Bill C-3 (Historical)

An Act to amend the Canada Pension Plan and the Canada Pension Plan Investment Board Act

Message from the Senate

[The Deputy Speaker]

Order, please. I have the honour to inform the House that a communication has been received as follows:

Rideau Hall

Ottawa

April 3, 2003

Mr. Speaker,

I have the honour to inform you that the Right Honourable Adrienne Clarkson, Governor General of Canada, signified royal assent by written declaration to the bills listed in the Schedule to this letter on the 3rd day of April, 2003 at 4:35 p.m.

Yours sincerely

Barbara Uteck

Secretary to the Governor General

The schedule says that royal assent was given to Bill C-3, An Act to amend the Canada Pension Plan and the Canada Pension Plan Investment Board Act, Chapter 5; and Bill C-227, An Act respecting a national day of remembrance of the Battle of Vimy Ridge, Chapter 6.

It being 5:30 p.m., the House will now proceed to consideration of private members' business as listed on today's Order Paper.

Sex Offender Information Registration Act

[Kevin Sorenson, Canadian Alliance, Crowfoot, AB]

Madam Speaker, I rise today to take part in this important debate, which has been a long time coming. Although this issue has been debated numerous times in the House, every time initiated by the Canadian Alliance, the official opposition, it is the first time an actual bill, Bill C-23, an act respecting the registration of information relating to sex offenders, has been the topic of discussion.

I stood in the House more than two years ago in support of a Canadian Alliance motion requesting the establishment of a national sex offender registry. Two years ago, that motion resulted in the government committing to the establishment of a registry. At that time, members opposite stood unanimously in support of their government's commitment to establish a national sex offender registry by January 30, 2002.

Quite obviously the government again has failed to meet another commitment. It failed to meet its commitment of having the sex offender registry up and running by January 2002. I am confident that had we not pushed and prodded the government, it never would have met that commitment on its own accord. The time it has taken to force the government to bring Bill C-23 before the House clearly demonstrates to all Canadians and all parliamentarians the priority, or the lack thereof, that it places on the protection of our children in this country.

Ontario established a registry three years ago. Christopher's law, or Bill 31, received royal assent in April 2000. That bill established a registry to enhance public safety by providing law enforcement agencies with a modern, reliable and effective electronic tool to support services to track sex offenders in our communities and to improve the investigation of crimes of a sexual nature.

Despite the efforts of Ontario and other provincial governments, the Liberal government has failed to protect Canadian children from sexual predators.

This will be the third time that I have stood in the House quoting from a document that was produced by the Liberal Party of Canada, produced before the 1993 election. Before the election, their promise, their commitment and their vision sounded pretty good in the red book. I quote this today because it is absolutely imperative that we point out the clear justification for a national sex offender registry as recognized not just recently but 10 years ago by those who now sit across the way in government. Yet the government has moved very slowly. It has done absolutely nothing to this point but fail to once again make good on a promise. It has failed, and that is this government's record. It has a record of failure.

In 1993 the Liberals fully supported the establishment of a national sex offender registry of convicted child abusers. Their rationale, quoting directly from their own document, was this:

Sex offenders represent almost 20 per cent of the incarcerated population and 10 per cent of the conditionally released population.

Repeat sex offenders are more than twice as likely to commit further sex offences, much more likely to violate conditional release conditions and more likely than other offenders to reoffend... However, treatment programs for sexual offenders are sorely lacking.

The Liberal government recognized the chances of reoffending. It recognized that they were a threat. All those it recognized. These facts were highlighted three years prior to the publication of the Liberal document.

A 1990 report by a working group established by the Department of the Solicitor General concluded that offender treatment programs have shown limited results. The report said that they gauged and looked at the programs that were in place, followed them through, did an evaluation and the programs showed limited results. The report showed that practitioners in the field of sex offender treatment do not claim to cure sex offenders. The Solicitor General's department in 1990, in a previous government, recognized that they cannot simply claim to have 100% cured the sex offender, but rather the treatment strategy is to manage the risk of reoffending.

That document says that although they will put them in a program, although they will give them treatment, at the end of the day they recognize that basically the best they can do is risk manage. I am not sure as a parent that I am quite satisfied with the response the report brought out, although it is true. As a parent it causes me some concern that people who recognize that programs are not working and recognize the recidivism rate are saying they are going to risk manage pedophiles and sex offenders back into the communities.

The report also said that there were not enough experts to meet the demand for sex offender treatment and the limitations of treatment were recognized. This research based information, produced by the Department of the Solicitor General, clearly demonstrated well over 10 years ago why Canada needed a national sex offender registry. Yet the government and its predecessor failed to establish such a registry despite recognizing the risks, despite the ample justification to do so.

The question must be asked, recognizing the rights, recognizing the risk, why would it fail to meet such a requirement? The only plausible answer in my mind to that question is that the government has and continues to place the rights of the offender before the rights of the victim. It has continuously placed the rights of the offender above the concerns of the protection of our society. We have seen this over and over and over again.

This is evident in almost all of the justice legislation the government has brought forward in the last few years, including the establishment of the DNA database. Enacted in 1998, Bill C-3, an act respecting DNA identification, created a new statute governing the establishment and the administration of a national DNA bank. It also amended the Criminal Code to permit a judge to make a post-conviction order authorizing the taking of bodily substances from a person found guilty of a designated Criminal Code offence in order to include the offender's DNA profile in the national DNA database.

The DNA data bank was officially opened on July 5, 2000. My party, the Canadian Alliance Party, is firmly committed to restoring confidence in our justice system by providing law enforcement officers and law enforcement agencies the latest technological tools to quickly detect and apprehend criminals. The attempt to amend Bill C-3 was unsuccessful.

We live in a day and age where every sector of society is looking for the newest technology available to enhance their way of life, to enhance their business, to enhance their safety perhaps, every aspect, every area of society.

Look at some of the things that are happening in health care and the new technologies that are available. It has only been for a few years that we have been able to have laser surgery done on our eyes to repair loss of vision. That is old technology now. Now health care has the technology to do many things.

We demand high technology in travel. There are vehicles now with global positioning systems that can detect when there has been an accident. When the air bag is inflated a signal is sent automatically by satellite to an office and medical attention is called without ever making a 911 call.

Our society has moved to a place where we accept and want the latest in technology. We see it. We have turned the television on in the last few days and we have seen the latest technology in the war on Iraq. We have seen missiles being sent from hundreds of miles away. We have seen the latest in laser guided missiles.

We see it in health sciences with research and development. We want the newest in technology. However, when it comes to law enforcement, when it comes to dealing with crime, when it comes to dealing with criminal offences and offenders, the Canadian Alliance argued that DNA identification, if used to its full potential, could be one of the newest technologies. We argued that DNA identification could be one of the greatest resources in fighting crime since the introduction of dusting for fingerprints.

To deny the police agencies the full use of this technology, as Bill C-3, did was reprehensible. It was unacceptable, inasmuch as it maintains an unnecessary level of risk to the lives and safety of our citizens. We have the technology. We have the ability to fight crime. When it comes to giving those resources to our law enforcement agencies, we handcuff them and then tell them to go out and do their job. Shame on the government.

There are literally hundreds of unsolved rapes. Hundreds of murders are outstanding in the country. There are victims across the nation where one event, one criminal offence has changed their life forever.

I have looked into the faces of mothers whose children have been murdered, some who have been murdered in prison. The twinkle in their eye is gone forever. When we talk with a parent whose young child has been sexually molested or raped, it not only leaves a scar on the primary victim, the child, it scars that family and the extended family forever.

Many dangerous offenders remain on our streets because of the government's failure to deploy the DNA tool properly as requested by police across the country. Bill C-3 did not allow for the taking of DNA samples at the time of the charge. The bill did not permit samples to be taken retroactively from incarcerated criminals, other than designated dangerous offenders or multiple sex offenders or multiple murderers.

However, Bill C-3 did provide a dangerous and an unnecessary exemption that could be authorized by judges not to issue a warrant for the taking of a sample if they believed that in doing so it would impact on an individual's privacy and security. Here again we see where the courts have the ability to disallow the taking of a DNA sample if that individual's privacy or security could be jeopardized.

This misplaced consideration for the privacy of offenders is more than apparent in the bill we are debating today. It is more than apparent in Bill C-23.

Sex offenders may be excluded from the registry, according to Criminal Code section 490.03(4) as set out in clause 20, if the court is satisfied:

--that the person has established that, if the order were made, the impact on them, including on their privacy or liberty, would be grossly disproportionate to the public interest in protecting society through the effective investigation of crimes of a sexual nature, to be achieved by the registration of information relating to sex offenders.

While not all sex offenders will be successful in exempting themselves from the registry, this one thing we can be sure of: many will delay having their names put on that registry and many will not register their whereabouts, arguing in court that with regard to their privacy, their liberty and their freedom, it would be too negative an impact for them to handle. One thing we can be sure of is we will see a log jam in the court system like we have never seen before. The lawyers across the way sit back and wipe their hands and lick their chops. This becomes a lawyer's dream.

If they are not successful in convincing the judge that their names should not be on the registry, we can be sure they will take their cases to the Supreme Court of Canada and they will string out those cases for just as long as they can.

