bill and the amendment he is bringing forward on preferential loan rates to provinces.

I think Canadians are telling us that they are looking for people to manage their money. Over the past 20 years we have been lending money to provinces at a preferred lending rate, but where are we today? There is a shortfall of $600 billion in the fund. I do not think that Canadians were looking for that.

We have to provide Canadians with the best bang for their dollar. They are looking for maximum returns, guarantees that the CPP will no longer be affected. They are looking to have a Canada pension plan in 20 years.

I also heard the hon. member talk about New Brunswick and how this would help to create jobs. I will say that for 20 years we have been lending money to provinces at a preferred rate and the unemployment rate is still very high. I do not believe the status quo would work. There are other vehicles to create employment in New Brunswick. The way to do that is by electing a Conservative government in the next election.

We are talking today about saving the CPP. The hon. member mentioned keeping the status quo. Well today there is a $600 billion shortfall in the CPP fund. Imagine if the NDP were the government today and passed this type of bill. Maybe in 20 years the CPP fund would be a trillion dollars in the red. That is scary. I hope that Canadians can see exactly what is going on here.

I know that for my investment, my money, I want the best bang for my dollar. This is 1997, not 1966.

Canada Pension Plan Investment Board ActGovernment Orders

11:35 a.m.

NDP

Lorne Nystrom NDP Qu'Appelle, SK

Madam Speaker, on a point of order.

I wonder if the member would entertain a question. He is talking about this radical amendment. This is the same approach that Brian Mulroney and the Conservative Party favoured over the years. They suggested keeping this particular fund for the provinces. That is what is wrong with it.

Canada Pension Plan Investment Board ActGovernment Orders

11:35 a.m.

Progressive Conservative

Jean Dubé Progressive Conservative Madawaska—Restigouche, NB

Madam Speaker, if I can continue, this is 1997, not 1966. Canadians are looking for good management and that is what we are proposing. We are proposing to secure the CPP fund for future generations.

Canada Pension Plan Investment Board ActGovernment Orders

11:35 a.m.

NDP

Yvon Godin NDP Acadie—Bathurst, NB

Madam Speaker, I am pleased to be able to address this topic. I will try to give a little of the background in our province.

I am saddened to see my colleague rise and say that, if the New Democrats were in office, the problem would be worse in ten years than it is now. I can tell you that all the poverty we are seeing today is a legacy from Brian Mulroney's Conservatives.

They were followed by the Liberals, the opposition back then, who said “Elect us and we will do better”. We have never been in such bad shape as we are now. It is all very fine and well to take the tack they are taking, to speak about the economy and how to invest money and reap the benefits, but I can guarantee you Canada never saw as many hungry children as it did under those two governments. It was because of those governments.

I find it really sad that, today, someone from my region, my colleague the hon. member, cannot grasp the fact that families are living in such poverty and that the Canada pension plan, with all the money that goes into it, plays no part in getting the economy moving again.

The problem is that the Conservatives and the Liberals have simply taken money and given it to their friends, the major corporations, in $100 million and $400 million chunks. This is why our economy is in such a sorry state today. There is too much patronage, that is the problem.

Liberal and Conservative members make me think of employment centres. There are the employees and the poor people that have to go to see them about jobs, and if they are not Liberals or Conservatives, they do not get a job. This is why Canada is so far in the hole. This is why Atlantic Canada is always impoverished. Governments have never carried out their responsibilities in the Atlantic provinces. They talk about national unity, but the day Canada considers all the provinces in the country, fewer children in the Atlantic provinces will suffer. I am ashamed of the previous speaker.

Canada Pension Plan Investment Board ActGovernment Orders

11:40 a.m.

Bloc

Paul Crête Bloc Kamouraska—Rivière-Du-Loup—Témiscouata—Les Basques, QC

Madam Speaker, on reading the NDP amendment, the deep feelings behind it are quite understandable.

It can be seen that in the past many regions of Canada have indeed been the victims of decisions by the central government. It must be kept in mind that the text that existed in 1964 was part of a kind of a deal to have the Canadian economy centred in Ontario, with transfer payments and employment insurance to give the peripheral regions a top-up income to allow them to survive.

