House of Commons Hansard #126 of the 41st Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was refugee.

Topics

Motions in Amendment
Pooled Registered Pension Plans Act
Government Orders

11:40 a.m.

Liberal

Kevin Lamoureux Winnipeg North, MB

Madam Speaker, I always find it interesting when the member provides all these factual numbers. The question I have is one of credibility. The parliamentary secretary says that today we spend 15¢ on every Canadian tax dollar. Then he says that if we do not make these changes we are going to be spending 25¢ of every tax dollar on the OAS program. I do not buy it. I just do not believe the numbers that the member is telling Canadians. In fact, I would suggest that the government has created this crisis situation.

We have heard from professionals, statisticians and actuaries. They have made it very clear that Canada as a government can afford to keep providing seniors the option to retire at 65, that the age of eligibility does not have to go to 67 and is not going to be this huge burden. Why should Canadians believe that if it does not change, that it is going to go from 15¢ on every dollar to 25¢ on every dollar, when the member himself likely knows that—

Motions in Amendment
Pooled Registered Pension Plans Act
Government Orders

11:40 a.m.

NDP

The Deputy Speaker Denise Savoie

Order, please. The hon. parliamentary secretary.

Motions in Amendment
Pooled Registered Pension Plans Act
Government Orders

11:40 a.m.

Conservative

Pierre Poilievre Nepean—Carleton, ON

Madam Speaker, why should they believe it? Because the number of retirees collecting OAS will double, the cost of the program will triple and the number of taxpayers supporting each retiree will fall by half. These are unavoidable statistics that members can access by going to Statistics Canada's website.

The average person now lives 47 days longer than the average person last year. That will continue into the future, meaning longer lifespans and more collection of OAS. The reality is that we cannot have a situation where we have two people carrying one person on their shoulders, in addition to all the other social obligations that our tax dollars fund. These are inescapable mathematical realities.

We have seen the member's vision. It is called Greece. We choose here Conservative economics, not Liberal Greekonomics.

Motions in Amendment
Pooled Registered Pension Plans Act
Government Orders

11:45 a.m.

NDP

Mike Sullivan York South—Weston, ON

Madam Speaker, I am very glad to rise today on behalf of the residents of York South—Weston, who sent me here to look after them and to try to make sense of what the government is doing.

One of those residents, a young fellow named Scott Jackson, finished in the top 12 in the Canada's Got Talent show last week. We want to congratulate him for being such a great self-employed musician. I say self-employed musician because those are the kinds of people who are going to suffer most from the kinds of policies and practices the government is putting forward to try to deal with the future of the retirement scheme in Canada.

First and foremost, people like Scott are going to work until they are 67, make no doubt about it. The minister may say people have time to prepare for that, which means they are going to save more money, but that is not unless they can earn more money. They cannot earn more money in the systems we have today, when the government is telling employers they can now bring people from other countries and ask them to work for 15% less than the people who are currently working in Canada.

It makes no sense. The government is driving down wages as quickly as it can. It is working hard to prevent organized labour from getting any further in the wage battles in this country. Its friends, the CEOs and captains of industry, are doing quite well. I do not see any 15% regulation for CEOs of big corporations, or calls for them to be replaced by temporary foreign workers. That is the reality the Conservatives put forward.

I am going to call this a scheme, because that is really what it is. The suggestion that this scheme of pooled registered retirement plans will somehow be the solution is just looking at the world through such rose-coloured glasses as to be laughable. If one wants to be generous to the government, it is perhaps an addition to an arsenal of possible retirement schemes, but it is really fundamentally no different from what is already there, except in the ability to pool. There is already a registered retirement savings plan scheme and a tax-free savings account scheme, which most Canadians cannot afford to contribute to. In fact, 74% of Canadians do not put money into RRSPs, and yet 60% of Canadians, as the minister opposite already stated, do not have a workplace pension plan.

The number of workplace pension plans is actually going down, and they are being converted, as we speak, from defined benefit plans to defined contribution plans in record numbers. Employers across the land are discovering they can no longer afford to continue the good, solid, defined benefit plans that are similar to the Canada pension plan and were supposed to work in tandem with it.