In the papers just two days ago, one headline read, “Rapist asks Supreme Court to strike down DNA law. Lawyer argues sampling bodily substances violates constitutional rights”. The article went on to say:

An Edmonton man convicted of raping and impregnating a 14-year-old girl has made the first Supreme Court of Canada challenge to laws allowing police to take DNA from suspects....The case being argued involves a man whose name is subject to a publication ban, who was boarding during the week with the victim and her family at their Hinton, Alberta trailer....The man had sex with her against her will for 30 minutes....Four months later she realized she was pregnant....The girl, described as intellectual delayed, told her mother what had happened and was taken for an abortion....Police seized the fetal tissue as evidence. In January, 1997, RCMP officers armed with a search warrant, pricked the man's finger for a blood sample to make a DNA comparison with the tissue [that they had taken]....He was found guilty of sexual assault and sentenced to six years in prison. In 2001, the Alberta Court of Appeal ruled two to one to uphold the conviction. Mr. Anderson, whose client is free on $5,000 bail, wants the Supreme Court to overturn that decision.

The defence is contending that the DNA legislation breaches the Charter of Rights and Freedoms, that it hinders the protection of his personal security and that it should be banned because it was an unreasonable search.

The convicted rapist's lawyer is not arguing his client's innocence. He is not arguing in a court of law that there has been a miscarriage of justice, that the individual was innocent of the charge that was put against him. He is arguing against how the police obtained the evidence to prove that he was guilty. He is arguing a technicality.

While the wheels of justice grind slowly or they grind to a halt, our sons and daughters may be victimized all because the government continues to stack the deck in favour of the offender and the offence over the protection of society.

A number of years ago the Supreme Court of Canada in a 5 to 4 decision held that privacy rights under the charter demanded that police obtain a warrant prior to entry into a dwelling house to arrest a suspect. The decision in response to the Feeney case resulted in evidence being thrown out because the police did not have a warrant when entering his premises. Feeney's blood soaked shirt which had been obtained by the police, and blood all over the place where this individual lived, clearly proved his guilt to the first degree murder charge. That shirt or that blood was not allowed as evidence.

In her dissenting opinion, Supreme Court Judge L'Heureux-Dubé said that while the rights of the accused people are certainly important under the Charter of Rights and Freedoms, “they are not all the equation”. I like what the judge said. The judge did not question whether someone who was charged had rights under the charter. She did not question whether someone who was a suspect by the police force and who had a charge levied against them had rights. She did not question whether the Charter of Rights and Freedoms applied. She said that it was only one part of the equation and not all the equation.

That quote should be a wake-up call to the government. That quote should be a wake-up call to those who are continuously looking only at the rights of the offenders with the rights of the victims forgotten.

The judge cautioned her colleagues not to automatically exclude even illegally obtained evidence without considering the consequence for victims, the protection of society and the reputation of the justice system. She stated:

When an attacker or a murderer is acquitted in the name of the regularity of the criminal process, it is not only past victims who are ignored, but also future victims who are sacrificed.

The Supreme Court judge boldly suggested that it was time to reassess the balance the court has struck between protecting the individual rights of the accused and preserving society's capacity to protect its most vulnerable members and to bring and to expose the truth. I challenge the government today to strike the necessary balance because as Judge L'Heureuz-Dubé said:

--perhaps it is time to recall that public respect and confidence in the justice system lies not only in protection against police abuse, but also in the system's capacity to uncover the truth and ensure that, at the end of the day, it is more likely than not that justice will have been done.

I emphasize this, “it is more likely than not that justice will have been done”.

She is saying that when someone goes through the system, the public wants to look and have the faith that justice has been served. When we read about offenders back on the street because of technicalities, the public begins to question if justice was served. Did they come to justice? Although they are very seldom ever satisfied when the offender is caught, the public questions if there a degree of closure that can be brought to the victim because justice has been served. That is the question. That is the secondary part of the equation that needs to be considered.

The only way we can ensure that justice is done is to ensure that police officers in Canada have all the investigative tools necessary to do their jobs effectively and to uncover the truth through the bringing together of all the evidence that they can gather.

It will indeed be an injustice if the DNA warrant provisions are found unconstitutional. It will indeed be an injustice if it severely restricted the use of DNA as evidence.

More than 10 years ago six year old Punky Gustavson was kidnapped, sexually assaulted and then murdered. The story captivated all the country, certainly my province of Alberta. It was a story that, not only in Edmonton where it happened but throughout the province, horrified people as when they heard about little Punky Gustavson going missing.

It happened over 10 years ago. Less than a week ago, Punky Gustavson's murderer was finally charged. In November of last year, an Alberta provincial court ordered that DNA sample be taken from Clifford Mathew Sleigh, who is a prisoner in the Bowden Institution. That sample was matched with a very small sample of DNA that was taken in 1992 when Punky's body was found.

As I stated earlier, only three types of prisoners who were found guilty prior to June 2000, when the DNA data bank was created, were eligible to be included. The first were those who were listed as being dangerous offenders. The second was multiple murderers. The third was multiple sex offenders. Across Canada 2,000 such offenders were identified. Three hundred of them were in Alberta prisons. The Alberta court however had to obtain court orders for the seizure and inclusion of DNA from the 300 inmates as it was not automatic.

The Canadian Alliance Party has argued that DNA samples should be automatic, should be retroactive and should be taken from all convicted offenders. Similarly, we have argued, not so successfully apparently, to have all convicted sex offenders retroactively entered into the registry. However we will continue to push for the inclusion of all past and current sex offenders to be listed on the registry with absolutely no exceptions.

The retroactively part of the bill is of huge concern to Canadians. The fact that the government boasts of a registry with no names on it and the fact that the government boasts of a registry that for many years down the road will not help law enforcement is wrong. It is wrong for the minister to stand up in front of the House or in front of any television camera across the country and brag about how the registry, as soon as it is brought into legislation and is passed, will help. Without retroactivity on that list, absolutely nobody will benefit.

We will push to have any sex offender who fails to comply with an order to register to be held liable for a significant terms of imprisonment. Currently, clause 20 of Bill C-23 adds subsection 490.09(1). It states:

Every person who knowingly contravenes an order...is guilty of an offence and liable

(a) in the case of a first offence, on summary conviction, to a fine of not more than $10,000 or to imprisonment for a term of not more than six months, or to both.

It is absolutely outrageous and a complete insult to law-abiding firearm--

Canada Pension Plan

[The Speaker]

The House will now proceed to the taking of the deferred recorded division on the motion at third reading stage of Bill C-3.

[Norman E. Doyle, Progressive Conservative, St. John's East, NL]

Mr. Speaker, I am pleased to say a few words on Bill C-3, the Canada Pension Plan. As we said when we spoke on this bill before, there is nothing major in the bill that would necessitate voting against it so we will be supporting the bill.

The bill would consolidate management of all CPP investments under the Canada Pension Plan Investment Board. It would no longer require the CPP to hold cash reserves equal to three months of benefits. The bill would also make various technical amendments as well.

The Canada pension plan is a very important cornerstone of the future retirement savings plan of most or all of Canadians. Certainly it is one plan that is broadly supported by a wide range of Canadians. Canadians support the notion of a secure government pension plan but also of course it maximizes their retirement income.

Generally, Canada's system of retirement saving has three main pillars. The first is the universal old age security and the low income supplement. Second, there are the earnings based Canada and Quebec pension plans as well. Third, there are private retirement savings and pension plans.

The Diefenbaker government initiated the work leading up to the 1966 introduction of the CPP. Progressive Conservatives have traditionally viewed the CPP as a fundamental part of Canada's social safety net, an obligation that government must meet and government has to honour. More than 2.8 million Canadians outside Quebec receive retirement benefits of up to $9,345 a year, depending upon how long they contributed and their employment earnings. Special benefits are also provided for people with disabilities, widows, widowers and orphans. The Quebec pension plan is not a lot different.

For three decades the CPP was a “pay-as-you-go” plan. Premiums only provided a fund equal to two years of benefit. By 1997, there was only $40 billion in that fund, while the cost of promised future benefits totalled $600 billion. Without changes to the overall plan, premiums would rise to 14.2% of pensionable earnings by the year 2030.

In 1997 Ottawa and the provinces agreed to two major changes to the CPP. The first was to increase premiums more rapidly than had been previously planned but to cap them at 9.9% in 2003, which would be $4.95 for employees and $4.95 for employers. This equalled an $11 billion increase in the annual premium revenues. The plan right now is sustainable over the long run at next year's rate. All Canadians will receive the benefits that they have been promised and that is a very good thing.

Second, changes were made to the way benefits were calculated reducing slightly the pensions of new beneficiaries, reducing the death benefit and making it harder to get disability benefits.

Third, new funds flowing into CPP funds would be invested in the marketplace and managed by an arm's length agency, which is the CPP Investment Board. Previously funds not immediately needed to pay for benefits were loaned to the provinces at the rate paid by the federal government on its long term bonds.

By 2010, CPP assets will equal $142 billion. By 2050, they will approach $1.6 trillion. Therefore, by the turn of the decade, the CPP will be by far the largest investment vehicle in all of Canada.