One important mandate was lost sight of at that time, however, that a supplementary income was not the only thing needed; regional economies also had to be diversified. The regions—although I speak for eastern Quebec, I think the same applies to the maritimes—have long respected this agreement, saying that industrialization and all the manufacturing sector would be mostly located in Ontario and the natural resources sector would be more in the eastern provinces and Quebec, but there was no change in the regional economy so that we would not just cut down the trees but also process them in our regions, not only catch the fish, but also have the fish plants in our regions. In short, there was no worthwhile diversification of the economy.

It must be kept in mind that, at the end of the 19th century, the maritime provinces were self-sufficient and the state of dependency we have today was created and perpetuated by the systemic implementation of federal government policies, particularly during the Trudeau years. So, as I said, we can certainly understand the deep feelings behind this amendment.

However, on the eve of the 21st century, the amendment before us is not necessarily the solution to revitalize regional economies. Nowadays, the provinces can get fairly easy access to credit. They can get money from various sources and use the pension fund in compliance with the stated purpose.

Let us not forget that the Canada pension plan is the fund that has had just about the lowest rate of return over the last 35 years. Compared to the Régie des rentes du Québec—and this is partly because of the investments made by the Caisse de dépôt et placement—the Canadian plan is way behind and does not perform nearly as well as the Régie des rentes du Québec and its investment instrument, the Caisse de dépôt et placement.

So, the bill seeks to correct a situation whereby the pension fund may no longer be self-sufficient and may no longer provide the funds necessary for future generations. Many of the amendments to the current act are based on the Quebec experience. I was told that federal public servants travelled to Quebec City to look at how the Caisse de dépôt et placement and the Régime de rentes du Québec worked. They looked at why the RRQ provided better control than the CPP over areas such as disability claims. They concluded that our system worked and that they should try to implement a similar plan in Ottawa and get it to work as well.

I hope the bill before us will lead to such results. Let us bear in mind that, given the opportunity to go about doing things differently, in an original way, Quebec can make an outstanding contribution and demonstrate, with concrete results, that Quebeckers have all it takes to take the necessary and appropriate steps to promote their development.

So, regarding the amendment under consideration, which seeks to give some sort of preferential rate to provincial governments that need money and borrow from the Canada pension plan fund, the solution may be to give the regions the opportunity to develop adequate infrastructures to ensure the most appropriate free trade possible. Since the free trade agreements were signed, some industries have expanded and Quebec certainly came out a winner in this respect. Safeguards will also be required to ensure that environmental regulations and labour laws are respected, but it will nevertheless be possible to diversify our economies.

There is a tool available that would be much more efficient than an preferential interest rate and that is a federal government procurement policy based on the regions. If in evaluating its procurement contracts with suppliers, the federal government was accountable to the House of Commons and to the people of Quebec and Canada for not concentrating its expenditures in Ontario, without necessarily distributing expenditures among all regions, that would be the beginning of a solution. The federal government's performance will have to be assessed on the basis of whether or not transfer payments are maintained, because there is no doubt that some action is required in that area, that some distribution of wealth is required, but in addition to transfer payments, there should be decentralization of procurement to the regions so that each region can create an appropriate number of jobs depending on its population. There is nothing of the sort in the government's plan of action right now.

I would be much more in favour of questioning this government on all its actions, and it does not seems to me that giving the provinces a preferential rate on loans from the Canada pension fund is the best solution because, at the same time, the public will demand that the fund finally become cost-effective after 30 years of going about it the wrong way, after discovering that it was not successfully replenished, it would be a grave mistake not to let this fund produce the best results possible. And I believe that today the provinces have other opportunities to borrow. There are various markets opened to them. They are not all the same economically, that is true, but if this approach had already produced over the past years what we are looking for, we would not have to be discussing it today. So it did not help achieve what was being aimed at. The result has been that basically the provinces were not encouraged to look for investments with capital that may not come from the federal government or from the Canada pension plan.