The systems that current and previous governments have put in place make it impossible for employers to deal with the huge deficits these plans rolled up. These deficits are not caused by some kind of structural problem with the defined benefits system. They are caused by the abnormally low interest rates that we have in this country, which are forcing employers to put huge amounts of money into pension plans for a potential windup of those plans. It is not likely to happen. If a company continues to exist and is profitable, it will continue to contribute into that defined benefit plan.

The windup costs become enormous. As soon as one tries to buy annuities, with the windup of a pension plan, one has to come up with enormous sums of money, so employers all over this country are dropping them like hot potatoes. The government has not provided them any relief. There has been no discussion by the government to find a way around this, to make it possible to preserve the system of a combination of the Canada pension plan, OAS and a defined benefit plan in an employer setting. Those are the three pillars of what we have now. Two of them are under attack and the third is being left stagnant.

The NDP has a plan. The NDP plan is to suggest that the Canada pension plan is so successful that it should be doubled. It is clearly the cheapest, the most reliable and the most sustainable form of pension in our country. The Canada pension plan, which is a type of defined benefit plan that is a recognition of years of service times wages, which is how most good pension plans in our country are calculated, provides a portion of what is intended to be the pension regime for Canadians when they retire.

One portion is the old age security, one portion is the Canada pension plan and the third portion is either personal savings or a workplace defined benefit plan. Because 60% of Canadians do not have a workplace pension plan, and a number of those Canadians are now in workplace pension plans that are precarious and dependent upon the stock markets, and if people happen to retire at the wrong time and the stock markets are down, woe betide them, they will not be able to retire.

We have not come up with an overall scheme. The government has put a band-aid on a scheme that needs something more than a band-aid. The only thing it has proposed is kind of like a bigger group RRSP. It still has the same precarious nature, depending on market forces for its success. It still has the issue of no mandatory provision to it, so people do not have to belong and do not have to contribute. It has no requirement for the employer to contribute.

With those three things missing, with those three things being a problem with this pooled system, it is a bad system. It may suit a very small minority of Canadians and a small minority of Canadian corporations, companies, businesses, owners that have no other alternative. However, if that is going to be the case, the better solution is to double Canada pension, gradually over time.

The Conservatives call it another tax. It is not a tax; it is a pension. It has nothing to do with taxing anybody. It is a way of maintaining a pension. If we are suggesting employers are contributing already to the Canada pension plan and that over time those contributions should double so Canadians who have no other alternatives will at least have something sensible to retire on, a portion of money that comes from a Canada pension, let us think of the downstream benefits to that.

First, it will reduce poverty. Reducing poverty is a good thing. Second, it will reduce the government's reliance on guaranteed income supplement. If Canadians have a doubled Canada pension plan and old age security, fewer and fewer of them would need that government handout.

We are making the future more sustainable through a present that looks forward. That is not what the government is doing. The government is trying to scare Canadians by suggesting that somehow the old age security system we now have is unsustainable and that this in combination with the guaranteed income supplement will bankrupt the country.

That is the absolute furtherest from the truth. Yes, there is a slight bump when the baby boomers retire, but the plan allows those baby boomers to all retire anyway and continue to collect OAS. Therefore, the bump is not being dealt with. This belies the fact that the government considers this to be a problem.

By the time we get around to implementing the government's plan, we will be on the downward slope of the baby boomers and we will end up with a sustainable system again. The plan is crazy. It is not an effective way to create sustainabilty in our pension system.

We in the NDP have determined that the best way to go forward, and the best way for the sustainability of the entire system, is to double the Canada pension plan. The government is not doing that. The government is suggesting that we should put our money into more personally risky investments. As long as that is the case, as long as there is a personal risk, then it is a roll of the dice on which year to retire. If people retire in a bear market, well, too bad, so sad, they will run out of pension.

Motions in Amendment
Pooled Registered Pension Plans Act
Government Orders

11:55 a.m.

Liberal

Judy Sgro York West, ON

Madam Speaker, we have had a lot of issues in common when it comes to our desire to improve our pension system. However, when he talks about the NDP plan to double the Canada pension plan, which is very admirable, this would have a huge impact upon Canadians and businesses.