The CPP actuary says that the changes in the bill would increase returns on CPP assets by $75 billion over 50 years. That reflects both the higher returns of a more diversified portfolio and a reduction on the amount of money that earns lower returns as part of the cash reserve. This movement of the Canada pension plan beneficiary pool toward capital markets is one that in the long term should benefit all Canadians and improve their retirement incomes.

Notwithstanding what has happened in the last year or two in the capital markets, by and large managers recorded that the return last year on the Canada pension plan compared to most mutual funds and investment portfolios was fairly good.

The CPP Investment Board's governance model is built on two fundamental principles. First, the investment professionals must be able to make their decisions without political interference, which is a good thing. Second, there must be full accountability and reporting to Parliament, to the provinces and to the people of Canada.

The legislation seems to be carefully crafted to effect accountability while ensuring independence. Whether it actually plays out that way remains to be seen. Time will tell. However it is a start in the right direction. For example, the legislation would require the board to have a sufficient number of directors with proven financial ability or relevant work experience. Why the standard would be anything lower really is not an issue. In fact that should be the minimum prerequisite.

How the directors are appointed is a departure from the traditional practice for crown corporations. The committee appointed by federal and provincial finance ministers would nominate candidates and the federal minister would select candidates from the nominating lists of the committee in consultation with the provinces. At the end of the day the appointments would still come by way of a final recommendation from the Minister of Finance, only to be rubber stamped by an order in council. That may or may not produce the very best people, but let us hope it does.

The proposed bill is a very good step in the right direction. As a result, future boards will consist of professionals with accounting, actuarial, economic and investment credentials. They will be experienced in the private and public sectors and will bring to the board informed opinions on public and private sector governance.

There are other proposed legislative measures to ensure transparency and accountability. The board will also appoint external and internal auditors who will report directly to the audit committee of the board.

Despite these powers, government can check on what is being done with the public's money. Indeed the federal finance minister will be required to authorize a special examination of the CPP Investment Board books, records, systems and practices every six years. Perhaps there might have been some utility in the suggestion of performing examinations more frequently.

Our political and public accountability is especially important at a time when some Canadians may be worried about equity markets. The Canada pension plan has to be invested for the long term. Good portfolio management expertise will prevail with the right quality of people at the management level. That one reason why it is so important that the board of the Canada pension plan be chosen very carefully.

We have had and continue to have significant concerns about the way in which the government makes order in council appointments. The correlation between Liberal Party contributions and the appearance in the board's order in council appointments is somewhat unsettling. The degree to which this level of partisanship can threaten the potential quality of the board is a very important consideration. When we are talking about the future retirement incomes of Canadians it is absolutely essential that the individuals on these boards be beyond reproach and that they be chosen by absolutely no partisan influence.

Furthermore, the government has to take a look at other ways to address Canadian retirement planning right now. We are just a few years away from seeing a significant reduction in the number of Canadians who are actually working and paying taxes, along with a significant increase in the number of people who will be drawing pensions.

Therefore the government should heed the finance committee's report and the PC's dissenting report both calling for the increase of RRSP contribution limits. Of course, we have seen that over the last few days. Hopefully this is a step in the right direction. It is one way in which we can defer taxes to the future as people withdraw from the these RRSPs.

The Progressive Conservative Party supports the bill but we want to make sure that the elderly in Canada do not suffer due to rigid policies and misguided principles or bureaucratic holdups. As I said a moment ago, the bill is a step in the right direction.

[Pierre Paquette, Bloc, Joliette, QC]

Mr. Speaker, I am very pleased to rise today to speak for the second time about Bill C-3, which deals with the establishment of the Canada pension plan investment board.

As I said previously, the Bloc Quebecois supports this bill. This initiative is very similar to the one Quebec took in the 1960s when it established the Caisse de dépôt et placement du Québec. This bill puts the final touch to a reform that is already underway, by transferring the Canada Pension Plan's assets to the board.

This is as good a time as any, just a few days after the finance minister tabled his budget, to point out the link between the bill and an issue of great concern to Canadians and Quebeckers, namely our aging population. As we know, the number of retirees will increase over the next few decades. The latest budget, which mentions the consequences of Bill C-3, does not adequately address the issue of making sure Canadians and Quebeckers will have sufficient savings upon retirement to keep them from poverty's doorstep. In this respect, Bill C-3 only deals in part with the issues of the aging population and the number of retirees.

There is still a lot of work to do and, as I said yesterday, I would have expected this budget to announce a thorough rethinking of the ways we, as a society, can make sure Canadians and Quebeckers put aside the money they will need when they retire.

The only rather worthwhile thing the finance minister has come up with in the budget is a measure to raise the limit of RRSPs from $13,500 to $18,000 over a number of years, but this will only benefit a minority of Canadians and Quebeckers. In Quebec, only 1.5% of taxpayers contribute the maximum of $13,500.

The budget did not put enough emphasis on this, and that is unfortunate. Although Bill C-3 is a major step toward ensuring that workers have adequate retirement incomes in the coming years, I have to admit, unfortunately, that this is just a drop in the bucket, compared to the challenges facing society in Canada and Quebec.

Therefore, as I said at the beginning of my speech, we will be voting in favour of Bill C-3. The Canadian Alliance has withdrawn its amendment, which, in our view, was totally inappropriate. When society agrees to defer tax payments for a number of Canadians, it is entitled to expect that the savings will be reinvested in Canada and in Quebec first.

As I mentioned earlier, the Bloc Quebecois will be supporting the government on Bill C-3, although we do realize that it is a just a tiny drop in the bucket, given the scope of the problem.

Business of the House

[Don Boudria, Liberal, Glengarry—Prescott—Russell, ON]

Mr. Speaker, I understand that on some of the bills there is perhaps not much debate left, but for greater clarity and for the benefit of all colleagues we will be calling Bill C-3, Bill C-19 and Bill C-22 in that order this morning.

[Don Boudria, Liberal, Minister of State and Leader of the Government in the House of Commons]

Mr. Speaker, I rise on a point of order. There have been further consultations and I wish to be quite clear. Pursuant to the same terms as a moment ago I would like to move that the following items be disposed of as follows. I move:

That the amendments to Bill C-3, Bill C-19 and Bill C-22 be deemed to have been withdrawn.

Mr. Speaker, I am moving that the amendments be deemed to have been withdrawn, nothing else, that is, all amendments and/or subamendments on Bill C-3, Bill C-19 and Bill C-22.

Canada Pension Plan

[John Duncan, Canadian Alliance, Vancouver Island North, BC]

Mr. Speaker, while listening to the speech by the NDP member for Palliser earlier, I was getting more and more concerned when he was depicting the entire legislation in terms of where the Canadian Alliance and, before the Canadian Alliance, where the Reform Party stood in terms of pensions, and of course misrepresenting considerable things.

I thought the exercise of opposition in the House of Commons was to hold the government to account and to deal with legislation put forward by the government, not to create or exacerbate divisions between the opposition parties.

I found most of what was said by the member for Palliser to be essentially irrelevant to the debate and counterproductive.

I would like to be irrelevant to the debate for a moment just to point out some things that the same member for Palliser recently said in the House of Commons that were basically contrary to where people are coming from.

I will quote briefly:

--in response to the member's specific questions, the position that I take, and I believe would be shared by a majority if not all of my caucus colleagues, is that if it has not specifically hurt a minor in the production of it, if it is created by people's visual imaginations and if the main purpose of it is not simply about pornography and sexual exploitation, then under the laws people do have a right to their own imaginations and thoughts, however perverse the member might think they are.

I want to hold that member accountable for a defence of child pornography in this place which I find indefensible. If he wants to carry out what I consider to be uncharacteristic descriptions of the Canadian Alliance, then I will ask him to be accountable for his actions in this place.

It is really my job today to talk about Bill C-3, which is a step in the government's attempt to put all the CPP assets under a single entity called the Canada Pension Plan Investment Board. We have had quite a bit to say about this board over time. I have heard the NDP member for Palliser and I have heard Liberal members say how wonderful it is that the Canada Pension Plan Investment Board will copy or emulate the Caisse de dépôt et placement du Québec.

I think this is clearly a backward step and one that we should all be very concerned about. We will end up with a very large, in a Canadian context, government run investment fund with the money and the mandate to essentially, within our small economy, take a controlling stake in private firms, to hire and fire directors, to block takeovers and to tilt the scales in capital markets.

All of this can be done at the whim of the government who is responsible for the appointees to this board. We are entirely captive of the goodwill of those government appointees to the board to put priority on the shareholders, the Canadian public, who are the eventual recipients of the Canada pension plan, as opposed to their political masters.

We know from recent history that the Caisse de dépôt et de placement in the province of Quebec has been used consistently for political initiatives. It was, for example, heavily used in the lead up to the last referendum when the Parti Québécois wanted to ensure that it had a two year period after the referendum before it had to go to the markets for money. That was all put in place ahead of time on the basis that if it won the first couple of years could have been a real difficult time.

