An Act to amend the Income Tax Act (tax credit for loss of retirement income)

This bill was last introduced in the 39th Parliament, 2nd Session, which ended in September 2008.

This bill was previously introduced in the 39th Parliament, 1st Session.

Sponsor

André Bellavance  Bloc

Introduced as a private member’s bill. (These don’t often become law.)

Status

Not active, as of May 17, 2007
(This bill did not become law.)

Summary

This is from the published bill. The Library of Parliament often publishes better independent summaries.

This enactment amends the Income Tax Act to provide a refundable tax credit to a taxpayer in respect of whom an employer and the employees failed to make the contributions required to be made to a registered pension plan.

Elsewhere

All sorts of information on this bill is available at LEGISinfo, provided by the Library of Parliament. You can also read the full text of the bill.

Votes

May 28, 2008 Passed That the Bill be now read a second time and referred to the Standing Committee on Finance.

June 1st, 2010 / 4:28 p.m.
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Diane Blanchard Secretary, Regroupement des retraité(es) des Aciers Atlas

Mr. Chairman, members of the Standing Committee on Finance, ladies and gentlemen, I would like to begin by conveying my greetings and once again expressing our appreciation for your interest in our cause.

On March 25, as part of your study on the retirement income security of Canadians, we had an opportunity to make you aware of our difficult living conditions. In your own words, you, the members of the Standing Committee on Finance, said that you appreciated the chance to put a human face to the questions and gather information, with a view to passing legislation that might put a stop to the widespread hemorrhaging affecting the pension funds of ordinary Canadians. For us, these discussions were an opportunity to gauge the misunderstandings and incomprehension.

Today, June 1, 2010, marks our 60th pension cut, representing a personal loss of tens of thousands of dollars, and 60 months of having to juggle with a budget that has been cut by between 30% and 58%, in order to meet our financial obligations. It is five years since we began the process of alerting governments to the gaps in the administration of private sector pension funds in cases of bankruptcy, as well as the devastating consequences for retirees and all sectors of the economy.

At the time, this was a relatively new phenomenon. Before us, only retirees from Singer and the Jeffrey Mine in Asbestos, Quebec, had suffered losses, as their pension funds had an actuarial deficit at the time their employer's company went under. So, we began working on a number of different fronts. Our analysis confirmed that only a political solution could solve our problem.

So, we went knocking on the door of our federal member of Parliament, Louis Plamondon, of the Bloc Québécois. As luck would have it, Asbestos was represented by André Bellavance, an activist from the same political party. It was therefore as a result of a joint effort that Bill C-445 was introduced in May of 2007, then introduced again in February of 2009, as C-290, An Act to amend the Income Tax Act (tax credit for loss of retirement income).

During the two-hour debate in May of 2008, at second reading, the Liberal Party and the NDP stated that they were in favour of more in-depth study of the bill, thereby giving it a chance of survival—an expression of empathy for which we are deeply grateful. The Conservative Party, however, felt it was poorly drafted and, because it might veer off in many different directions, likely to result in astronomical costs for the Treasury.

We are neither politicians nor tax experts able to ascertain the implications of its wording, no more than we have the expertise to examine it. We recognize that it is normal to want to engage in verbal jousting and flex one's muscles when one has a grip on power, but there comes a time when the cries and tears of ordinary people must be heard and a solution found to ease their suffering.

We derived no pleasure from having to drive hundreds of kilometres on this awful day. We see our appearance before you as a cruel humiliation. Having to enter the arena once again, at the end of your life, to redress a wrong is an aberration. And yet, ours was a life of work, sacrifice, contribution to this country's economic progress and foresight, because we contributed to a pension plan, with dignity and pride. Being reduced now to the level of welfare because of our income, but with no opportunity to avail ourselves of its benefits in the way of exemptions, is destroying us.

At the previous meeting, Mr. Menzies, in expressing your consternation, you stated that what Mr. St-Michel had said was extremely troubling, and that what had happened to him was terribly unfair. You added that this kind of thing should not happen. And yet, that is what happened, and we know all the reasons behind the current state of affairs: lax management, elastic legislation that favours employers, and tax benefits that allow an employer to escape his obligations, with no concrete protections for workers who bear the brunt of all the inherent risks when a plan is discontinued. Workers can easily monitor the share of wages and social benefits. However, that share of the pension plan is managed at a higher level, away from the watchful eye and control of others.

