House of Commons Hansard #41 of the 36th Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was pension.

Topics

Canada Pension Plan Investment Board ActGovernment Orders

Noon

Some hon. members

Nay.

Canada Pension Plan Investment Board ActGovernment Orders

Noon

The Acting Speaker (Mr. McClelland)

In my opinion the yeas have it.

And more than five members having risen:

Canada Pension Plan Investment Board ActGovernment Orders

Noon

The Acting Speaker (Mr. McClelland)

Call in the members.

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

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12:45 p.m.

The Speaker

I declare the motion carried.

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12:45 p.m.

Glengarry—Prescott—Russell Ontario

Liberal

Don Boudria LiberalLeader of the Government in the House of Commons

Mr. Speaker, I think if you would seek it you would find unanimous consent for the following motion. I move:

That for this day only the end of Government Orders will be deemed to be 5.30 p.m. instead of 6.30 p.m.

(Motion agreed to)

The House resumed from November 27 consideration of 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, as reported (with amendment) from the committee; and of Motions Nos. 11, 13 to 19 and 22.

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12:45 p.m.

Progressive Conservative

Jean Dubé Progressive Conservative Madawaska—Restigouche, NB

Mr. Speaker, I believe what I heard was resuming debate on Group No. 7. I believe we are still on Group No. 6.

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12:45 p.m.

The Acting Speaker (Mr. McClelland)

The hon. member is quite correct. We are resuming debate on Group No. 6.

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12:45 p.m.

Bloc

Christiane Gagnon Bloc Québec, QC

Mr. Speaker, the bill before us proposes major amendments to the Canada pension plan and the establishment of the Canada Pension Plan Investment Board.

The bill, which was tabled in the House on September 25, is an updated version of a previous bill that died on the Order Paper when the federal election was called, in April.

I am pleased to take part in the debate on Bill C-2, particularly since this new legislation is an indirect tribute to the initiative taken by the Quebec government in the mid-sixties, when Jean Lesage's team decided to create the Caisse de dépôt et placement du Québec.

To better understand the fundamentals of the proposed reform, I will try to answer a few questions regarding Bill C-2. What is the objective of the bill? Who, in Quebec, will be affected by the new legislation? What are the main changes sought and what are our objections to the amendments proposed by the various parties in this House?

What is the purpose of this legislation? The bill has three main objectives. First, to preserve the Canada pension plan and strengthen its financial foundation by accelerating the increase in contribution rates.

Second, to improve the investment practices of the Canada pension plan by establishing the Canada Pension Plan Investment Board.

Third, to reduce costs through a more rigorous administration of certain benefits, in particular disability benefits.

For the benefit of those listening, it is important to mention that any change such as this must be approved by two-thirds of the provinces representing two-thirds of the population of Canada. This requirement was met and the proposed changes were approved. Only the provinces of British Columbia and Saskatchewan opposed this proposal.

Who will this bill affect? For those Quebeckers listening, it should be mentioned that the CPP reform is of greater concern to Canadians than to Quebeckers. Less than half of 1% of Quebec residents receive CPP benefits. Last August, there were 12,882 such people. Those affected must fall into one of three categories. The first category is Quebec residents who have worked all their lives in another province, and who have therefore paid CPP premiums only. For example, a resident of Hull who has worked all his life in Ottawa could be eligible.

The amendment also applies to members of the Canadian Armed Forces and the RCMP who reside in Quebec and must pay CPP premiums. Having paid only CPP premiums, they receive CPP benefits, even though they are residents of Quebec.

The amendment also affects those receiving CPP benefits who move to Quebec.

In all other cases, the QPP will apply. It should be noted, however, that the Government of Quebec is also in the process of reforming the Quebec plan, although that plan is in better financial shape.

Quebeckers are indirectly affected by the present reform because the two levels of government have always harmonized the main features of the two plans, through a common desire to accommodate those who have paid into both plans.

What are the main changes intended with this bill? I will deal here briefly with the two main changes being considered: the establishment of the Canada pension plan investment board and the rate of contribution. I would like to state immediately that the Bloc Quebecois agrees with these two initiatives.

The design of the Canada pension plan investment board being established by the government with this bill is closely modelled on the Quebec Caisse de dépôt et placement. However, unlike the Caisse de dépôt et placement, the federal investment board has no economic mandate; it only has the mandate to achieve the best possible rate of return.

It should be remembered that, at present, the money in the Canada pension plan is not invested in financial markets, as is the case in Quebec. By placing the management of this money in the hands of an independent organization, it will be possible to increase the performance of the Canada pension plan and also to protect taxpayers against dramatic contribution increases.

This is a proactive measure Quebec implemented a long time ago; it has produced convincing results. We should therefore point out the vision and the determination of the work carried out in this area by Jean Lesage and Jacques Parizeau, among others, who gave Quebec a tool not only to maximize the pensions of its citizens, but also to provide an instrument for economic development. We feel that, in this bill, this second component has not been given enough emphasis, with the result that the investment board's mandate is too weak.

The rate of contribution is certainly an area of the bill that has raised major concerns. It should be remembered that it had become necessary to review this rate because the plan was rapidly approaching unsustainability. The way things were going, the fund would have been empty by 2015, and the rate of contribution would have had to increase then from 6 to 14% in the case of the Canada pension plan, and from 6 to 13% in the case of the Quebec pension plan.

So the bill calls for a gradual increase up to a permanent ceiling of 9.9%, to be reached in 2003.