It put the aspirations and needs of its separatist movement ahead of the aspirations and needs of either current or future pension recipients. We know that the former minister of finance, the member for LaSalle—Émard, would love to designate the Canada Pension Plan Investment Board direction to be utilized for all kinds of social policy and economic regional development initiatives as opposed to allowing that board the freedom and independence to seek the maximum rate of return for its shareholders.

This is part of a pattern that is consistently demonstrated by the Liberal government in most initiatives that it takes. There is in every case an attempt to utilize the board or the institution or the crown corporation in a way that would benefit the Liberal Party of Canada and its attempt to retain control in this place in the national governance of the country.

I find this very problematic. Although we are heartened by some of the comments from the people who have actually been appointed to the board, that is not good enough. We are not talking about good intentions here. We are talking about the inevitable reality of poorly designed legislation that would allow the entire exercise to come under the political control of the minister responsible for the board .

We can talk about some of the details of performance that would demonstrate quite clearly what kind of problems we could get into with rates of return when we attempt to emulate something like the Quebec model.

The Chief Actuary of Canada reported that from 1966 to 1995 the average real yield after inflation on the Quebec pension plan account, which was invested as it would be under what is envisioned by this bill, was under 4%. If we compare that with the average of the largest private managed funds in Canada, it came in at just under 5%.

If we were to take the huge amounts of investment capital that would be invested by the Canada pension plan and compound that over several decades, like the example I gave from 1966 to 1995, that would be a huge differential. We are forgoing that money by allowing this kind of scheme to be the operative scheme for the Canada pension plan.

When the former finance minister, the member for LaSalle--Émard, put these pension plan proposals forward, he projected a rate of return of his Canada pension plan after inflation to be 3.8%, even less than what was being achieved by the Quebec pension plan. Why would the former minister be targeting that kind of a rate of return unless he had strong designs on using it for political purposes and knew that it would reduce the rate of return? What kind of a message does that send about how caring our government is about the future incomes of our seniors? Even if those motivations were not there the inevitable result of this kind of legislation eventually would be that we would end up with that kind of a consequence.

A big problem with the current arrangement of the legislation is that the moneys that the Canada Pension Plan Investment Board invests would have to follow the same rules as an organization that we as individuals are stuck with in terms of investing in RRSPs, that is, dealing with Canadian content and how much we are allowed to invest outside of Canada. Canada has about 2% of the world's capital market. What that means is that a large pool of money is funnelled into a very small capitalization. This increases the risk for Canadians and for Canadian pensioners.

I believe that we need to free the Canada Pension Plan Investment Board and individual Canadians from these restrictive Canadian content rules.

The Canada Pension Plan Investment Board would look at $100 billion tied up in the stock market potentially as a large investment indeed. To demonstrate how insignificant Canada's capital markets are, when we look at that number, it is instructive to realize that yesterday's announcement of AOL Time Warner's loss for last year came in at $100 billion in the U.S. Here is one company that lost approximately the asset base of the Canada pension plan.

The other aspect that could show up is that in a very down market, we could end up with a large captive drop in the market of anywhere from 30% to 40%. That is why we need to spread the risk. That is why we need to get beyond these restrictive Canadian content rules that are tying up too much of the capital base into a small market.

We did have a crisis in the Canada pension plan during the tenure of the former finance minister, the member for LaSalle--Émard. What happened then? We watched the payroll burden for Canada pension plan contributions increase. That is a job killer; it is hard on employers and employees. There was a reduction of about 5% in the CPP rates to seniors. Those were not happy measures and were counterproductive. If we had that once before, we are potentially looking at a situation under this legislation that would be exacerbated, in other words, actually made worse.

What could we to look at? We could look at, for example, a year of investment where the Canada pension plan would be invested in a passive fund as opposed to the active engagement of choosing a capital mix. This could be done by contrasting the Quebec pension plan with a passive investment, and guess what? The passive investment plan in the example of the first year of operation did twice as well as the Quebec pension plan.

I find it puzzling to hear so much support coming from the government and the NDP in terms of them saying this is an enlightened measure when what it is sure to do is reduce pensions for seniors and put us in peril of political manipulation of the entire pension assets of this country. I find this totally unacceptable. We need a better context than what the government is providing for our pension assets.

[Norman E. Doyle, Progressive Conservative, St. John's East, NL]

Mr. Speaker, I am pleased to say a few words to on Bill C-3, the Canada pension plan. At the outset, there is really nothing major in the bill that would necessitate our opposing it. Progressive Conservatives will be supporting the bill. I am delivering these remarks today on behalf of my colleague, the member for Kings—Hants, who is unable to be here. He is on Her Majesty's business elsewhere.

The purpose of the bill is to consolidate management of all CPP investments under the Canada Pension Plan Investment Board. It will no longer require the CPP to hold a cash reserve equal to three months of benefits and the bill will also make various technical amendments. As I said at the beginning, I do not believe that there is anything major in the bill that would prevent us from voting for it.

The Canada pension plan is an important cornerstone of the future retirement savings plans of most or all Canadians and certainly is one that is supported broadly by a range of Canadians. Canadians support not only the notion of a secure government pension plan but also one that maximizes their retirement income.

Generally, Canada's system of retirement savings has three main pillars. The first is universal old age security and the low income supplement. Second are the earnings based Canada and Quebec pension plans. Third are the private retirement savings and pension plans.

The Diefenbaker government initiated the work leading up to the 1966 introduction of the CPP. Progressive Conservatives have traditionally viewed the CPP as a fundamental part of Canada's social safety net, an obligation that government must honour.

More than 2.8 million Canadians outside Quebec receive retirement benefits of up to $9,345 a year depending upon how long they contributed, and their employment earnings. Special benefits are also provided for persons with disabilities, widows, widowers and orphans. The Quebec pension plan is quite similar in that regard.

For three decades, the CPP was a “pay-as-you-go” plan. Premiums only provided a fund equal to two years of benefit. By 1997 there were only $40 billion in the fund, while the cost of promised future benefits totalled $600 billion. Without changes, premiums would rise to 14.2% of pensionable earnings by 2030.

In 1997 Ottawa and the provinces agreed to two major changes to the CPP. The first was to increase premiums more rapidly than previously planned, but they were kept at 9.9% in 2003, which was the equivalent of $4.95 for employees and $4.95 for employers. That equalled an $11 billion increase in annual premium revenues. The plan is sustainable over the long run at next year's rate and all Canadians will receive the benefits they have been promised. That of course is a very good thing.

Second, changes were made to the way benefits were calculated reducing slightly the pensions of new beneficiaries, reducing the death benefit and making it much harder to get disability benefits.

Third, new funds flowing into the CPP funds will be invested in the marketplace and managed by an arm's length agency, the CPP Investment Board. Previously funds not immediately needed to pay benefits were loaned to the provinces at the rate paid by the federal government on its long term bonds.

Under current numbers, contributions to the plan will exceed benefits until 2021. At that point some investment income will be used for some CPP benefits. By 2010, CPP assets will equal $142 billion. By 2050, they will approach $1.6 trillion. Therefore, by the turn of this decade the CPP will be by far the largest investment vehicle in Canada.

The CPP actuary says that the changes in the bill will increase returns on CPP assets by $75 billion over 50 years. This reflects both the higher returns of a more diversified portfolio and a reduction in the amount of money that earns lower returns as part of the cash reserve.

This movement of the Canada pension plan beneficiary pool toward capital market is one that will in the long term benefit Canadians and improve their retirement incomes. Notwithstanding what has happened in the last year or two in the capital markets, by and large the return last year on the Canada pension plan, compared to most mutual funds and investment portfolios in the last year, was actually fairly good.

Relatively good changes in accountability structures are made to the board's governance provisions with this bill. The CPP investment board's governance model is built on two fundamental principles. First, the investment professionals must be able to make their decisions without political interference. That could only be a good thing. Second, there must be full accountability and reporting to Parliament, the provinces and the people of Canada. That could only be a good thing as well.

The legislation seems to be carefully crafted to effect accountability while ensuring a certain level of independence. Whether it actually plays out that way will be seen as years go by. Time will tell. However, it is a very good start in the right direction.

For example, the legislation requires the board to have a sufficient number of directors with proven financial ability or relevant work experience. Why the standard would be anything lower really is not an issue. In fact, that should be the minimum prerequisite.

How the directors are appointed is a departure from the traditional practice for crown corporations. A committee appointed by federal and provincial finance ministers nominates candidates and the federal minister selects candidates from the committee's nomination list, in consultation with the provinces. However, at the end of the day the appointments will come by way of a final recommendation from the finance minister, only to be rubber stamped by an order in council. That may or may not produce the very best people. Let us hope it does.

The bill is a step in the right direction and as a result future boards will consist of professionals with accounting, actuarial, economic and investment credentials. They will be experienced in the private and the public sector and will bring to the board table informed opinions on public and private sector governance.

There are other legislative measures to ensure transparency and accountability. The board will also appoint external and internal auditors who will report directly to the audit committee of the board. Despite these powers, government can check on what is being done with the public's money. Indeed, the federal finance minister is required to authorize a special examination of the CPP investment board's books, records, systems and practices every six years. Perhaps there might have been some utility in the suggestion of performing examinations much more frequently.

Our political and public accountability is especially important at a time when some Canadians might be worrying about equity markets.