With respect to provincial and federal jurisdiction, I am sure you know that we have made the same appeal to Jean Charest's team. Five years after our indirect appeal, the Harper government now feels the need to react to this hemorrhaging. What will become of the groups that were sacrificed while the storm raged? Our two ambassadors from the Bloc Québécois are proposing to hand over Bill C-290 to the Conservative Party to amend it as it sees fit, in order to break the log jam and restore some of our dignity. Our demand, as representatives of the Regroupement des retraité(es) des Aciers Atlas, imposes no particular form of redress and can be summarized with this simple image: a blood transfusion is needed to get the patient back on his feet.

Moreover, there is a need to move quickly, because the time we have left is not unlimited. I would just remind you that our income—

June 1st, 2010 / 3:35 p.m.
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Bloc

André Bellavance Bloc Richmond—Arthabaska, QC

Thank you very much, Mr. Chairman.

I would also like to introduce the people to my left. They are two economists with the Research Department of the Bloc Québécois, Jean-David Beaulieu and Odile Rochon. So, if there are any questions about the numbers, we may want to call on them for assistance.

This is a bill we are all very familiar with, because I introduced it for the first time in 2007. At the time, it was Bill C-445. I would like to give you some background to explain how I came up with the idea of introducing this bill. I might add that it was developed in cooperation not only with a number of MPs, but also with people who have been affected—retirees who lost a lot of money in their pension plan.

You have already introduced my MP colleague, Louis Plamondon. He, my colleague representing Chambly—Borduas, Mr. Yves Lessard, who is here at this table, and myself all met with the people from the Jeffrey Mine and Atlas Stainless Steels a few years back. They asked us what could be done under the federal tax system to help them out, given the loss that they had suffered under their pension plans.

After some discussion and brainstorming, we concluded that a bill introducing a tax credit would be the best solution. In that regard, I take my hat off to Mr. Gaston Fréchette. He lives in my riding and is the chair of the Jeffrey Mine Retiree and Active Workers Sub-Committee. He is the one who proposed the idea of a tax credit that would soften the blow for retirees whose pension plan was cut following the closure or failure of their employer's company.

So, Bill C-445 was introduced for the first time in 2007. I have just given you a brief explanation of the discussions that led up to this solution. Because of the election in 2008, this bill died on the order paper.

Today, Mr. Chairman and colleagues, we come before you, at this stage in the process, to discuss Bill C-290 which, if I am not mistaken, was introduced again in February of 2009.

Following that, we also received a great deal of support. I believe that some witnesses will be coming here to add their voices to those of the pensioners from these two companies located in our respective ridings. A petition has also circulated. In our region, we have gathered more than 2,000 signatures in support of this request for a tax credit through Bill C-290. We also have the support of the Fédération de l'âge d'or du Québec, or FADOQ—at least, of its president— for this bill.

I would like now to briefly explain what happened at the Jeffrey Mine. A bankruptcy occurred in 2002. On average, people lost 40% of their pension. Approximately 1,200 workers were affected by this. In fact, under their pension plan, people lost some $55 million. Atlas Stainless Steels, located in Sorel, went bankrupt in 2003. Workers there lost between 28% and 58%—almost 60%—of their pension funds. Approximately 250 workers are affected. On average, they lost $6,000 each. As you see, there is quite a gap: some lost almost 30%, while others lost 58%.

There is one question we have been asked frequently. Are there currently other cases that could be eligible for this 22% tax credit proposed under Bill C-290? To our knowledge, there are none at the present time. Could other industries eventually fall under it and could other workers also be penalized? The answer is yes. Having said that, such cases will have to involve workers whose employer has gone bankrupt and shut down, as well as workers who have actually lost part of their pension funds.