Sustainability and affordability are the main issues in this debate. We cannot put our heads in the sand and try to avoid this reality. As we know, the population of Canada is aging rapidly. Here are some numbers. There are now 3.7 million elderly people, in 2030, it is estimated there will be 8.8 million of them.

When the Canada pension plan was established in 1965, there were, for each elderly person in Canada, eight persons of working age. In 1997, the ratio is five to one, and it is estimated that it will be three to one in 2030.

As well, with all the progress in medicine, experts feel that the average length of time people will receive Canada pension plan pensions will be 20 years, as opposed to 15 when the plan was implemented.

All of this is very informative, and is the reason we are examining this bill. These are the reasons why the increase in contribution rates earlier than expected, which will result in improved funding, will reduce generational disparities by making the baby-boomers, who generally have about twenty years left to work, pay a greater portion of contributions, which is more representative of the benefits they will be receiving.

I would like to address the question of the amendments proposed by the different parties in this House.

Without reviewing all of the proposed amendments, I will if I may touch upon two of them.

With Motions Nos. 20 and 25, the NDP is calling for deletion of the clause setting penalties for fraud or false declarations.

No one can be against virtue. We understand the NDP's preference for incentives over coercive measures. We cannot, however, subscribe to such a proposal, since it is very difficult not to be severe in cases of fraud or false declarations.

As for the Reform Party, its Motion No. 10 calls for deletion of the clause permitting the retroactive increase of 1997 contributions.

This again is an amendment to which the Bloc cannot subscribe. Let us not forget that deferring any increase in contributions will only increase the contribution rate in the long term. The problem is with us now, so deferring action that ought to have been taken long ago is irresponsible.

In conclusion, I would like to repeat that we agree with the objectives of the reform, which are to make the system more viable, affordable and equitable.

We are duty-bound to ensure the viability of the plan for the generations to come. The proposed reform ensures intergenerational equity among contributors by establishing a constant and long term contribution rate, and by doing so promptly.

I see my time is up, so I shall stop here.

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12:55 p.m.

Reform

Dick Harris Reform Prince George—Bulkley Valley, BC

Mr. Speaker, I am pleased to speak to group 6 and the motions that have been put forward regarding Bill C-2.

I think it is important to point out from the very beginning that it is no small surprise that we see so many motions that have been put forward to try and make something out of Bill C-2. In fact, the House will find that the number of motions is far above the average that we would normally see for a bill. The reason is that members opposite have seen so many flaws in Bill C-2 that we have had no option but to put forward a number of motions to try to make C-2, although it may be a sour pill to swallow, at least something that we do not choke on.

Group 6 has a number of motions to it. I will first deal with Motion No. 11.

This one being put forward by the fourth party basically wants to stop the government from having a golden lever that it can pull every time it needs more cash. We congratulate the fourth party on having the foresight, although we brought it up in committee. The fourth party made it into a motion.

I think it is very important that we do not let the government get away with having the option to raise contributions any time it simply wanted to. Therefore this motion would prevent that. We support Motion No. 11 put forward by the fourth party.

We also support Motion No. 13, which would basically take away the freezing of the year's basic exemption because, as members know, the Liberals snuck this one in and it could be used in fact as a form of taxation.

Without the ability to increase the YBE, as the cost of living went up, as inflation went up, the exemption on taxes that a Canadian would be able to have could not go up. Therefore they would find their disposable income shrinking even more than it has.

Let me point out that since these Liberals came to power in 1993, the average household disposable income has decreased by some $3,000 in this country. Who needs yet another mechanism to wrench disposable income dollars out of Canadians' pockets? The Liberals felt that they did but we certainly do not feel they should have that.

Motion No. 14 we oppose. This is confusing. The fourth party put forward Motion No. 13, which we support, preventing the freezing of the YBE. Yet its members only wanted to prevent it until the year 2006.

Life does go on in this country. It is bad enough that this bill has been put forward in the first place, where it is going to raise Canada pension premiums by an astounding, obscene 73% over the next few years. Members will find nowhere in this bill that that is all they are ever going to go up.

By supporting Motion No. 14 that would mean that the ability to not freeze the YBE would only continue to the year 2006. We cannot support that because the world is going to go on a lot longer than the year 2006. We will oppose that one.

One of the things that we have to touch on in this debate, and it deals with these motions, is that this band-aid approach to fixing the Canada pension plan, this quick fix that the Liberals put through, has no more merit than the manner in which the Liberals and the Tories before them have managed the Canada pension plan since the mid-1960s when it was introduced.

It has been badly managed. It does not even do justice to the lousy job that the Liberals and the Tories have done with the Canada pension plan. It is $600 billion in the hole in unfunded liability. To fix it, and this is not rocket science, they simply raise the premiums. That will fix everything.

By the way, they are going to build this fund and they are going to have some Liberal hacks running it unaccountable because there are clauses in here which, if they do not get changed, will make sure that the investment board of the Canada pension plan is not accountable to Parliament.

We are talking about over $100 billion in CPP funds. It is scary to think that the Liberals could have any type of influence over that kind of money. It is really scary to think that. The way they are going to fix it really has no more merit than the way they have managed it for the last 30-some years.

Let us not let the Tories off the hook. They stand up in this House so indignant about this bill. They slam the Liberals about how they have not presented. They had nine years to do something under the disaster of the Mulroney government from 1984 to 1993. Back when the unfunded liability was down around $400 billion or $375 billion the Tories could have done something. They could have taken the bull by the horns. They knew at that time that the CPP was broke or was headed for it.