Does he not have consideration for the impact that would have upon our business community if the NDP were to become government and decided that it would double the taxes, which is effectively what it would be?

Motions in Amendment
Pooled Registered Pension Plans Act
Government Orders

11:55 a.m.

NDP

Mike Sullivan York South—Weston, ON

Madam Speaker, with all due respect to my colleague, this is not a tax. This is in fact a pension.

What we are suggesting is that over time, gradually giving people time to prepare, the Canada pension plan should be increased. It is by far the most effective and most consistent form of pension in our country.

The Ontario Liberal government in 2007 reacted exactly the same way when it was suggested that the minimum wage in Ontario should go from $7.00 to over $10.00. It said that businesses would fail, that it would be a huge burden on businesses to raise the minimum wage. That was not the case. It did not happen.

The kind of fear-mongering that goes on when we talk about this as a tax, which it is not, when we talk about this as somehow harmful to business is wrong and has the same illogic as suggesting that the minimum wage in Ontario would kill business, which it did not do, and which eventually the Liberal government adopted.

Motions in Amendment
Pooled Registered Pension Plans Act
Government Orders

May 17th, 2012 / 11:55 a.m.

NDP

John Rafferty Thunder Bay—Rainy River, ON

Madam Speaker, I have enjoyed the debate today because it is a very important one, not just for us now, but for future generations of Canadians.

It was an interesting question from my colleague in the Liberal Party. If she looks at CPP and doubling it perhaps over the next 10 years, 12 years or whatever the case might be, it is not a tax; it is an investment. That is where we need to come from.

However, my question is for my friend from Toronto. He talked about risk in a pooled retirement savings plan. We have a real life example? Many people who had RRSPs in 2008 found out they had lost 30%, 35% of the value of their RRSPs. We know they is risky. Would my friend like to make comment further on that?

Motions in Amendment
Pooled Registered Pension Plans Act
Government Orders

11:55 a.m.

NDP

Mike Sullivan York South—Weston, ON

Madam Speaker, there is a two-fold risk to having our money in a vehicle in which we must actually make the decisions about how to invest it and, at the end, about how to take it out of the plan.

We are at a situation right now in Canada where the stock market has not performed the way it did in the 1980s and 1990s. It has certainly not been the pillar that it ought to have been. People did wake up one day and discovered that their portfolios were worth sometimes as much as 50% less. Add to that the fact that interest rates are at historic lows in our country. When we take that money out, we get nothing in return. Now when people go to one of these friendly insurance companies to buy an annuity, they discover that they are lucky if they get $600 a month or $500 a month. Ten or fifteen years ago, when interest rates were at 5% and 6%, for $100,000 they could get $1,200 a month.

Those two things are combining together to make that kind of pension plan a disaster for persons who wish to retire.

Motions in Amendment
Pooled Registered Pension Plans Act
Government Orders

Noon

Liberal

Judy Sgro York West, ON

Madam Speaker, I am sure the member will have an opportunity to ask some further questions since he seemed dismayed that his colleague's time was up.

When I last spoke to Bill C-25 on this issue, I expressed my concern that this was little more than breadcrumbs to a starving person. I supported it going to committee, as did our party, with the hope that some significant changes would be made to improve some part of what the government had called pension reform.

Bill C-25 is still nothing more than a mechanism for those who have money to save for their retirement and the government trying to pass it off as its answer to pension reform.

While I have no difficulties with creating savings vehicles, in fact we need to do more of that, we must also work to help those who have little means to save. Pension reform should be all about that. Bill C-25 is not pension reform and any claim that it is false, misleading and deceptive.

For the sake of clarity, it is still my intention to vote for Bill C-25 because it is a breadcrumb to a starving person. It is as simple as that and nothing more than that. It will not satisfy the demand, but perhaps it will offer a small portion of temporary relief to some. Therefore, I will cast my vote with deep concern for what this legislation fails to do.

PRPPs are nothing but locked-in RRSPs and Canadians will face a number of problems if they choose to join these plans. Members will bear 100% of the investment risk. A single market stumble could spell the end to any retirement hopes. There is also no ability to make up for the bad years by making additional tax deductible contributions. They will have to become administrators of their own plans and there is no ability to move out of an underperforming PRPP into a performing one or one that will offer better services.