The solution we are proposing is a 22% tax credit. It is the equivalent of the federal marginal tax rate that applies to the middle class. I will explain by way of an example. If someone was expecting to receive $20,000 under his pension fund and ended up with only $12,000, he would be looking at a loss of $8,000. So, it is based on that loss that the tax credit is determined. The tax credit would be $1,760, non taxable and transferable to a surviving spouse, but not retroactive.

I said earlier that the bill only applies to retirees who have been cheated through income losses under their pension plan following a closure or bankruptcy. This is not a virtual loss, as it would be for someone who loses his pension funds because of the economic crisis or because the stock market falls. He could not suddenly claim a tax credit because, in actual fact, he would not already have lost the money. The idea is not to make up for an actuarial deficit resulting from a stock market drop. That point must be absolutely clear.

I would like to provide a further clarification, Mr. Chairman. There are legislative amendments which, in our opinion, would mean that there would not be a lot of other companies or retirees who could avail themselves of this tax credit, even though one may think the door is always open. It is important to realize that Bill 30 is already in effect in Quebec. In Ontario, the Pension Benefits Guarantee Fund has been set up. In other provinces as well, there are laws in effect which prevent such unfairness from occurring, at least we hope so. That means that these kinds of situations will be very few in number. There is also the Bankruptcy and Insolvency Act which has been amended by the Parliament of Canada. The benefits must be paid into the pension plan before the court accepts the bankruptcy. Therefore, any contributions due by the employer are paid out of the company's assets. Before an employer can declare bankruptcy, those contributions must be made, which obviously makes an enormous difference. I believe that amendment came into effect last September 18.

I am not telling you anything you do not already know when I say that regulations will be introduced once the bill is in effect, in order to restrict the scope of some of these measures. But the initial idea was to help workers who have been cheated out of their pension—to help retirees. Thus far, I must say we have received the support of the Opposition parties at every reading. The Bloc Québécois obviously voted in favour. Only the Conservative Party has opposed this bill. Today will be an opportunity for you to ask us questions. We will be very pleased to answer them, Mr. Chairman.

Thank you very much.

Speaker's RulingIncome Tax ActPrivate Members' Business

October 23rd, 2009 / 1:30 p.m.
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NDP

The Acting Speaker NDP Denise Savoie

Before resuming debate on this bill, I am prepared to rule on the point of order raised on June 18, 2009 by the Parliamentary Secretary to the Leader of the Government in the House of Commons concerning the requirement for a royal recommendation for Bill C-290, An Act to amend the Income Tax Act (tax credit for loss of retirement income), standing in the name of the member for Richmond—Arthabaska.

I would like to thank the parliamentary secretary for having raised this matter, as well as the member for Richmond—Arthabaska for his contribution to the questions.

Members will recall that Bill C-290 was among those bills identified as causing some concern for the chair, as stated on June 2 at Debates, page 4074. In his remarks, the parliamentary secretary clearly identified Bill C-290 as proposing to reintroduce a refundable tax credit. He further commented that refundable credits are direct benefits paid to individuals regardless of whether the tax is owed or not, and are paid out of the consolidated revenue fund.

He went on to point out, citing a Speaker's ruling made on June 4, 2007, and a ruling made by the Speaker of the other place on May 11, 2006, that refundable tax credits have been ruled to require a royal recommendation.

In his comments on this issue, the hon. member for Richmond—Arthabaska, while acknowledging that the bill seeks to create a refundable tax credit, drew the attention of the House to an earlier Speaker’s ruling of October 16, 1995 in support of his contention that measures to alleviate taxation do not require a royal recommendation.

The chair notes that a question similar to that at issue here was raised with respect to Bill C-445, An Act to amend the Income Tax Act (tax credit for loss of retirement income), in the second session of the 39th Parliament.

That bill, which appears to be very similar to Bill C-290, was also introduced by the member for Richmond—Arthabaska, and was determined to require a royal recommendation in a ruling given on May 2, 2008.

The chair has reviewed carefully Bill C-290, particularly with respect to the manner in which it compares to the earlier Bill C-445, and as was noted in the May 2, 2008 ruling on Bill C-445,

Whether or not the tax credit is refundable or non-refundable is the key issue in determining the need for a royal recommendation.

Non refundable credits are deducted from a person’s tax payable rather than being calculated separately: they simply reduce the amount of tax payable by an individual.