For these reasons, we will vote against the proposed amendment, although we are well aware of the fact that many changes should be made in the way the federal government helps the regions and the provinces. The best way to do that is to restore the transfer payments that were withdrawn four years ago, instead of trying to design new programs for youth or for any other group, such as the disabled or other groups. It is of course very appropriate that assistance be provided to these groups.

But we should have more confidence in the ability of the provinces and of the professionals in these areas to address these issues. We should give back the money that was taken away because of cuts over the past four or five years, and I am sure there would be a much greater positive effect than by letting the provinces borrow from the Canada pension plan at a preferential rate.

Having assessed this whole situation, we feel that this amendment should not be allowed. It is contrary to the general scheme of the act, which is not the same as the one passed during the sixties. We have learned that there is less money coming in than expected to finance the plans.

Such an approach could have the following undesired effect: if we allow the provinces to borrow at a preferential rate, who will be paying the cost of such a preferential rate? Will it be future generations, the young people who will have to finance the program, by increasing their contributions over the next 10, 15 or 20 years? It is absolutely essential that the act, and the scheme of the act ensure a better intergenerational balance.

I believe we should avoid adding amendments that would not help achieve that objective.

Canada Pension Plan Investment Board ActGovernment Orders

11:50 a.m.

Progressive Conservative

Mark Muise Progressive Conservative West Nova, NS

Madam Speaker, I would like to comment on the comments of the hon. member from the NDP that we are seeing more and more poorer Canadians and poorer children. I think a distinction has to be made here.

What we are talking about is preventing poorer and poorer senior citizens in this country. That is the concern that we have. Lending money to provinces at preferential or lower interest rates is not what we are talking about.

We want to ensure that there is a solid fund that will provide for Canadians who are planning for their retirement. We see the reason why there is a $600 billion shortfall in the CPP system. It is partly because these funds were loaned to the provinces at far too low interest rates.

We want to see a solid fund that is going to provide a regular income for retired citizens in a way that basically gives the people what they deserve and not having younger people paying exorbitant amounts for this.

I think the hon. member for the NDP is out in left field on this one.

Canada Pension Plan Investment Board ActGovernment Orders

11:50 a.m.

NDP

Rick Laliberte NDP Churchill River, SK

Madam Speaker, I would like to speak in favour of the opportunity for provinces to have access. I think previous members speaking in opposition to this do not realize that economic indicators are major cycles. Some day their riding or their province may realize a downturn, something that Hong Kong, Taiwan or Korea as state nations in the Pacific Rim are realizing. Their national interests have closed the door on them to be able to build much needed infrastructures like schools, hospitals, water and sewer facilities for the health and well-being of their communities.

All these major needs are prevalent in my region. I look at a region in northern Saskatchewan. We do not have big banks. We cannot walk down the street, then play golf with the local banker and hopefully get a few million dollars to build our next major infrastructure to create an economic cycle.

We still have the remnants of the Hudson's Bay Company. They took the profits and left nothing. There is no Hudson's Bay hospital, school or highway. These guys took the profits and ran.

Here a government finally has a fund that is available from our pensions and then members want to close the door to allowing us to access our own investment for our children, our communities and for the betterment of our entire country. They are willing to close this door without knowing what our economic future is going to be like.

We are speaking on behalf of people who are aware, people who are at the poverty level, the unemployed and the people who do not have huge bank accounts. We do not even have major banks in some of these regions. Having a bank teller is basically a way of accessing one's bank account. However, if one has nothing to put in it then one is in trouble.

Territorial governments have been borrowing from the provinces. They do not seem to have access to this investment fund unless the provinces do it on their behalf. The government is closing the door on the whole territorial region that is at the developmental stage. Some of these regions that the hon. members who are speaking represent have had their opportunity for development and now they are closing it on the underprivileged or underdeveloped areas of this country.

I carefully ask for the government to take its time on this whole issue of investment of pension funds and access by provincial governments at a federal rate as opposed to a marketable rate. If a province's rating by Moody's has been classified high the interest rate will be high. We may run into trouble in the future and maybe our grandchildren will run into trouble in the future and the door has been closed.

I ask for support for this amendment to keep the opportunities for these provinces to have access if they need it. It does not necessarily mean they are always going to line up and take it away. If they need it, they will be able to ask for it.