Employers will be forced to create administrative systems to enrol their members. If provinces make them mandatory, then since both employers and members can opt out, they may incur a significant amount of costs for absolutely no reason.

It is still unclear whether any homemakers would be able to contribute or would it have to be from employment income only? Yet again, the so-called Conservative plan excludes those who contribute to society outside of the traditional workforce.

Why not learn from some of the others who have tried plans like the PRPPs that are being proposed today. Australia tried it well over a decade ago, in 1997. It was published in the Rotman International Journal of Pension Management. It found that the only ones who benefited from the plan were those in the financial sector. The study concluded that the Australian superannuation system was founded on the assumption that market competition would deliver economic efficiency in a largely private, defined contribution system. That did not work.

Management fees are a significant problem. PRPPs will be managed by the very same people who manage Canada's mutual funds, and Canadians already pay some of the highest management fees in the world on their mutual funds.

Morningstar released a report grading 22 countries on the management expense ratios levied on their mutual funds. Canada was the only country to receive an F. Why should we be striving for an F? I, like most, think we should be striving for an A. It would make far more sense.

The government already knows all of this. It was specifically raised in January when Bill C-25 was last before the House. The standing committee knew this too, which is why I am shocked it reported back to the House without any suggestions for improvement and without any insights of any kind, in spite of having a variety of individuals go before the finance committee and suggest some amendments and some ways to improve Bill C-25, clearly because Canada needs serious pension reform.

The standing committee was silent, despite witness testimony that said, “in its current form, Bill C-25 is an example of good intentions, creating a legislative response that will have numerous unintended adverse consequences”. Witnesses also stated that as an effective pension plan, pooled plans were unlikely to achieve that goal.

Expert witnesses at committee begged the government to make even minor changes, again because we need to move forward as a country on pension reform. They said:

There is a considerable body of academic work that shows that putting untrained and uninterested individuals in charge of investment selection is foolish.... If investing money was a simple matter, we'd all be rich. The reality is that investing is challenging, even for professionals, and that it remains to be a full-time job.

The world is becoming increasingly complex, financial innovation continually challenges practitioners and to expect Canadians to suddenly have the time required and the skill needed to manage money carefully is unfair and, to be blunt, ill-advised.

Despite all these warnings, the government had ordered its MPs on the finance committee to ignore all of that good advice and to vote down any amendments from the opposition.

We had suggested several amendments. At second reading the Liberal caucus said, and I led that discussion, that we wanted to work with the government to make Bill C-25 more effective. At the committee we introduced an amendment to address some of the problems raised by the witnesses. All of our amendments were defeated along party lines.

Specifically, the Liberal finance critic presented an amendment that would have addressed the issue of high management fees. Why would the government defeat it? The government decided that Canadians should be cast to the markets without any form of protection, despite the warnings coming from experts on the subject. In simple language, this means that investors, average Canadians interested in the PRPPs, would be legally required to pay fees that would guarantee a profit for the bank. That sounds to me like an inefficient way of delivering pensions.

These requirements are the cornerstone of the PRPP plan. With this in mind, I am left to wonder how PRPPs could possibly yield results for Canadians and pensioners. The simple answer is that PRPPs would not help the average Canadian prepare for retirement, just as millions of Canadians have not been able to max out their RRSPs.

Forcing Canadians to work longer and harder to save for retirement on top of asking them to pay for $6 billion in giveaways to the largest corporations, $13 billion for new megaprisons and $40 billion for an untendered stealth fighter jet deal is not a plan for pensions. PRPPs will not work for those who need them the most.

Why are we not learning from some of the mistakes of other countries? Australia adopted its version of PRPPs over a decade ago, in 1997. The recent study that I alluded to earlier, done by the Rotman International Journal of Pension Management, found that the only benefit from that plan went to the financial services industry.

Why not look at other options? Let me tell the House a bit about the Liberal option. A supplemental Canada pension plan, already proposed by the Liberals, would provide the best of both worlds. It would create a new retirement savings vehicle for Canadians who need it, while delivering the low overhead cost structure of the Canada pension plan.