At the very time the Canada pension plan was introduced in the mid-sixties, the Liberal government of the day knew it would not work because its own financial advisers told the government that. But that did not deter the Liberals at that time from pushing ahead with this plan that was doomed for failure. They pushed ahead, and now here we are 30-some years later, $560 billion in the hole in the CPP fund, and the Liberal answer to fixing it is to raise the premiums by 73% over the next few years. Let's get into the pockets of young Canadians who will be starting out in life to make their careers and raise their families. Let's just double their premiums and give them less when they want to retire.

I believe retirees now get about $12 for every dollar they put into the Canada pension plan. The Liberal government must hate that. Under its plan if someone in their twenties starts paying into this plan, by the time they retire the Liberals want to give them an astounding 57 cents for every dollar they contributed. The Liberals really hate a good deal. They must hate a good deal. They would be thrown in jail if they were to handle an investment like that in the private sector.

Now the Liberals see retired Canadians getting $12 for every $1 they put in, and that just is not Liberal philosophy. Canadians should not be getting fair treatment, so the Liberals will change the plan so Canadians get only 57 cents. Young people will be paying into that plan for 40 years.

I hope some of these motions get put into Bill C-2. If some of these motions were to pass the government would be brought to accountability kicking and screaming and we would be there pulling it. We will support some of the motions. We have some of our own that we hope some other members will support, members from the third, fourth and fifth parties.

I stand as a member of Her Majesty's Loyal Opposition in this House of Commons, this House of Parliament in the country of Canada, and I say let us not let the Liberal government get away with this odious piece of legislation. Let us fix it, as the Liberals and the Tories had a chance to—

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1:05 p.m.

The Acting Speaker (Mr. McClelland)

Resuming debate, the hon. member for Shefford.

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1:05 p.m.

Progressive Conservative

Diane St-Jacques Progressive Conservative Shefford, QC

Mr. Speaker, I would like to express our support for one of the amendments proposed by our colleague from Qu'Appelle last week.

This amendment proposes a sliding scale for contributions by self-employed workers.

Under this amendment, a self-employed individual earning $25,000 would contribute less than another such individual earning $60,000. The amendment would therefore resolve one of the most serious problems in Bill C-2 for the self-employed.

As my colleagues for Madawaska—Restigouche and Saint John pointed out last week, these workers, who represent 18% of the workforce, must bear the brunt of combined contributions. With a contribution rate of 9.9%, self-employed workers do not have myriad calculations to make. They know that they have to contribute $9.90 for every $100 they earn.

When you realize that 45% of these workers, and there were 2.5 million of them in 1997, earn less than $20,000, you understand the importance of the amendment immediately. We are talking about over 1.1 million Canadian workers. Given the fact that the growth in self-employment is far greater among women, there is even more reason to support this amendment.

As currently worded, Bill C-2 has a significant negative effect on women. But this we should have expected from a government that has no concern about the effect of its policies on women. In fact, in the initial discussions on the proposed changes to the pension plan in 1996, nothing was said about the impact of these proposals on the income of women who would be retiring.

However, almost all the proposed changes affect women more than men. Let us look, for example, at the freeze on the annual basic exemption. It affects mostly those with low incomes, and this category of worker is made up primarily of women.

Women, therefore, generally make less than their male counterparts. For example, women working part time earn only a portion of what full time workers make, that is, between 69% and 72%. Furthermore, 28% of women, compared with 10% of men, work part time. They also tend to retire earlier, with up to 25% of women taking their retirement at an average age of 52. They also live longer. The life expectance of women is 80.9 years, as compared to 74.6 for men. This means that they will have to make do longer with lower benefits than men.

In 1995, senior women received on average $274 per month in benefits, while men received $477 per month. Add to this the fact that there is a much higher risk of becoming a widow than there is of becoming a widower. Also, there are nine times more senior men than senior women who remarry.

One last point. Women are not covered as well as their male counterparts by employer sponsored pension plans. And many of these plans do not provide any survivor benefits, the survivors being mostly women as I said.

The cumulative effect of all these factors precludes women from setting funds aside for the many years of life they have remaining.

The government should not have the power to make changes to such a fundamental and important program as the Canada pension plan without first explaining their full impact to the people of Canada. Also, there is nothing in here to ensure that they will be treated fairly and equitably.

We, in the Progressive-Conservative Party, believe in equity for all. Since equity is also a major concern in the public at large, it is essential that an equitable contribution scale be provided for in Bill C-2.

This way we will be fair, at least to some extent, to those who account for more than 52% of the Canadian population: women. This is also a way to recognize the work and important contribution of the men and women who now make up 18% of the Canadian labour force, that is to say self-employed workers.

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1:10 p.m.

NDP

Libby Davies NDP Vancouver East, BC

Mr. Speaker, I rise today to speak to the group 6 amendments and to the changes to the Canada pension plan and the creation of the investment board.

As a new member of the House, like many other new members of the House, it is sometimes a daunting process to go through a bill such as this and to try to make sense of what the bill is really trying to accomplish and what the impact of the changes will really be on Canadians.

Having gone through the bill and listened to debate in the House and having spoken to the member for Qu'Appelle, who is our expert on this matter, we find ourselves at report stage today with an overriding concern that Bill C-2 will endanger the security of retirement for many Canadians.

The problem with this bill is that it will create winners and losers. We have to ask ourselves who will be the winners in terms of changing the Canada pension plan.