The Canada pension plan has to be invested for the long term. Good portfolio management expertise will prevail with the right quality of people at the management level. That is one of the reasons why it is so important that the board of the Canada pension plan be chosen very carefully. They are doing very important work.

We have had and continue to have significant concerns about the way the government makes orders in council appointments. The correlation between Liberal Party contributions and an appearance in the board's order in council appointments is somewhat unsettling to say the least.

The degree to which this level of partisanship can threaten the potential quality of a board is very important.

When we are talking about the future retirement incomes of Canadians, it is absolutely essential that the individuals on these boards be beyond reproach and that they be chosen by absolutely no partisan influences. I hope the two latest appointments, Germain Gibara and Ronald Smith, do their jobs exceptionally well as Canadians expect them to do. Hopefully there is no reason to believe that they will not do a very good job.

Furthermore, the government has to take a look at other ways to address Canadian retirement planning right now. We are just a few years away from seeing a significant reduction in the number of Canadians who are actually working and paying taxes, along with a significant increase in the number of people who will be drawing pensions.

Therefore, the government should heed the finance committee's report and the Progressive Conservative's dissenting report, both calling for an increase in the RRSP contribution limit. That is one way in which we can defer taxes to the future as people withdraw from these RRSPs. Also, the increase in RRSP contribution limits would give Canadians an opportunity to shelter more income today than they would otherwise be able to do.

While Bill C-3 does address some much needed governance, housekeeping, administrative and technical issues, the bill does not turn its attention to any substantive change in pension policy that would actually help alleviate some of the financial pressures currently being experienced by many of our elderly, one of our most vulnerable groups in society.

In addition to addressing the structure of the CPP, the government might have done well to address some policy questions concerning seniors and how their GSI, guaranteed income supplement income, private savings and CPP are currently being administered under the all the present federal schemes. I know our party would want to make sure that the elderly in Canada do not suffer due to rigid policies and misguided principles or bureaucratic holdups.

Speaking of the guaranteed income supplement, it was just today that I had a call from a senior in the St. John's area who was appalled at a story coming out of Quebec about a senior who did not know that in order to actually receive the GIS, the guaranteed income supplement, that one actually had to apply for it. I think it was in today's Globe and Mail and the Ottawa Citizen . In other words, it is not automatically sent unless one applies.

When a senior finally does apply, the mother of all injustices kicks in. If the person qualified, say three or four years ago, Ottawa will only retroactively pay for one year, even though the person might have qualified for the benefit three or four years ago but did not know about it and therefore did not apply.

A parliamentary committee has discovered that about 380,000 people are eligible for the guaranteed income supplement but that they do not receive it because they did not apply for it. That is heart-rendering. The most needy in our society would certainly have to be people who are eligible for the guaranteed income supplement but 380,000 of them did not apply for it, saving the Government of Canada $3 billion.

As I said, once they apply, the mother of all injustice kicks in, in that Ottawa will only pay them retroactively for one year even though they might have qualified for the supplement three or four years ago.

These are very important points. We support Bill C-3. Hopefully the government will pay a little bit of attention to the last issue I raised about the guaranteed income supplement because seniors are the most vulnerable in our society and they need a co-operative federal government, a government that will look at the policy and say that it needs to be adjusted and changed because it is costing the seniors of our society dearly.

[James Rajotte, Canadian Alliance, Edmonton Southwest, AB]

It does not even cover the rate of inflation as my colleague has just said.

However, a different generation that retired in 1995 would receive a 9% return on their investment.

We are not saying one generation should receive less. What we are saying is to have some intergenerational fairness by proposing some genuine reforms to the system.

Despite the painful and expensive Liberal solution, the Canada pension plan's unfunded liability is hovering around a half a trillion dollars and is continuing to grow at 6% a year. Since the CPP investment board first invested funds in 1999 the board has delivered roughly 2.6% annualized performance, which is slightly better than the TSE over the same period. It is not enough to make up for the ever growing unfunded liability.

I am always perplexed as to why the government feels that the government and the wise men that it sets up in this board can investment the money in private markets, and yet Canadians such as ourselves do not have the wisdom to act in our own best interest to invest the money in a mandatory personal retirement account.

This could be a retirement account where the government could say to Canadians that they have to set aside a certain percentage of their income in a pension plan to ensure that they have something as a nest egg, as is done in the system in Australia.

In Australia there is one system where Australians have three options. Australians can choose to take the fully government directed plan where it is safe, secure and conservative because it is invested in government bonds. They get a minimal rate of return over a 20 year or 30 year period. They know that there is something there at the end, but then a second group can say it wants to invest a little more in equities or private markets. They have more of a mixed portfolio. In the third group, even though they still have to invest a certain amount in government bonds, there is more risk and they know that their rate of return will vary. Over time it will generally be much better, but it is not as conservative.

This gives the options to Australians that says they have to put aside a certain amount each year to invest in a nest egg. Instead of it being a pay as we go system, it is a system where it is actually invested in a person's name as a nest egg, but it is actually in one of three accounts.

In Canada we say to Canadians that they do not have the wisdom to invest themselves, that they are not concerned about retirement so the government has to take on the role for them. It is simply a patronizing attitude that many Canadians find offensive because they themselves take much more concern over their own retirement and the future of their children than the government does. It is just simply obvious.

Getting back to the ever growing unfunded liability in the Canada pension plan, this explains why in 1995 the Chief Actuary of Canada stated that contribution rates would have to nearly triple, from 5.6% to 14.2% over the next 30 years, simply to ensure the benefits could be paid for the immediate and indefinite future. Of course, we know what happened to him. He was simply fired. The messenger was fired because someone did not like the message.

By 2021 it is expected that the Canada pension plan payouts would exceed contributions again. After that, investment income would be needed to pay for benefits. At that time we can expect the percentage that Canadians would be asked to put into the Canada pension plan, I should not say asked because it would be demanded, would be increased again.

I now want to turn to some specific clauses within Bill C-3 and offer our critique of the clauses. Clause 15 applies to foreign property limits in the Income Tax Act to the CPP Investment Board.

During clause by clause consideration of the legislation, the director of finance, markets division, of the finance department's financial sector policy branch, Bill Mitchell, admitted to members of the finance committee that no particular study was done by the department to determine what the negative impact of this restriction would be on the long term performance of the CPP investment fund.

It is known to be a bad thing for private companies to invest the assets of their pension plans in their own securities and it can be argued that it is the same thing for governments. CPP Investment Board President John MacNaughton has said that all large investors face the challenge of having to manage within the capacity of the Canadian market. The Canadian market is small relative to the amount of capital in the country and it is small relative to world markets. Canada only represents 2.2% of global capital markets yet on the investment side we are much bigger than that.

As the CPP holdings get larger with regard to the opportunities available to invest in Canada, the limit is going to matter for other reasons as well. Baby boomers will begin retiring in 2012. By that time the CPP fund would have an excess of $140 billion. That would make it the largest investor in Canada, and among the largest in the world.

The CPP currently accounts for only 1% of the Toronto Stock Exchange's market capitalization. It could be as high as 10% by 2012 which is a dangerously high number for a single investor in a single market. There are concerns that public money would be competing with private money for the best investments. As time goes on the problem is only going to get worse. Every year the CPP will be piling in $16 billion to $18 billion in new money. It will own the market and this is a concern.

At the time that Bill C-3 was introduced I recall Andrew Coyne raising concerns about the undue influence that the CPP Investment Board, because of its size, would have within the private market.

This is something we should look at seriously. We in the Canadian Alliance feel that the bill is not a simple housekeeping bill. It is a bill that we should actually use to address some of these concerns. The concern obviously is that the government could then move money and unduly influence where the market goes in Canada. That simply is something we should not want and should seek to prevent.

The fact is that bigger is not always better. As an illiquid large investor, the CPP Investment Board will be unable to trade freely and smaller funds will delight in playing off the Canada Pension Plan Investment Board positions, which will only serve to the detriment of Canadians.

Ironically, the rise of the CPP Investment Board may entrench that 30% foreign property rule because when it is raised, Canadian markets could stumble badly if the Canada Pension Plan Investment Board tried to sell even a percentage of its immense holdings. The longer the government waits, the larger and more significant the fund will be to the Canadian investment climate.

I want to return to the issue of younger Canadians and the notion of intergenerational fairness. We in the Canadian Alliance feel that the Canada pension plan, as it is, is not fair to younger Canadians. We have a serious problem with the Liberal approach and its solution to the Canada pension plan and to its unfunded liability.

The chief actuary says that for every Canadian worker born after 1980 their CPP investment will offer them this 2% real return that I have been talking about. We have a situation where those Canadians born after 1980, and even before that, will be receiving a pathetic return on their investment. Even when they retire their maximum benefits are only $9,000. By the time Canadians who were born in 1980 reach retirement age, to be receiving $9,000, or even at that stage $12,000, is simply pathetic and will not enable them to secure a safe retirement.

According to the Canadian Taxpayers Federation, if young adults entering the workforce today invested their CPP contributions in a mandatory plan, they would have, at the very least, a $1 million nest egg by 2036. Does it not sound better to have a $1 million nest egg instead of the $9,000 or $12,000, whatever it will be, each year? The present value of the benefit package for the CPP will be worth about $570,000. Clearly there is a better solution available to younger people if we had a mandatory pension plan which was not a pay as you go plan.