A supplementary Canada pension would be a simple cost-effective solution to the pension question facing our country. It would be a defined benefit pension for everyone, even those who have left the workforce during their lives for child rearing, illness, seasonal employment and educational advancement. It would use proven and existing resources to give every Canadian man, woman and child a reliable and stable investment vehicle for the future. A supplementary Canada pension would be a plan for real pension reform.

The Conservatives could not care less. By ignoring the amendments that we had put forward, by ignoring our good intention of trying to work with the government on making changes to Bill C-25, the government is clearly showing that it has no interest in the idea that Canadians should have anybody help them to save money.

The government's fend-for-yourself attitude that we see every day in the House continues. Bill C-25 is just another example of good intentions but failed legislation.

Motions in Amendment
Pooled Registered Pension Plans Act
Government Orders

12:10 p.m.

Independent

Bruce Hyer Thunder Bay—Superior North, ON

Mr. Speaker, that was an impressive and thoughtful analysis. I learned a lot. It is quite clear that the hon. member does not really think much of Bill C-25. She thinks it is a poor substitute for enhancing our current CPP system.

Given the great job that my colleague has done in showing how the bill is not very good, I am wondering why the Liberals intend to vote for it at this time.

Motions in Amendment
Pooled Registered Pension Plans Act
Government Orders

12:10 p.m.

Liberal

Judy Sgro York West, ON

Mr. Speaker, we have had many discussions about is it this or is it that. At the end of the day I think it is going to be another piece of failed legislation that was perhaps introduced to derail the discussion about OAS and the rest of it, because this measure is really not going to help anyone save money.

At the end of the day, what does it do? It gives bread crumbs to a starving man. It is a little step forward on the issue of pension reform. It is inadequate, but there will be a few Canadians who will go forward with this plan.

I think it is better than nothing at all. Bill C-25 will provide an opportunity for a few Canadians to start thinking more about putting money away for their retirement. We want to move the issue forward and we know we need pension reform, so we will allow this tiny piece of legislation go forward. I suspect that the government will see that it is not what it thought it would be and hopefully will really start to look at pension reform in Canada in the future.

Motions in Amendment
Pooled Registered Pension Plans Act
Government Orders

12:10 p.m.

Conservative

Roxanne James Scarborough Centre, ON

Mr. Speaker, in a follow-up to the last question, I wonder if the member could actually define what “a few Canadians” actually amounts to? Are you talking ten, a thousand, hundreds of thousands? You have left it open to interpretation, and I think you need to be honest with your constituents and the rest of Canadians right across the country.

Motions in Amendment
Pooled Registered Pension Plans Act
Government Orders

12:10 p.m.

Conservative

The Acting Speaker Barry Devolin

Just before I go to the member for York West, I would remind all hon. members to address their comments to the Chair.

The hon. member for York West.

Motions in Amendment
Pooled Registered Pension Plans Act
Government Orders

12:10 p.m.

Liberal

Judy Sgro York West, ON

Mr. Speaker, it depends on what one calls success in relation to a piece of legislation. PRPPs will be put out there and advertised by banks and insurance companies as the greatest saviour for Canadians. At the end of the day, success will be gauged on how many Canadians participate in the program, given that both employers and employees realize that high management fees are built into that program and that the banks and insurance companies will be able to get their management fees out of it even if the individual loses.

It will all depend on what one would call “a few Canadians”. Based on all the information I have received, I do not think there will be a huge take-up. It is a flawed piece of legislation, but there will be a few, and the member can figure out what “a few” is. Since the government talks about a billion here and there, I suppose a few could be a few thousand, but I doubt very much that there will be a huge take-up once Canadians realize that they are on the hook for huge management fees.

Motions in Amendment
Pooled Registered Pension Plans Act
Government Orders

12:10 p.m.

NDP

Mike Sullivan York South—Weston, ON

Mr. Speaker, in my colleague's questioning to me, she referred to the notion that the Canada pension plan is a tax or is hurtful to employers. However, we have discovered over the past 60 years of pension system history in Canada that if it is not mandatory for employers and employees to contribute, a large section of our populace does not, or cannot, save for retirement. Given that this plan is voluntary, what does she have to say about mandatory increases to the Canada pension plan?