When we look at the bill we see that the winner will definitely be the private sector. It will have a huge financial windfall as a result of increasing privatization. Even the business section of the Globe and Mail took note that the changes to the Canada pension plan were a huge financial windfall for the private sector. The privatization of the administration of the plan will create approximately $500 million in commissions for the private sector. It is unconscionable and should not be allowed to happen.

The section question is who will be the losers as a result of the changes to the Canada pension plan. It has been very well evidenced in debate by witnesses before committee and in motions and amendments put forward that the losers under the bill will be women, people with disabilities, widows, widowers and retirees generally. We have to be very clear and frank about the bill. It is about reducing benefits for people with disabilities, survivor benefits to widows and widowers and the ongoing privatization of the Canada pension plan.

For example, even the 16th actuarial report projects that CPP spending reduction on disability benefits by the year 2005 will be over $1 billion. There is no getting away from that. The changes being put forward by the government in the bill are a clear attempt to reduce benefits to those with disabilities who collect Canada pension.

The reality is that those retirees will be hit disproportionately higher than any other component as a result of the Canada pension plan changes. This raises a serious question about the social equity of the plan and the fact that there will be more losers. It will also create greater hardship or inaccessibility for Canadians with disabilities.

The survivors benefit will also be reduced. The amendments of the member for Qu'Appelle address the issues and mitigate the damage that will be created if the bill goes ahead. Widows and widowers who are disabled will also have reduced combined benefits. This is a shocking state of affairs that needs to be brought to the attention of the public.

The second major concern of the New Democratic Party that our amendments speak to is that the changes in the bill will force Canadians to rely more and more on private arrangements, on privatized pension plans. We need to address the reality of working people who cannot afford to buy into private pension plans such as RRSPs. This is another giveaway to the private sector by privatizing the plan and forcing more and more people into a private arrangement.

There is a very serious concern that the bill undermines and erodes the universality and the accessibility of our public pension plan. If we talk to Canadians in our local constituencies, at community meetings or associations that represent seniors, they all tell us that one thing they have been proud of in this country is the fact that we have stood behind and strengthened our universal accessible pension plan over the years.

We now stand at a moment in history where that universality and that proud history of Canada are about to be changed forever if the bill goes ahead without the critical amendments that have been put forward.

The bottom line is that this crisis has been deliberately staged to undermine the credibility of the Canada pension plan, as we move toward more and more privatization, and to create a huge windfall for the private sector.

The amendments of the New Democratic Party balance the scales and ensure that Canadians who pay into the Canada pension plan and rely on it for the future will not be losers.

The motions before the House today deserve our serious consideration if we truly and genuinely believe we want to protect, strengthen and enhance our public pension system. If that is what the bill is about these motions must be approved, but we have a great fear that what is at work here is the government's agenda to create winners and losers, to further provide privatization of the Canada pension plan, and to erode the universality of the plan.

I speak in favour of the amendments proposed by the New Democratic Party. It is an important set of amendments that will seek to mitigate the damage being created by Bill C-2.

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1:20 p.m.

Liberal

Steve Mahoney Liberal Mississauga West, ON

Mr. Speaker, I would like to address the concerns we have in government about some of the motions we think will be detrimental to the preservation and securing of the CPP as a pension plan for all of us, for future Canadians who will be retiring.

Contrary to what the previous speaker has mentioned, it is very important to understand we arrived at the changes through rather dramatic and extensive consultations across Canada. They are the result of federal-provincial statutory review which included extensive cross-Canada consultations.

Unequivocally we heard from Canadians. They asked that their governments preserve the plan by strengthening its financing, improving investment practices and moderating the growth of the benefits.

It is not rocket science to understand it is important to improve investment procedures. I would share some examples. In years gone by in various provincial legislatures and indeed in this place pension plans have been used by governments as a cheap source of financing.

For example, the government of Ontario in the 1970s consistently went to the well to borrow funds at as low as 3% interest rates at a time when marketplace interest rates were in the neighbourhood of 10% or higher. It used that money to build roads, bridges and other facilities; but in turn what happened is that the pension fund was suffering because it was not allowed to grow.

We cannot allow this to happen with the CPP. As a result of all the consultations and what Canadians have said, we must ensure if the money is borrowed and it is used as a fund that fair market value is paid. It is simply not acceptable to rob Peter to pay Paul by using pension fund money for cheap investments with a view that somehow taxpayers will save money. At the end of the day the particular pension fund will have to be shored up. In their entirety the motions run counter to a strong fiscal policy that we believe is needed to secure the CPP.

I also share an example with which some may be familiar. Money was used from the teachers' pension fund without a proper view toward investment practices. In 1989 or so one of the teachers' pension funds in Ontario, the superannuation fund, was running at a deficit and the other one was running at a surplus. The reason for the deficit was the bad borrowing practices of previous governments. We cannot allow that to happen regardless of who is in government. The CPP funds should not be used and abused in that way. That is one very important issue.

Motion No. 11 specifically wants to delete the new contribution rate schedule. The old unsustainable rate schedule would remain in effect.

The member is sticking his head in the sand, I say with all due respect. If the motion were to be accepted by the government it would put financial sustainability of the CPP at risk. That is the very issue the changes address. In parliamentary terms it probably should not be allowed on the floor as it is totally contrary to the intent of the bill.

Instead of rates raising by 9.9% in the year 2003 and then levelling off, if the motion were adopted contribution rates would rise to 10.1% in year 2016. That happens to be a year when many in the baby boomer generation will be looking to drawing on their CPP fund. Therefore it makes it even more important to ensure the sustainability of the CPP. Then it would go to 14.2% in the year 2030. This would be a 140% increase over current contribution levels. I cannot imagine justifying contribution levels rising by that amount. It makes no sense and frankly the motion would be destructive.