Canada Pension Plan Investment Board ActGovernment Orders

11:55 a.m.

Reform

Myron Thompson Reform Wild Rose, AB

Madam Speaker, I recently talked to one of my constituents, Rene Jaspar, as well as many small businesses in my riding. I am sure this is applicable to a number of businesses across the country. These people are right at the doorstep of closing their business doors and going into bankruptcy. They are in a great depression.

I ask the permission of the House and the Chair to move a motion:

That we enter into an emergency debate to put an end to this postal strike immediately.

Canada Pension Plan Investment Board ActGovernment Orders

11:55 a.m.

The Acting Speaker (Ms. Thibeault)

I must advise the hon. member that a letter should have come to the Speaker seeking an emergency debate. However, at this stage, the hon. member may seek the unanimous consent of the House to hold such a debate.

Canada Pension Plan Investment Board ActGovernment Orders

11:55 a.m.

Reform

Myron Thompson Reform Wild Rose, AB

Madam Speaker, under my point of order I asked for the unanimous consent of the House.

Canada Pension Plan Investment Board ActGovernment Orders

11:55 a.m.

The Acting Speaker (Ms. Thibeault)

Does the hon. member have the unanimous consent of the House?

Canada Pension Plan Investment Board ActGovernment Orders

11:55 a.m.

Some hon. members

Agreed.

Canada Pension Plan Investment Board ActGovernment Orders

11:55 a.m.

Some hon. members

No.

Canada Pension Plan Investment Board ActGovernment Orders

11:55 a.m.

The Acting Speaker (Ms. Thibeault)

There is no unanimous consent.

Canada Pension Plan Investment Board ActGovernment Orders

11:55 a.m.

Progressive Conservative

Mark Muise Progressive Conservative West Nova, NS

Madam Speaker, in response to the hon. member from the New Democratic Party, what we are talking about here is wise investments. We cannot ask the people of Canada to have their funds invested unwisely. That is what we are talking about.

Canada Pension Plan Investment Board ActGovernment Orders

11:55 a.m.

NDP

Bev Desjarlais NDP Churchill, MB

Madam Speaker, as someone who is not quite at the age where I am thinking about getting on to the Canada pension plan, I have to admit that in the last few months I have become very much aware of the seriousness of this legislation and the consequences to the people of Canada. The amendment our caucus is supporting is a clause that has been part of the Canada pension plan since its inception in 1966.

When I listen to the comments of the member from the far right on this being a devastating affect, putting the Canada pension plan way under, that people of Canada want to see their money invested strictly for profit, I suggest that the provinces being able to access the Canada pension fund for investment to ensure they can continue is an investment and is profitable. It might not be a buck we can hand back and forth, run to the store with or down the street, whatever our little hearts desire, but it is profitable. It is an investment in the people of Canada.

I am surprised at the comments coming from that member. His party left in Saskatchewan one of the most devastating results of a government that so blatantly abused its power. I am surprised that the present government did not have to borrow from this fund to secure the locks on the jails of Saskatchewan because of that situation. It was able to borrow from this fund and is very credible in its approach to getting out of the mess that government put us in.

As someone who grew up in Saskatchewan I would go back from Manitoba year after year while that government was in place and watch my home province go down and down and down. It literally tore me apart. I have such pride in seeing the results of the present government and knowing that this amendment, this proposal, was the result of being able to see that province come back life. For someone to suggest that it is not important, that it is not a profitable investment, is absolutely disgraceful.

Canada Pension Plan Investment Board ActGovernment Orders

Noon

Liberal

Tom Wappel Liberal Scarborough Southwest, ON

Mr. Speaker, my intervention will not be long but I have been carefully listening to the interventions from our NDP colleagues with respect to this proposed amendment. Unless I heard it incorrectly, from the very mouth of the last speaker comes the reason why the amendment should not be supported.

She is talking about giving, as I understood, the opportunity for the provinces to dip into this fund and use the money for what they think is right, if I understand the amendment correctly. Yet in the very next sentence she points out the irresponsible behaviour of a certain province during the regime of a certain government. There is nothing in the future to prevent other irresponsible governments in other provinces from doing things that might be irresponsible with the CPP.