The CPP basically is a transfer of resources from younger to older generations. As the population ages, the transfer will have to increase because there will be more older people in relation to younger working people. The problem is compounded because people are living longer. Today pension eligibility is age 65 and life expectancy is age 79, so the average Canadian can expect to collect CPP for 14 years. Life expectancy is likely to continue to rise due to medical advances, which is a good thing.

Many younger Canadians feel that they are paying into a system of pensions, health care and massive public debt, and they are not sure that they will get many benefits back. There is a possibility of a real ugly generational war within the next couple of decades. As Thomas Courchene at Queen's University has said, “We older Canadians, many of us tenured, are revealing ourselves to be a very selfish lot by turning the tables on generation X , a cohort with nowhere near the employment or income prospects that we enjoyed when we were young”.

However, Canadians are not doing this. Older Canadians themselves are extremely concerned about the futures of their children and grandchildren. It is the government that has done this. It is the government that has created a schism between generations.

Another issue with which the Canadian Alliance takes issue is the CPP Investment Board's vulnerability to political pressure and interference. It already has been suggested that CPP investments should be required to adhere to so-called Liberal societal values. There are calls that CPP should only be allowed to invest in certain companies that increase employment, that are environmentally friendly, that comply to employment equity and bilingual federal regulations, et cetera, the priorities determined of course by the board and by the government.

If the purpose of the board is to provide the best pensions we can manage for the price we are paying, these kinds of demands for social strings to be attached must be rejected outright.

It is not sensible to take a fund like the CPP and use it for industrial or social policies. That is because once the principle that other criteria will come into play has been established there is no obvious place to stop. The overall record of these types of public funds around the world is terrible.

The Canadian Alliance also takes issue at how individuals are appointed to the CPP Investment Board. I would like to stress of course that the people who are currently on the board seem quite up to the job in our perspective and we certainly have a high regard for them in a personal way.

Nevertheless, they are and will be in the future, and we always have to imagine what will happen in the future, appointed by governor in council on the recommendation of the Minister of Finance. The minister appoints them after receiving advice from provincial committees but he is under no obligation to follow this advice.

What protection does Bill C-3 offer members of the CPP to ensure that it does not go down the similar path of moving away from professional investors to those who are professional bureaucrats with a primary political focus? There is none.

In conclusion, we in the Canadian Alliance hope the government will come to its senses on this bill. We hope Parliament will reject the bill and send it back for much needed amendment and will look at some serious reform of the Canada pension plan so that younger Canadians will have a genuine opportunity to have their retirement secure and to have the good life that all Canadians enjoy.

I would like to propose an amendment, seconded by the member for Athabasca. I move:

That the motion be amended by deleting all the words after the word “That” and substituting the following therefor:

Bill C-3, an act to amend the Canada Pension Plan and the Canada Pension Plan Investment Board Act, be not now read a third time but be referred back to the Standing Committee on Finance for the purpose of reconsidering Clause 15 with the view to change section 15 of the act to remove the cap on the percentage of Canada pension plan money that might be invested outside of Canada.

[James Rajotte, Canadian Alliance, Edmonton Southwest, AB]

Mr. Speaker, I believe I have 40 minutes for my speech and I will not be splitting my time with anyone, so you will have the pleasure of listening to me for up to 40 minutes.

Later I will address some of the comments made by the parliamentary secretary, but first I want to detail what Bill C-3 is supposed to do. I want to talk about some of the history of the Canada pension plan just to give members some background and then I want to propose alternatives or state where the Canadian Alliance stands on the bill.

Bill C-3 is an act to amend the Canada Pension Plan and the Canada Pension Plan Investment Board Act. It will transfer the management of the cash operating balance and the bond portfolio, which is about $40 billion, to the CPP investment board. Specifically this will permit all amounts held to the credit of the Canada pension plan account to be transferred to the Canada Pension Plan Investment Board by repealing the requirement to maintain in the account a three month operating balance.

Second, it will establish a means by which the investment board may be required to transfer funds to the government to the credit of the Canada pension plan account so that the immediate obligations of the account can be met.

Third, it will transfer to the investment board over a three year period, 1/36 per month, the right, title or interest in each security held by the Minister of Finance and establish the conditions on which the securities may be redeemed or replaced.

Fourth, it will provide a 30% foreign property limit. The Income Tax Act applies to the investment board and its subsidiaries on a consolidated basis, to provide that the investment board will be considered to hold the property of its subsidiaries for the purpose of applying the foreign property limit. Of course at second reading our party proposed an amendment to expand this to allow at least a small way for Canadians to access capital markets to further increase their retirement savings. They themselves then would be more independent at a stage in life when they want to enjoy the full benefits of life rather than being dependent on government assistance.

Fifth, the bill will make housekeeping amendments to the investment board's reporting requirements.

I have some observations and a little history. The CPP investment board was incorporated by an act of Parliament in 1997. It was set up as an arm's length crown corporation and was charged with ensuring the soundness and sustainability of the nation's pension plan.

The assets were planned to be transferred over this three year period to ensure a smooth transition for capital markets, provincial borrowing programs and the CPP investment board itself.

By investing CPP cash not needed to pay current pensions, the board's aim is to enable higher returns in the stock and bond markets over the long term. The CPP investment board currently manages about $14 billion, mostly in equities, for the pension plan. The assets to be transferred include the CPP bond portfolio, made up mostly of provincial government bonds, and a three month cash operating balance. The Department of Finance is currently managing this money.

The CPP investment board made $360 million in fiscal year 2001-02 but lost $845 million in the previous year. About two-thirds of the board's money is invested in indexed stocks tied to the S&P/TSX composite while some is allocated to U.S. and international stock indexes. Including returns from the CPP bond portion, the entire pension plan made $2.3 billion in fiscal year 2001-02.

The federal government's chief actuary estimated that the proposed changes would increase returns on CPP assets by about $75 billion over 50 years. Of course in that estimate we have to take into account the serious decline in the stock market over the last three years, which certainly affects the specific prediction that the chief actuary made.

At this point I want to basically give an overview of Bill C-3 and also speak about the Canadian Alliance position and what we in the official opposition would do if we were in government.

The main thrust of the bill is to transfer all the amounts held in the Department of Finance within the Canada pension plan account, including the bond portfolio which is worth about $40 billion to the CPP Investment Board over a three year period. It would establish a means for the transfer of assets between the Department of Finance and the CPP Investment Board so that immediate payout obligations of the plan could be met. The legislation also spells out how the provincial securities currently held on the account may be redeemed or replaced.

As I mentioned earlier, it applies the 30% foreign property limit. We were quite disappointed that the government did not consider increasing that limit so that it would allow Canadians to access more foreign content within the CPP investment as it should within RRSP accounts as well.

To give a brief history of the Canada pension plan, the government is representing this as a housekeeping bill, but it deals with one of the main pension programs which Canadians receive and it is incumbent upon us to give a history before we vote on this at third reading.

The Canada pension plan was devised over 36 years ago as a mandatory plan on a “pay-as-you-go” basis and would be transferred from generation to generation. There is no account in my name or someone else's name and it is not tied to a social insurance number that would then be invested as a nest egg for retirement. The people who are currently working are paying for those who have retired. When this was started, people who were retired at the time started receiving the benefits but they had not gone through the system in that way. That was one problem.

The actuary at the time advised the Liberal government that this would be problematic, particularly as a demographic shift would occur in which the population growth would not be as much as it was in the post-war period. The government was advised that it would encounter some real financial crunches. Unfortunately, the government at the time disregarded that advice. It shadowed the future in which later on the finance minister completely disregarded the advice of the chief actuary in the mid-1990s and fired the actuary when the person gave advice contrary to what the government wanted.

In 1966 Canadians were told that their payroll deductions required to fund the Canada pension plan would never go above 5.5%. This is important to note because the present government is guaranteeing it will not go above the 10% level. Obviously the 1966 guarantee was untrue. The actuary at the time warned that percentage would not be sustainable over the long term, particularly with the fact that the population was not growing at its previous level.

The government of the day has told Canadians that it will not increase it past a certain percentage, but how can Canadians be expected to believe the government will hold it at a certain percentage when it clearly has not done so in the past?

When it was designed by the government at the time, it was assumed that there would be six tax paying workers for every dependant retiree. That was true when it was set up, although even at the time the actuary pointed out that with the demographic shift this would not happen in perpetuity. The government unfortunately did not set up a system whereby it was invested in people's names in an account and set aside over a 20 or 30 year period so it would be there as a nest egg when they retired. Unfortunately it was a situation where the government counted on this in perpetuity growth in the population that would fund the Canada pension plan. This was unrealistic at the time and the government should have realized that.