Another problem, and we have done the financial analysis, is that the plan would be bankrupt by the year 2015. It would impose a totally unfair burden on our children and our grandchildren. They would loose the ability to collect the CPP.

When talking about the CPP bill, the amendment and all the motions, we must recognize that our main goal should be to sustain and secure the system now. We consider it to be a top priority in government. We have heard other members and other people talk in terms of it being a tax. The reality is that it makes us distinct as Canadians because we have a public pension plan that leaves no Canadian behind.

I have heard the example used about people being in a race. At the Special Olympics there was a wonderful example that my good friend, Dalton McGuinty, the leader of the provincial Liberal Party in Ontario, talks about. In a race in the Special Olympics one of the runners fell. Another runner who was competing to win that race, which presumably we all do from time time, stopped and picked up the person and helped him finish the race. It meant the person who stopped would not be victorious. It meant that he would not win the race. What a message it sends about Canadians and about Canada.

Yes, we will stop and help when one falls. We are all in this together. The CPP is one landmark that shows us that we as Canadians care about one another. We could ignore the problem. Some paint it as a tax grab. That is nonsense.

This plan has to be secured for future generations. The bill will do that but the motions of the hon. member will not. A key priority is to secure retirement income for all Canadians. That is why we are proposing a comprehensive plan to make the system sustainable, affordable and fair. Affordable is key.

If we want to drive rates through the roof like some of the motions are suggesting with increases in the neighbourhood of 140%, that is what we should adopt. However that will not be affordable.

I have often found a lack of realism on the part of my colleagues opposite. They think that by putting a motion forward some workers will benefit. In reality it will be unaffordable for employers. If we do not have employers we do not have jobs. If we do not have jobs we do not have CPP contributions and the plan will fail. This is all inextricably tied to the economic growth and the future of this growth.

With great respect for my colleague opposite, we will be opposing these motions on the grounds that they are detrimental to the security of the future of the CPP.

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1:30 p.m.

Reform

Bob Mills Reform Red Deer, AB

Mr. Speaker, as has just been pointed out, I too think that the group 6 motions drive the cost way beyond what Canadians can bear.

I want to go back a little bit into the history of this whole thing and also use a few quotes from some of my constituents that might give a better focus on where grassroot Canadians really stand.

In 1966 government made a contract with Canadians basically stating that it would provide a pension when a person reached age 65. We believed that, went along with it and everybody dutifully paid their 3% or whatever it was and thought that government would take care of them. Obviously mismanagement and a poorly designed plan caused the situation that the government finally realized it was in last year. It found out that it had an underfunded liability and had a real problem. Obviously some of the amendments we are speaking about here would make that problem even that much worse.

I think Canadians realized this problem much sooner. They knew this plan was not working and could not work. They were not dreamers but, as often happens, the people are so much ahead of government that we are only now catching up. The only solution that the government has put forward is a 73% increase in the premium tax which is going to be collected.

There are a lot of other ways to solve this problem and I will try to touch on some of those briefly. Basically, when you talk to the people on the street, they will tell you that this is an extremely important bill. They know what is happening. They know about it and can talk very intelligently about the changes to the Canada pension. They will tell you that it is a $10 billion tax grab. They will tell you that they are already taxed at the highest rate in the G-7 and just cannot afford any more taxation. They will tell you that the self-employed person is just going to buckle under this sort of an increase. They will tell you that this is going to cost jobs and probably more jobs than even some of the critics of this would point out.

They are also extremely concerned about the setting up of an investment board with 12 political friends being appointed to this and the potential abuse that this could create. Remember, people do not have all that much respect for political choices in our past history.

For the young people who are looking at this plan, the message is pretty well standard. They do not believe they are really going to get any Canada pension plan. They do not really believe it is going to be there for them. In fact, if the government is going to collect an extra $700 from them and their employer and only give them $8,800 some 30 years from now, that is just not realistic. It will not sell and is not acceptable to the Canadian public.

They look at the other options of what they can do with that same amount of money if they were to invest it privately. I believe that this change in CPP can be equivalent to what the GST was to the PC Party. I believe this is its Achilles heel and the public will react when they find out what the politicians have done to them.

Let me give a summary of some 4,000 letters received in my riding. First, “My husband and I are very concerned about the proposed CPP hike. We are a young couple expecting our first child and we feel that it will be very difficult for us and many people of our age to pay the proposed tax increases. We also feel that it is unfair that we be forced to pay this seeing as we have no hope of ever receiving the Canada pension plan ourselves”. I believe that summarizes what young people are saying.

The amendments that we are talking about here that say we are going to increase those premiums even more are even that much less acceptable for the Canadian public.

Middle aged people are saying “What about our children? Our children are having a tough enough time as it is”. They are concerned about the killing of jobs. They are concerned about what this means. They still feel they have time under an optional plan to that being proposed by the Liberals.

The seniors are saying “We also are concerned about our children and our grandchildren and what it might mean for them”.

I believe that we have across the range of ages genuine concern about Canada pension and what the future of this is going to be. The sad part is that the government will not even look at the options. It has made no attempt to look at other countries to see what they have done.

The list is quite long but if we take a look at countries that have adopted a different kind of a pension plan, in that list we would include Chile, Australia, Argentina, Bolivia, Colombia, El Salvador, Mexico, New Zealand, Peru, Singapore, Uruguay, Great Britain. All of these countries have gone to a different form of Canada pension.