It seems that what Canadians want is to make sure that the Canada pension plan is there when they retire and to make sure that when they retire they will receive an appropriate pension, being one of the three pillars we are trying to get Canadians to appreciate.

If we are going to do that we want to make sure that the fund is invested in the most prudent and most efficient way to ensure profitability, not for the sake of profitability but for the sake of ensuring that those people who are retired can count on the Canada pension plan. One of the ways we want to do that is to make sure that the investments are invested in a prudent, financially secure manner. If we are going to leave it willy-nilly to governments that may or may not be good or bad from time to time, it seems to me that in itself is irresponsible.

If that is the intent of the NDP amendment I certainly cannot support it.

Canada Pension Plan Investment Board ActGovernment Orders

12:05 p.m.

Reform

Diane Ablonczy Reform Calgary Nose Hill, AB

Mr. Speaker, one thing all of us in the House need to be absolutely clear on is that this is not politicians' money. I hope my colleagues in the NDP realize that. This money belongs to the people of Canada. They work hard for it and they want to retire on it with some security. They do not want it to be played with for political purposes.

Why is the Canada pension plan in such a mess? Why do we owe $600 billion when there is not a nickel anywhere to pay it? It is because of philosophies like this, that somehow we can use this money, we can play with it, we can benefit from it and there will be no price to pay down the road. There is a price to be paid. It will be paid by our children.

Unbelievably, we have a party which is arguing passionately in favour of continuing to repeat the mistakes of the past. I hope there is not one more member of the House who would support such nonsense.

The Canada pension plan represents a second national debt. We have to do everything we can to pay off that debt. It is a disgrace. It represents a real threat to the security of our future and to the well-being of our children. Yet we have a group of people saying let us continue to use this money to bail ourselves out when we get in a jam. Let us continue to use this money with a lower rate of return. The people who entrusted us with this money could get a better rate of return under prudent management.

This kind of philosophy has failed us miserably in the past. One of my gravest concerns about this whole scheme is that we are going to create a huge investment fund, with billions and billions of dollars in it, and we are going to have politicians like these saying we need to do this, that this is a different kind of investment, that maybe we will not get as much money out of it but, boy, it is really important that we make these kinds of investments. It is an investment for the future. Maybe we will not get a good return on it, but it is an important investment.

This is not our money to play with. This is money which has been entrusted to us by hardworking Canadians who hope to retire on it. We had better give them the very best management we can possibly give them and forget about all the other nice things we could do with this money.

I wish we had unlimited money. I can think of at least a hundred things that I would do tomorrow if I had an unlimited pot of cash, things that would help a lot of people. But this money does not belong to the politicians and it should not be treated that way.

I am very concerned about the political risk that is being posed to our hard earned retirement investment before it even gets going. I wonder as a middle-aged Canadian whether this kind of thinking will be the death of my retirement hopes and those of my children.

Someone has to pay. If money is loaned at low rates, someone has to make up the difference. There is no way around it. It will have to be made up by paying the extra money which should have been earned or it will be made up by receiving lower benefits because the maximum return was not earned. Yes, all these nice things are being done but that does not give us a secure retirement.

Let us not support amendments to a bill which would in any way, shape or form suggest that this money belongs to the politicians. The money belongs to the people. It is their retirement fund. They had better get the best, most secure retirement they can possibly get or there will be big trouble in the future.

Canada Pension Plan Investment Board ActGovernment Orders

12:10 p.m.

Stoney Creek Ontario

Liberal

Tony Valeri LiberalParliamentary Secretary to Minister of Finance

Mr. Speaker, just to pick up on the comments of my colleague who was just up speaking and addressing this House, the motion is clearly inconsistent with the public's wish to stop the practice of lending CPP funds to the provinces at below their own market rates of interest.