By 1993 contributions and interest could not produce the revenue required to cover the benefits paid out. The crunch started by the early 1990s. In 1996 the Canada pension plan was in a great deal of trouble. Over 10 million Canadians were paying $11 billion into the plan but three million people were being paid about $17 billion in benefits. Even though we had a ratio where 10 million Canadians were working and paying into the plan and only 3 million were receiving benefits, we still had a fiscal situation where the amount being paid out in benefits was above the amount being paid in. As we go into the future imagine the stress and the pressures that will be put on the Canada pension plan when the population does not grow at the expected level and when more people retire, particularly the baby boomers.

At that time, the $6 billion difference had to be made up out of general tax revenue so clearly it was not sustainable. The Canada pension plan's chief actuary warned that without changes the plan would be in very deep trouble, particularly when the baby boomer generation began to reach the age of 65, about the year 2012 which is not that far off.

By 1977 the Canada pension plan's assets had fallen to $35.5 billion. During the fall of that year, the Liberal government introduced Bill C-2, which was designed to save the Canada pension plan by the only way it knew how. It increased the cost to taxpayers and took more money from Canadian taxpayers rather than introduce some real fundamental reform to change the system.

Starting in 1998, Canadians saw their take home pay shrink as contribution rates for both employees and employers were jacked up in a series of increases to Canada pension plan premiums. CPP premiums went from 5.6% of the average industrial wage to 9.9% in five years. This is a staggering 73% increase and the biggest tax grab in Canadian history.

The government and the Minister of Finance love standing and saying that they have introduced a $100 billion tax cut, which is completely untrue because they neglect to mention the Canada pension plan tax increase. They also neglect to mention the EI surplus which they have been hiding and using for general revenues. The fact that they stand and talk about this $100 billion tax decrease is just simply untrue.

In 1995 the chief actuary of Canada noted that contribution rates would have to nearly triple, from 5.6% to 14.2%, over the next 30 years simply to ensure benefits could be paid for the indefinite future.

This is an important point because the contribution rate is now up around 10%. The government says, as it said before with the 5.6% level, that it will never go above that. This is not what the chief actuary said in 1995. This person stated that it would need to go to 14.2% over the next 30 years to deal with the retirement of the baby boom generation. The result is that employers and the self-employed are feeling the brunt of this Liberal tax cut.

The Canadian Federation of Independent Business has been conducting letter writing campaigns, both on this and on the employment insurance account. What it is notes is that while employers have received a 7¢ reduction in their employment insurance premiums, the Canada pension plan premiums have gone up by 40¢, and they are said to increase another 25¢ in 2003.

That may not sound like a lot but for small businesses with very small margins, increases like this for each worker are very substantial and certainly cause a lot of businesses to really look for ways to cuts costs. The most obvious way they can cut costs, unfortunately, is through labour. If the costs of labour for small businesses, a coffee shop or whatever, increases, the only way they can really deal with that in the immediate term is to cut labour, which means laying people off. The CPP premium increase is not only a tax grab, it is a job killer as well. Everything the employers have gained back in their small employment increases has been eaten up and more by the Canada pension plan increases.

The worst injustice of the Canada pension plan in general, is the intergenerational unfairness. This is a point I want to return to a number of times in my speech.

Every Canadian worker born after 1980 will see their Canada pension plan investment offer them a 2% return on investment for their retirement. This is unbelievable and unacceptable. However for those who retired in 1995, a different generation, they will receive a 9% return on their investment which is a greater return. However, if one looks at the long term investments over a 20 or 30 year period, this is obviously unacceptable as well.

Economist David Foot has suggested that the federal government should raise the retirement age by two or three years so that boomers can contribute to the CPP longer, thereby creating a bigger pool to invest and from which to draw. It would not have to raise premiums or cut benefits. It is something the government obviously has considered but not acted upon.

Another consideration is that the government could bring in more flexible workplace policies to address some of the problems which I talked about earlier, where employers faced with increased CPP premiums unfortunately have to lay off workers.

A lot of Canadians who are approaching retirement or who have retired have said that if we bring in more flexible workplace policies, older workers nearing retirement could work part time and still make full pension contributions to maintain revenues in the pension fund while creating employment for younger workers. This would also mean that they would still contribute and would draw upon that for a longer period because it would be more sustainable.

Economist David Foot, in describing the 1997 reforms, said, “They do not recognize the profound demographic changes that have taken place since the program was launched”. That is indisputable. The fact is the government has not recognized this pay as we go plan setup where we had a huge population explosion after the second world war with a relative decline after that. It has not recognize that a demographic shift would cause some serious constraints on the Canada pension plan.

The Canada pension plan will take just under 10% of income to receive 25% after age 65. The average annual payout is $5,500 a year. That figure is something we should all consider, because the government loves to say that it is providing for Canadians in their retirement. The average annual payout is $5,500 a year. Obviously a Canadian cannot live on that so for the government to say that it is providing for Canadians in their retirement through this plan is simply farcical.

Another figure we should keep in mind is the number of seniors in Canada will double to 22% of the population by the year 2031. This will place a heavy burden on workers who have to support these pension and health programs. It is important to note that the demographic shift causes a lot of other pressures as well, particularly in health care. As we age we require more and more of the health care. That is just simply logical. Canadians are rightly concerned about where the tax revenues will come from to pay for our social services. Instead of dealing with these problems, unfortunately the government has pushed these off by introducing marginal changes, as it has done with this bill.

Members of the Canadian Alliance do not believe that our future security lies in the wages of a shrinking workforce. It lies in the vast productivity and production capacity of a full economy. We value retirement security as a vital element of independence. The government's goal should be to ensure that as many Canadians as possible are independent in their retirement years, that they can afford to have a good standard of living, that they can afford to take a relative amount of trips when they need to and that they have the quality of life they deserve.

Our policy platform states that we will honour obligations to retired Canadians and those close to retirement under the current state run programs. We will also maintain support for low income seniors.

We believe that future retirees deserve a greater choice. People in my generation who are extremely frustrated with the Canada pension plan deserve a greater choice and a greater opportunity to increase their retirement savings. We should have a choice between a government managed pension plan and a mandatory personal plan. Giving Canadians greater control of their own affairs and retirement plans would eliminate the foreign investment restriction for retirement investments, thereby allowing access to greater capital and investment opportunities. We would devise options allowing individuals greater opportunities to save for themselves as the current system failed its original objective from 1966.

This is an important point because friends my age in their early thirties see the RRSP contribution limit each year. A lot of people in the 55 to 65 age group do not have a lot of money put away. Let me use for an example dentists who own their own dentistry business. They have taken quite a while to pay off debts they incurred when they started out after graduating from dental school. By the time they reach 55 they do not have a lot of money put away because they spent the first 15 or 20 years in their business paying off their debts. At the age where they are making profits or their earlier investments have paid off, they would like the opportunity to put some money into their RRSP. With the present contribution limit it is simply impossible for them to put enough away so that they are fiscally secure when they retire in 5, 10 or 15 years. I hope the Minister of Finance will look at raising the contribution limit for RRSPs in the next budget.

I was talking to a friend recently who said the forms the government sends out indicating the amount an individual can put into an RRSP is a joke. She indicated that the government takes so much from her in taxes that she does not have anything left at the end of the year to invest in an RRSP. The contribution limit is a slap in the face because the government takes so much in taxes. Canadians are taxed at the highest marginal rate of $60,000 per year, and that is an absolute joke.

Canadians who get out of university usually have a high debt load. If they are lucky they may get a job making $30,000 or $35,000 a year. They have to pay down their loans and pay taxes while trying to establish themselves at the same time. Paying high taxes simply creates a crunch on them that is unfair. The government should create opportunities so that these people can pay down their student loans and pay less tax so they can start establishing themselves. For those individuals who are far-sighted they could then start putting away even at that age for their retirement.

Bill C-3 is a step in the government's planned development of the public pension plan in this country. It is managed at arm's-length by a crown corporation. As the Canadian Alliance noted at second reading, the bill is more than a housekeeping bill. The government says it has only presented some minor changes, but we regard them as much more.

We are opposed to the solution proposed by the government. Canadian workers and employers would be bilked out of billions of dollars to pay for a plan that is unquestionably unfair to Canadians of all generations, but particularly to the younger generations in our society.

The Canada pension plan began floundering in the 1990s. In 1996, 30 years after its inception, the plan was going bust. It was fulfilling the prediction of the original actuary who said that this pay as we go plan was unsustainable in the long term. This created a situation where the benefits exceeded the amount going in by about $6 billion. This had to be made up out of general tax revenues.

The Liberal solution was to take more money from the Canadian public. It was similar to health care. Instead of addressing some overall issues and proposing fundamental reforms, it resorted to taking money from the Canadian taxpayer. This is something the government is doing now with the new elections bill. Instead of addressing genuine concerns about the ties between businesses, unions and government, what does the government do? It asks the taxpayer to pay for everything. It wants taxpayers to pay for everything in the elections bill, despite the fact that they may or may not support a particular party. Taxpayers now would have to support every political party that attained a certain number of seats in the last election.

I will go back to the CPP premiums. Beginning in 1998 the CPP premiums were jacked up from 5.6% of the average industrial wage to 9.9%. As I mentioned earlier, the government promised it would never go past this 5%. The government said this promise could be carved in stone. It is now up to 9.9%. The chief actuary at the time said it would have to go to 14.2% over the next 30 years.