Surely this government owes it to Canadians to look at the other options. It should take a look, see how they work, find out what happens. When it was suggested in the committee that the committee bring the designer of the plan in Chile, who 16 years ago put their plan together, the committee was refused to have this person come and testify before it.

This is letting down Canadians. Canadians have the right to find out what all the options are and to have open discussion. Of course, the use of closure on this sort of debate also is not accepted very well by the Canadian people. Again, I remind the members on the other side that this is not going to be looked on any more kindly than was the GST.

We have a lot of misrepresentation. We have a finance minister who says “Feel good, be happy, everything is fine now”. We all know that is not the case. We know that we have a $600 billion debt. We know that we are paying $50 billion in interest payments in a year. Just think what we could do with that $50 billion in terms of pensions, in terms of our social services. All of those are there but they are not accessible to us because of mismanagement of the previous two governments.

In conclusion, the Liberals are taxing the soul out of Canadians. They are going too far. This Canada pension is going to be for some the final straw. It is going to drive the economy underground. It is going to cause small businesses to close. The government is going to use this as another tax increase to opt out of the system.

The Liberals are taxing our food, they are taxing our homes, they are taxing our savings, they are clawing back from senior citizens and people are losing patience with them. That is the message we have to get out.

These amendments simply go one step further in that tax and spend philosophy that seems to be so common or possibly the disease which people get when they come into this place.

It is time to say no. Canadians need to speak out and let the government know what they think about Canada pension.

Division No. 33Government Orders

1:35 p.m.

Bloc

Jean-Guy Chrétien Bloc Frontenac—Mégantic, QC

Mr. Speaker, I am pleased to take part in the debate on Bill C-2, which seeks to put some order in the Canada pension plan and to modernize its structure.

I want to pay tribute to my distinguished colleague, the hon. member for Kamouraska—Rivière-du-Loup—Témiscouata—Les Basques, who does a wonderful job in leading the Bloc regarding this issue and in expressing Quebec's representations on the amendments to the Canada pension plan.

The Canada pension plan must undergo a thorough review. If the government does not act or is slow to act, within ten years, the fund will be empty. I am among those who have always believed that, when a government or a municipality buys or builds things, the payments should be spread out over the duration of the investment.

It would not be wise for a government to borrow each week to pay its public servants, just as it would not be wise for the hon. member for Québec to borrow every month to pay her rent. The government has now reached a deadline where it must make decisions, otherwise our children or grandchildren will have to pay so we can get our old age pension.

Last year's contribution rate of 5.6% was clearly too low. In 15 years or so, the baby-boomers—and I am one of them—will reach retirement age in very large numbers, at which point the fund would be insufficient.

So, the government, whose role is to anticipate such things, must make proposals to adjust the contribution rate, so as to meet future financial needs. The proposed rate schedule seems fair and reasonable. The rate current of 5.85% for 1997 would be increased to 6%. Premiums will go up slowly but surely over the next five years to a maximum of $9.90, or 9.9% if you prefer, in 2003.

This 9.9% would be frozen. According to actuaries we have consulted, who corroborate the government's figures, it could be frozen until 2100, in other words, for over a century. If our forecasts are accurate, and I believe they are, this should provide us with a safety valve for those who will begin to draw a pension at age 65.

To govern means to anticipate. Certain parties in the House are going to oppose an adjustment. They apparently do not anticipate the impact of baby boomers. Those now 50 and under are going to be reaching the eligible age in very high numbers. When we begin drawing benefits, we will be contributing much less, perhaps nothing at all if we have no insurable earnings. So the fund will be rapidly depleted.

It is my sincere and honest belief that recipients must pay the cost of this pension plan. For this reason, our party will be supporting Bill C-2 generally speaking.

But we cannot vote in favour of the motions in Group No. 6 because they go directly against the premise that the plan must be self-funding.

Bill C-2 has three basic objectives. In order for the plan to be self-funding, there must be increased capitalization, and this I think will be achieved through the new premium rates over the next five years.

It is also necessary to increase the rate of return—and this is important—through the establishment of a Canada pension plan investment board. The role of this board is not to stash the money in a sock like my grandfather used to do; that was not only unsafe, it was also unprofitable. Inflation was not very high at that time, so he did not lose anything, but he did not gain anything either.

At present, we could say that the government has not succeeded in using wisely this large amount of money that was placed in its care. It has not been a cautious administrator of these investments, unlike what Quebec did for the Régie des rentes when it established the Caisse de dépôt et placement.

I would like to take the opportunity here to pay tribute to a great team led by Jean Lesage at the beginning of the sixties. That team included none other than Jacques Parizeau, and, of course, René Lévesque. So they set up the Caisse de dépôt et placement, which, often, produces a return of up to 20% a year. That is a very interesting annual rate of return; it is the equivalent of one fifth of the total capital that the Caisse de dépôt et placement du Québec is responsible for. Unfortunately, the central government failed to act and was unable to ensure a proper yield for the money in the Canada pension plan; this is rather disturbing and shameful.

Fortunately, with Bill C-2, the Canada pension plan investment board is being established, and if it is well managed, it should be able, hopefully, to equal the return obtained in Quebec.

There are now only two provinces that continue to oppose Bill C-2. But with the agreements that are now in place, as soon as there are eight provinces representing a sufficient percentage, we will be able to override the two provinces that refuse to go along with the plan.