I refer to the report on the Canada pension plan consultation that was put out in June 1996. It says that there was widespread support across the country for achieving a higher rate of return by investing CPP funds in market securities. Participants said a higher rate of return on investment is a prerequisite for the changes to the benefits and contributions. Without it the rationale for fuller funding disappears. There was agreement that the inevitable increases in contribution rates must be kept in check through diversified investments that will earn a higher rate of return.

This is reflective of what Canadians have said throughout consultations. The NDP this morning consistently gets up and talks about how any of the changes that are put forward with respect to Bill C-2 are not progressive enough or are not reflecting what Canadians are saying.

I offer to this House the opportunity to put aside the rhetoric the member for Qu'Appelle has put forward this morning, and some of the other members of the NDP, and look at the facts.

They talk about the reasons why British Columbia and Saskatchewan did not sign on to this agreement. Let us be quite clear that during the consultations both those provinces never said that provincial access to funds was an issue. They had other issues.

British Columbia put forward toward the latter part of the consultations and the negotiations between the province and the federal government the proposal to expand coverage up the income scale to $50,000 or $55,000 from where it is with the present plan. That is fair enough, but it also needs to be stated that particular issue is on track two.

The discussion with respect to that proposal from British Columbia will be reviewed on track two when the provinces and the federal government come together once again to review the Canada pension plan.

There were no issues related to the investment board or the investment board principles. In fact, both those provinces signed on to the information paper that included the investment board principles. The investment board principles stated quite clearly that it will perform its function in the best interest of the plan members. The best interest of the plan members is an attempt to receive the best rate of return, and the best rate of return is not achieved if we have this motion go forward.

The provinces agreed that the CPP fund should be invested in the best interest of the plan member, just like other pension funds. I think it is important to emphasize like other pension funds. Another member of the NDP was up earlier this morning talking about the limited access to the funds. The regulations included in Bill C-2 quite clearly state that the bill guarantees provincial access to funds at market rates.

There is a transition period. It was part of the negotiation. The provinces wanted to ensure the amendments to the Canada pension plan provided the opportunity for the provinces to continue to receive access to those funds, and Bill C-2 does that while at the same time providing the highest possible rate of return to the plan members by ensuring the provinces are able to have access to those provincial moneys at market rates.

I also want to state that this morning we heard the NDP get up and say that the amendments are not progressive enough with respect to Bill C-2. Yet here we have a motion that continues to put forward the status quo. Let's not change it. What they are doing is mixing all kinds of different motivations for these changes. They talk about regional development. They talk about labour participating and different types of initiatives.

Regional economic development is an issue that is being dealt with outside the Canada pension plan. Canadians have said unequivocally that they want the pension plan to survive. As my colleague from the Reform Party stated quite clearly, it is Canadians' money. They are asking for the highest rate of return with prudent management and investment of the money. That is what we are doing. This motion would not speak to the concerns of Canadians or support what they want.

Let us be quite clear that nothing would put benefits at risk in the long run more than the failure to deal with the fiscal realities of the program.

The higher rate of return the actuary has indicated the plan will receive speaks to the contribution level. If we take away provisions from the bill that do not allow the board to achieve the highest possible rate of return in a prudent fashion, which reflects what Canadians have said then, as my hon. colleague from the Reform Party said, the money has to come from somewhere, either from higher contributions or reduced benefits.

On the one hand the NDP continually says that the benefits are being slashed in the program. At the same time it is saying that we should not allow Canadians to receive the highest rate of return on their money. The NDP cannot have it both ways. Bill C-2 strikes a very good balance in achieving the sustainability of the plan financially while still providing crucially important benefits to Canadians.

I close by saying that we should oppose this amendment for the reasons stated by me and by members of the Reform Party, the Conservative Party and the Bloc who all stated quite eloquently reasons why we should not support the motion.

The provisions in Bill C-2 reflect what Canadians have been saying throughout the consultations. It allows for a higher rate of return than is presently there. It also continues to allow provincial access to funds, which is part of the federal-provincial agreement.

Canada Pension Plan Investment Board ActGovernment Orders

12:15 p.m.

Liberal

Paul Szabo Liberal Mississauga South, ON

Mr. Speaker, I would like to add a couple of points. The parliamentary secretary has made very clear why the motion should be defeated. Page 58 of the report on the Canada pension plan consultations says that all but one presenter were opposed to giving the provinces continued access to CPP funds at below market rates.