Now the promise was that the premiums would never go above 10%, yet the chief actuary said they would go over 14%. Unfortunately we do not receive his advice any more because he was summarily dismissed once the finance minister realized that he did not like his advice. This is a tradition that we see all too often with this Parliament.

It is interesting that people such as the Auditor General who have independence and are able to observe the government and how Parliament operates, are the ones who are bringing to light, as is the case with the firearms registry, the actual substance the opposition has been stating for years. We need objective and independent analysts such as the chief actuary to help us.

When the finance minister fired this person simply for giving advice that the finance minister did not want I think that was a serious breach of independence that Parliament should have addressed. Unfortunately, the government simply let it happen and did nothing.

The worst injustice by the government and its Canada pension plan hike of 73% is the intergenerational unfairness. The government simply has not addressed this and it does not want to address this. In the last election campaign the Liberals simply engaged in scare tactics about this, rather than address the actual problems with the Canada pension plan.

What is meant by intergenerational unfairness? Every Canadian worker born after 1980 would see his or her Canada pension plan investment offer a 2% return on investment for the retirement years. That amount might as well be stuck in a mattress. It is pathetic that we would allow younger Canadians, such as the pages here before me, to receive 2%. Imagine that over a 30 year period there would be a 2% return on the investment. That is completely unfair and it should be changed.

[Bryon Wilfert, Liberal, Parliamentary Secretary to the Minister of Finance]

Mr. Speaker, I welcome the opportunity to speak today at third reading of Bill C-3, which amends the Canada Pension Plan and the Canada Pension Plan Investment Board Act.

As hon. members are aware, this legislation completes the reforms to the Canada pension plan which the federal and provincial governments, as joint stewards of the plan, initiated back in 1997. Those changes were necessary because of the warnings in the early 1990s from the Chief Actuary of Canada that the sustainability of the Canada pension plan was at risk.

Governments heeded the warning and overhauled the system. Reforms included bringing forward scheduled increases in CPP contribution rates, building up a larger asset pool before baby boomers retire and investing it in the markets at arm's length from government for the best possible rates of return, and slowing the growing cost of benefits through administrative and expenditure measures.

By transferring all the CPP assets remaining with the federal government to the Canada Pension Plan Investment Board, Bill C-3 represents the final steps in CPP reform. Hon. members will recall that a key element of CPP reform was a new market investment policy for the plan, which the CPP Investment Board was established to implement. Clearly the need existed for this independent organization.

Prior to 1999 when the CPPIB began operation, the investment policy in place for the CPP required that funds not immediately needed to pay benefits be invested in provincial government bonds at the federal government's interest rate. That policy resulted in an undiversified portfolio of securities and an interest rate subsidy to the provinces.

As members know, the CPPIB is now responsible for the development of the CPP's market investment policy. Since 1999, funds not immediately required to pay benefits and expenses are transferred to the board and prudently invested in a diversified portfolio of market securities in the best interests of contributors and beneficiaries.

The CPPIB prudently manages billions of dollars of retirement funds belonging to Canadians to the highest professional standards and at arm's length from government, with highly qualified, professional managers making investment decisions. In addition, the board is fully accountable to CPP members and governments.

I also want to mention that the CPPIB functions under rules similar to those that govern other public sector pension plans in Canada. Its market investment policy is consistent with the investment policies of plans like the Ontario Teachers' Pension Plan and the Ontario Municipal Employees Retirement System, OMERS. The CPPIB is also subject to the foreign property rule.

Until now, not all CPP assets have been managed by the CPPIB. Certain assets have remained with the federal government. These assets include an operating reserve of about $6 billion and a large portfolio of mostly provincial government bonds valued at about $32 billion. Under Bill C-3 these remaining assets would be transferred to the CPPIB over a three year period.

This means that all CPP assets will be managed and invested in the market by one independent professional investment board, a move that essentially completes the process of reforming the CPP that was initiated in 1997 by the federal and provincial governments. Let me briefly review the benefits that will ensue with the passage of this legislation.

First, consolidating all assets under the management of one organization will allow the CPPIB to develop a more coherent investment policy for all CPP assets in order to enhance rates of return and better manage risks on the total portfolio, thereby helping to ensure the sustainability of the Canada pension plan. This will put the CPP on the same footing as other public sector pension plans, providing the CPPIB's investment managers with the flexibility to determine the best asset mix and investment strategies for the CPP.

Second, phasing in the transfer of the remaining assets over three years will help to ensure that the transfer is absorbed smoothly by capital markets, the CPPIB and provincial borrowing programs.

The CPPIB is responsible for establishing and fully disclosing its investment policies and for investing CPP assets while properly minimizing risk. With the transfer of the remaining assets to the CPPIB, Canadians can feel secure that prudent, sound investment diversification, as well as increased performance, will result for the entire CPP asset portfolio.

In considering this legislation, I encourage hon. members to keep in mind that the Chief Actuary of Canada has indicated that the CPP assets fully invested in the marketplace are expected to earn a greater return and thereby grow more rapidly. In his three actuarial reports since 1997, the Chief Actuary has confirmed the long term viability and financial sustainability of the CPP. According to the last actuarial report, investing the transferred CPP assets in the marketplace will produce a benefit of about $85 billion over the next 50 years for the Canada pension plan.

As I indicated earlier, it was the Chief Actuary who first brought to the government's attention in the early 1990s the fact that CPP assets, the equivalent of two years of benefits, would be depleted by 2015 and that the contribution rates would have to increase to more than 14% by 2030 if nothing was done. At that time the Canada pension plan had worked well for 30 years, but its sustainability was becoming a concern.

As a result, following coast to coast consultations with Canadians, the federal and provincial governments in 1997 adopted a balanced approach to CPP reform so that the plan could meet the demand of the coming years when the baby boomers would be retiring. As I mentioned, those reforms included an increase in CPP contribution rates, a buildup of a larger asset pool while baby boomers were still in the workplace, its investment in the markets at arm's length from government for the best possible rates of return, and administrative and expenditure measures to slow the growing costs of benefits.

All together, those measures ensured that a contribution rate of 9.9% could be expected to maintain the sustainability of the plan indefinitely, and now, through Bill C-3, with the transfer of the remaining assets to the independent professional CPP investment board, the 1997 reform of CPP investment policy will be completed.

I would like to remind the House that Canadians told their governments during the 1997 public consultations to fix the CPP and fix it right. Canadians also told their governments to preserve the CPP by strengthening the financing, improving the investment practices and moderating the growing costs of benefits. Governments met this challenge. Now, through the measures in Bill C-3, Canada's retirement income system will be even more secure for all Canadians.

Together with the 1997 CPP reforms, the measures in the bill will ensure that the Canada pension plan will remain on sound financial footing for generations to come. I urge all hon. members to give speedy passage to this legislation.

[Don Boudria, Liberal, for the Minister of Finance]

moved that Bill C-3, an act to amend the Canada Pension Plan and the Canada Pension Plan Investment Board Act, be read the third time and passed.

Business of the House

[Don Boudria, Liberal, Minister of State and Leader of the Government in the House of Commons]

Mr. Speaker, let me start with the parliamentary agenda.

We will continue this afternoon with Bill C-13, the reproductive technologies bill, followed by, if there is time, Bill C-20, the child protection bill, as well as Bill C-22, the family law bill.

Tomorrow, we will call third reading of Bill C-3 regarding the Canada pension plan. The next item will be Bill C-6, the bill regarding specific claims for aboriginal people.

On Monday, we would return, if necessary, to Bills C-6, C-20 and C-13. We will continue this business on Tuesday morning, but in any case at 3 p.m. on Tuesday, it is my intention to call Bill C-22, the family law bill.

I will be consulting with a view to returning at some point to debate on the Senate amendments to Bill C-10A, the Criminal Code amendments.

On Wednesday, we will continue the debate on Bills C-13 and C-19 if necessary, at whatever stages they are at then.

I wish to announce that Thursday shall be an allotted day.

Colleagues across the way particularly have asked about what they claim to be a principle that military intervention has a vote. I have a number of them here.

For Korea in 1950, there was no resolution in the House and no vote. For Sinai in 1956, there was no vote. For the Congo in 1960, a recorded vote was asked for but no division was held. For Cyprus in 1964, there was a debate before deployment, the motion was agreed to on division with no recorded vote. For the Middle East in 1973, the motion was agreed to with no division and no recorded vote. For the UNIFIL mission in 1978, there was no motion and no vote. For Iran-Iraq in 1988, the motion was agreed to with no division. For Namibia in 1989, there was no vote. For the Persian Gulf in 1990, it was debated after deployment, with a recorded vote and a division.

There were many cases where there were no votes, no debate, no uniformity.

We have established the coherent system which we enjoy today. We have utilized it as late as last night.

I am also prepared to offer to other parties, should they want it at some point, perhaps as early as next week, yet another evening to debate the situation in Iraq. I know many colleagues on my side of the House would like that. We are quite prepared to offer that.

Canada Pension Plan

[The Speaker]

It being 3.03 p.m. the House will now proceed to the taking of the deferred division on the report stage of Bill C-3.

Call in the members.

(The House divided on Motion No. 1, which was negatived on the following division:)