The third objective of Bill C-2 is to tighten up the requirements for certain benefits, including disability benefits.

We must be careful not to give disability benefits to everyone who claims them. Everyone knows that, in certain regions, and especially in certain provinces I will not name here, when people lose their job, they go to see the doctor or any other person who can be of assistance to provide a disability certificate. But doing this costs a lot of money for all the other people who are honest and who have to pay for the ones that are exploiting the system.

To conclude, the Canada pension plan investment board, again, if it is properly managed, could provide dividends, and this would be profitable for all Canadians. The member for Malpeque, in Prince Edward Island, who is listening to me closely, must know that when a potato is planted, it is subdivided into eight parts, and this can yield almost three quarters of a bag of potatoes. So he knows that in the case of potatoes, it is possible to ensure that these plants will provide a yield.

Therefore, in the case of the federal government, if they do the same thing as the member for Malpeque, they will be able to make sure that this money yields a profit.

And, finally, I am glad to see that with this bill, it will be possible to invest up to 20% outside the country, and, of course, a minimum of 80% will have to stay in the country, in Quebec or elsewhere, but it will have to stay in Canada.

Division No. 33Government Orders

1:45 p.m.

NDP

Louise Hardy NDP Yukon, YT

Mr. Speaker, I rise to support the amendments put forward by the NDP.

The object of the changes to the pension plan was to address the most needy of our country, our seniors and our elders, but these changes do not address that need. I will give examples of some members of my community, seniors and elders who live solely by means of their pensions. There are two of them who support a family and their eldest son is on a disability pension. He is disabled from the neck down. They must use their old age security and their GIS to support a disabled son.

The fact that the pensions are inadequate for those most needy is very clear and the changes were meant to address this need. Unfortunately $10 a month or $120 a year will not address the question of need. We must ask why these changes are being made. I agree with my colleagues that there are definitely winners and losers in this scene.

There will be $2 billion taken out of our pension plan. I feel we are trying to convince Canadians that by taking out $2 billion we will somehow be able to help them more. This just is not the case especially in our present society and circumstances where social housing is no longer available and those who need it most, seniors, will not be able to get it.

We have faced cuts to transfer payments, cuts to medicare with the federal government being the last payer at this time. We have faced a huge increase in the cost of prescriptions. These are all services our seniors desperately need. They are not working and they do not have the income to make up the difference.

We are facing the basic problem that we do not have the level of employment to support our pensions. This is a problem the present government refuses to address. If we had strong employment we would not have to be worried at the other end about the ability of our elders and seniors to get their pensions.

I attended a finance committee meeting in which the witnesses talked about how they would see our new pension fund being used. Their major point was that it should not have such a low foreign investment ceiling, that 20% just was not enough and that if you were sophisticated enough you could get around it. They believed people would be cheating. I was quite shocked at that attitude. They claimed that investing 80% of that pension fund in Canada somehow was not a good deal for Canadians when in fact it is a good deal.

Provinces should be able to access Canadians' money for infrastructure programs, for roads, for hospitals, for schools, for jobs, because that is good for all Canadians. The more jobs we create the more we will be able to support our seniors and our elders.

The changes being proposed are unfairly targeted at women and those who are expecting a disability pension. I do take exception to my colleague from the Bloc who alluded that people with a disability pension received it fraudulently. I do not know of anyone who has done that and I do not believe they would like to be considered as Canadians who are criminals by behaving that way. They should never be labelled as criminals because they have applied for a disability pension. It does no service to our citizens and to those who are more desperate because they cannot work and their only sustenance is from their pension, and one that is drastically inadequate at that.

It would be a good idea if the money from the pension fund that we are proposing would actually go to pensioners, but it is not. Half a billion dollars a year will go from public money into private hands. None of that money will be going to those who are poorest. None will be going to those who are getting an extra $10 a month. They will not be benefiting from those investments although I believe that is where the money should go.

The investment board should not be able to set its own standards. It should not be able to hire and fire its own auditor, set its own guidelines for ethical or unethical conduct. That should be done independent of that body. If we are going to have a board, it should be for the benefit of those in our society who are most needy.

Division No. 33Government Orders

1:55 p.m.

Progressive Conservative

Gilles Bernier Progressive Conservative Tobique—Mactaquac, NB

Mr. Speaker, there have been many amendments brought before the House over the past two days and many more to come that wish to improve this plan the government has developed to change the Canada pension plan.

Many of the amendments that are before the House in Group No. 6 would jeopardize the Canada pension plan because they refuse to admit that there is a problem with the CPP. They refuse to see that it is in a crisis situation. The sad fact is that if we do not fix the CPP, it will not be there for our children and our grandchildren. If we spend blindly now, we will be playing with the money of future generations. This is simply not acceptable.

Young people today are already facing huge student debts and fewer job prospects. Let us not saddle them with the responsibility of paying for our retirement. I know that this is not the legacy I want to leave to my children.

Canada's population is aging rapidly. This will put great stress on seniors programs in the years ahead. Today for every person of retirement age there are five persons of working age. In 20 years there will be one person of retirement age for every four persons of working age. When today's youth retire in 40 years, the ratio will be just one to three.

The strain on the CPP results from an aging population, a lower birth rate, increased life expectancy and a sharp rise in disability claims.

The CPP was set up as a pay as you go plan in 1966. Premiums were set at a rate that provided the fund with investments equal to at least two years of benefits. There is $40 billion in the fund. However, the cost of its promised future benefits totals $600 billion. Under the present Canada pension plan the premiums are expected to rise to 14.2% in the year 2030.