As a result of those exhaustive consultations and with the requisite support of the provinces the issue is quite clear not only for the provinces and the federal government but for Canadians at large.

I also want to make one brief comment about the issue of the unfunded liability raised in the speech of the Conservative member. He referred to it as a shortfall of some $600 billion. Technically it is referred to as an unfunded liability, but in the context of corporate pension plans an unfunded liability determined by an actuarial report must be dealt with and provisions must be made to fund the unfunded liability for one very simple reason. Pensioners have to be protected. Should the business fail there would be no recourse to deal with an unfunded liability.

There is a difference, however, with regard to the benefits accrued under the Canada pension plan by today's workers which have not been fully funded. Finance officials have advised that should the benefits accrued by all current workers which continued to build up over the years require funding, we would need some 30 years of funded benefits put aside in the investment fund. Needless to say, that is a very substantial amount of money. Since that money is not funded it is in the hands of businesses. It is in the hands of Canadians, the premium payers of the CPP.

I should point out for the benefit of members the reason crude benefits to current workers who are earning credits for their pension plan are funded on a pay as you go basis. When the plan came into effect the then retirees had come through two world wars and a depression, the depression of the thirties and forties. We all know they did not have the opportunity or a full working career to be able to provide adequately for their retirement needs. As a result the plan was structured on what is called a pay as you go basis. Today's workers pay for the benefits of the then retirees.

We have an aging society. The ratio of workers to retirees is going down. This is one of the principal reasons amendments to the Canada pension plan are necessary. We have to move to an investment opportunity which will achieve higher rates of return than previously was the case so that the fund earning those rates will subsidize the premiums Canadians would otherwise pay.

It makes good sense. It certainly was the view of Canadians and experts that appeared before the finance committee that attention should not be seconded away from the principal purposes of the Canada pension plan, which is to provide a secure guaranteed indexed pension to all Canadians today and for future generations. That should not be jeopardized or undermined by either ancillary benefits or other activities such as regional economic development, et cetera.

In closing, the member from Qu'Appelle continues to suggest that the amendments being proposed by the NDP are reasonable and that the government has not accepted any of these amendments. It is a prime example of the motivation of the amendments proposed by the NDP being totally inconsistent with the objectives of Bill C-2 and the creation of the Canada pension plan investment board. That is precisely the reason this amendment should be defeated.

Canada Pension Plan Investment Board ActGovernment Orders

12:20 p.m.

Bloc

Jean-Guy Chrétien Bloc Frontenac—Mégantic, QC

Mr. Speaker, the purpose of the amendment now being considered, Amendment No. 9 moved by my distinguidished colleague, the hon. member for Qu'Appelle, is to amend Bill C-2 in order to allow certain provinces to be able to borrow from this huge fund at a very low rate of interest.

It must be remembered that governing means forecasting, anticipating. It means being able to see 10, 20 or even 100 years down the road. If I may, I would like to go back to the early 1960s, when the late Jean Lesage was elected to office in Quebec with his slogan about things having to change. And he was successful.

In 1962, I am sure you will recall the Liberal Party in Quebec talking about being masters in our own province, the primary goal being to create the Quebec pension plan fund and to nationalize Quebec's electricity companies. This phenomenal team included René Lévesque, who did wonderful things in Quebec for Quebeckers, and Eric Kierens.

The Quebec pension plan investments are earning a distinctly higher return. If the QPP loaned money to government corporations at 3, 4 or 5%, it would be in the hole today.

If corrective action is not taken quickly, the CPP will be running a large deficit. With $5.85 on every $100 insurable today, and hundreds of thousands of baby boomers all set to turn 65 at the same time, or just about, the fund will be in the red. The Minister of Finance would then be facing serious problems.

The CPP must therefore be properly managed so as to deliver the highest return possible. To this end, it is anticipated that a minimum of 80% of the fund will be invested in Canada. This could go as high as 99%, of course, but never below 80%. And the 20%, also as a maximum, could be invested in certain foreign countries, where it is the safest to do so. We should not be investing in countries offering 100% or 120% interest, but without any guarantee. In other words, we should not be investing in a company like BREX, which was very profitable, as you noticed also, but many Canadians lost their shirts after having invested in BREX.

So these assets have to be invested, not with a charitable but rather with an intelligent approach, to achieve maximum return, in the same way that such assets are administered in Quebec by the Régie des rentes du Québec. In Quebec, we have our Caisse de dépôt, and in Canada we will have a fund called the Canada investment board, which is the equivalent of the Caisse de dépôt et placement.

In conclusion, I would like here to pay tribute to Jean Lesage and his tremendous team; in 1964, they created the Régie des rentes du Québec, which is working very well and providing fruitful investments for Quebeckers.

Canada Pension Plan Investment Board ActGovernment Orders

12:25 p.m.

Bloc

Maurice Dumas Bloc Argenteuil—Papineau, QC

Mr. Speaker, I am pleased to rise in this House a second time to speak to Bill C-2 concerning reform of the Canada pension plan.

When I spoke the first time, I mentioned that this reform of Canadian pensions was of special concern to me, because I am the Bloc Quebecois critic on policies affecting the elderly. Furthermore, I have risen many times in this House to defend the rights of the elderly, one of the most vulnerable groups in society.

The Bloc Quebecois agrees with the general objective of the reform, which is to preserve the viability of a public pension system. However, this reform concerns Canadians more than Quebeckers, since less than 0.5% of the people living in Quebec receive Canada pension plan benefits.

I would like to reiterate what my colleague for Mercier said: the Government of Canada or the governments of the other provinces should have done the same thing as Quebec in 1964-1965 when it created its Caisse de dépôt et placement.

According to forecasts, retirement benefits from the Régie des rentes du Québec, and also the benefits from federal income security programs, will reach $49 billion in 2001, and as much as $170 billion in current dollars in 2030.

Since the birth rate has gone down considerably over the past several years, we have to ask ourselves: What will be the consequences of the greater than expected rise in the contribution rate that will result from the increase in capitalization?

Whereas there were 7 people of working age for every pensioner in 1951, the ratio dropped to 5.3:1 in 1991, and by 2031 will be 2.4:1. Unlike the Quebec pension plan, then, the federal programs have no reserve they can capitalize on.

We therefore believe that this will have the effect of reducing the intergenerational inequality by making the baby-boomer generation pay, and most of these have about twenty years left to work. Needless to say, the Bloc Quebecois has never called for the end of the Canada pension plan and I would refer you to the speeches of myself and my colleagues in this connection, all of which focussed on the same thing: leaving seniors' rights untouched. The younger generations must also be able to benefit from a public pension plan.

In Machiavelli's Prince , he says “The people could bear any burden, provided it was imposed gradually”.

I would like to focus once again on the changes proposed for federal disability benefits. The federal government is experiencing great difficulty in implementing the disability benefit. Last year, the auditor blamed the federal government for the unjustified escalating costs of disability benefits, for the most part the result of its rules being too lax.

At the present time the federal benefit is more generous that the Quebec pension plan's disability benefits, mainly because federal administrative policy allows more people to be eligible. A departmental directive allows a person to be declared disabled after the age of 55 if unable to perform his or her own job. The federal government intends to abolish this directive, thus tightening up administration of the plan.

Quebec has never had a directive of this type. In fact, a person is eligible for disability benefits if he or she has contributed for two of the past three years, five of the last ten, or half of the same contributory period.

The federal government wants to limit eligibility to those who have contributed for four of the last six years, which ought to cut back considerably on eligibility to the plan. Today, at the report stage, we need to look at a number of amendments moved by several of the parties.

I will deal particularly with Motion No. 9, moved by the New Democratic Party, which provides that a provincial government should be entitled to borrow funds at the lowest rate of interest available to the federal government. Unfortunately, the Bloc Quebecois cannot support this amendment, because it goes against the primary responsibility of the investment board, which is to achieve a maximum rate of return to ensure the plan's viability. A wide consultation process will take place, possibly in early 1998.