For Progressive Conservatives the CPP is a fundamental part of the Canadian social safety net, an obligation that government must honour. Let us make it clear, the CPP is worth saving. We believe that there is an urgent need to restore public confidence in the Canada pension plan so that Canadians will continue to participate in saving for their future retirement. Many of the amendments we are debating now will not restore the public confidence in the CPP. Far from it.

The CPP contribution rates will have to rise to levels adequate to ensure the long term viability of the plan, but these increased contributions must be more than offset by substantial reductions in our taxes.

Division No. 33Government Orders

1:55 p.m.

The Speaker

The member will have another seven minutes after Oral Question Period.

Since it is nearly 2 o'clock, we shall now proceed with Statements by Members.

The Late John SopinkaStatements By Members

1:55 p.m.

Liberal

John McKay Liberal Scarborough East, ON

Mr. Speaker, I rise today to pay honour to the life of Mr. Justice John Sopinka.

I was a great admirer of his judicial reasoning. In particular Judge Sopinka resisted activist tendencies on the part of some jurists to make decisions which are properly within the purview of Parliament. He gave real meaning to the doctrine of deference to the will of Parliament in both Egan and Rodriguez decisions. In other words, he challenged Parliament to do its job and to create law in areas of moral controversy because he realized unlike many others that judge-made law in those areas was really a reflection of parliamentary failure.

He leaves a legacy of sound judicial reasoning and practical guidance to litigants and legislators alike. He will be greatly missed.

AidsStatements By Members

December 1st, 1997 / 1:55 p.m.

Reform

Bob Mills Reform Red Deer, AB

Mr. Speaker, today is World AIDS Day. As the official opposition foreign affairs critic I would like to take this opportunity to bring to the attention of the House the serious ongoing destruction this disease has on human beings worldwide.

A United Nations report released last week states that 30 million people worldwide are infected with HIV or have AIDS itself. An alarming statistic is that 90% of these people infected live in developing countries. By the year 2000 this report predicts that 40 million people will be infected with this horrible disease.

The continent of Africa is home to more than half of the known HIV cases. This, however, is quickly changing as the disease is spreading rampant in the countries of Asia, especially in India where as many as 5 million HIV infected persons live.

The Reform Party and I urge all countries to work together so that we will be able to find a cure for this terrible disease.

Impaired DrivingStatements By Members

2 p.m.

Liberal

John Maloney Liberal Erie—Lincoln, ON

Mr. Speaker, drinking and driving is a national tragedy; 4.5 innocent Canadians killed by impaired drivers every 24 hours, every day of the week. Just think of it. Incredible.

Over 300 people a day are injured in Canada as a result of an alcohol related crash. Just think of it. Incredible.

Impaired drivers caused over half of Canada's 3,300 road fatalities in 1995. Just think of it. Truly incredible.

Too many Canadians have been cut down in the prime of their lives. Too many families, friends and communities have grieved unnecessarily over the loss of a loved one at the hands of an impaired driver. This carnage must stop and the time is now.

Laws to combat the problem have not changed in over 10 years. I urge this House and our justice minister to consider necessary changes to the Criminal Code. Our laws must reflect the stark realities of the epidemic of impaired driving and the seriousness of this crime.

Nagano Olympic GamesStatements By Members

2 p.m.

Liberal

Guy St-Julien Liberal Abitibi, QC

Mr. Speaker, the composition of Canada's Olympic team is revealing. Canadian international hockey has just entered a new era on the eve of the Nagano Olympic games.

They do not start for another two months, but I think we can all be proud of Canada's Olympic team, whose members come from across the country, reflecting the diversity of all of Canada's regions.

We are going to have some exciting moments with the Canadian team. Our athletes' performance will provide fantastic inspiration for all of us and for Canada's young people.

United Nations Mission In HaitiStatements By Members

2 p.m.

Bloc

Maud Debien Bloc Laval East, QC

Mr. Speaker, the United Nations mission in Haiti ended yesterday. The soldiers and police officers from Quebec and Canada taking part in this mission have begun to return home and will all be back by Christmas.

As we know, their mission was to maintain security and stability in Haiti and to support the Haitian police in its activities. They also provided humanitarian assistance by building schools and orphanages and by distributing medical and educational material.

The Bloc Quebecois would like to thank the soldiers and police for their efforts in democratizing Haiti. I would particularly like to draw attention to and express our gratitude for the work done in Haiti by the police officers from Laval.

While much remains to be done in this country ravaged by poverty, it is on the road to democracy. The international community must continue to provide help and support for Haiti's reconstruction efforts.

Canadian Broadcasting CorporationStatements By Members

2 p.m.

Liberal

Reg Alcock Liberal Winnipeg South, MB

Mr. Speaker, the father of Canadian broadcasting, Graham Spry, once said that only the state or the United States could provide Canadians with radio and television programming. Today, however, this is no longer true.

The advent of the 500 channel universe means that Canadians have a wide range of options open to them, but this has not lessened the need for the CBC. Only the CBC provides programming from a uniquely Canadian perspective. In recent years the CBC has had to adapt to audience fragmentation and changing fiscal realities.

It pleases me to note that despite this, the CBC has become more efficient and more Canadian in character. Since Canadianizing its prime time schedule, for example, CBC English television has gained more viewers than it had only a few years ago.

I would like to commend the corporation for its efforts to reflect Canada to Canadians. It is my belief that only the CBC can be to Canada in the 21st century what the CPR was in the 19th, a link that joins the country.