Refundable credits, on the other hand, are not limited simply to the reduction of tax payable. They provide an entitlement to funds which is independent of the tax otherwise due. They are calculated separately and, where no further reduction of tax payable is possible, they give rise to a disbursement from the consolidated revenue fund. Any such disbursement, no matter how it may be characterized in the legislation which proposes it, represents spending for a new and distinct purpose and must therefore be accompanied by a royal recommendation.

In this regard, there does not appear to be any substantive difference between Bill C-290 and its predecessor, Bill C-445. Both involve refundable tax credits.

Accordingly, the Chair will decline to put the question on third reading of Bill C-290 in its present form unless a royal recommendation is received.

The debate, however, is on the motion for second reading, and this motion will be put to a vote at the conclusion of the second reading debate.

Income Tax ActPrivate Members’ Business

June 18th, 2009 / 6:05 p.m.
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NDP

Wayne Marston NDP Hamilton East—Stoney Creek, ON

Madam Speaker, as the NDP critic for seniors and pensions, I am very pleased to participate in tonight's debate on Bill C-290.

Let me begin by thanking the Bloc member for Richmond—Arthabaska for bringing forward this bill.

For those who may have just turned on their televisions, I would like to add some commentary to help them understand what we are talking about.

Bill C-290 would grant a refundable tax credit equal to 22% of the reduction in pension benefits experienced by beneficiaries of registered pension plans, other than trusts, who suffer a loss of pension benefits when their pension plans are wound up in whole or in part. It applies to both a defined benefit plan and a defined contribution plan. Bill C-290 would also allow taxpayers to apply for a reassessment of taxation if they voluntarily request reassessment on or before 10 calendar days after the end of the taxation year.

Without the legalese, that essentially means that if the income of a retiree's pension drops from, say, $30,000 to $22,000, he or she would receive 22% of the $8,000 loss, which would be a non-taxable amount of $1,760.

This bill is particularly timely. It allows us to discuss pension protection and retirement security on the cusp of a demographic change that we will see very soon. In fact by 2014, one-quarter of Canada's population will be over the age of 65.

This bill is equally timely because of the NDP motion that was just put before us. Members will know that the motion passed on Tuesday of this week, which was an NDP opposition day. It was my motion in fact, which I am very pleased with. It called upon the Conservative government to expand and increase CPP, OAS and GIS, to establish a self-financing pension insurance program, to ensure that workers' pension funds go to the front of the line of creditors in the event of bankruptcy proceedings, and to end the practice of rewarding bonuses to CPP investment managers and recover the $7 million in bonuses paid out this year when they lost $24 billion.

Bill C-290 is very much in keeping with the spirit of my party's own work, and my work, and as such we will be supporting it.

To hear some Conservative MPs in this place tonight, one would think the debate over retirement security is mostly about containing costs. For more progressive voices, it represents an opportunity to re-examine the growing gap between the rich and the rest of Canadians and to make decisions that protect the public interest instead of the interests of the wealthy few.

At a time when more wealth is being created in this country than at any other time in our history, people in Canada are working longer and harder, not to get ahead, but just to keep up. In fact, average Canadians today are squeezing out 200 more hours of work each year than they did nine years ago.

Until recently, a few people at the top were enjoying the benefits of the current economy while everybody else was not. We have seen the windfall salaries and extraordinary bonuses of CEOs, but wages and purchasing power for everyone else are essentially stagnant or falling. The working people and retirees are falling farther and farther behind.

One of the reasons of course is tied to what is happening in our economy. In the manufacturing sector, our economy lost over 350,000 jobs between 2002 and 2007, and since October 2008, an additional 406,000 jobs were lost in Canadian forestry, industry and manufacturing.

This week, in fairness to the government, we did see an announcement of an infusion of $1 billion into the forestry industry. I do hope that money flows faster than the infrastructure dollars.

It is absolutely essential that the government sit down with leaders from both the labour movement and the business community to develop a plan to maintain and build both the manufacturing and resource sectors of our economy. Not only are those jobs crucial for sustaining families, but we know empirically that the highest level of pension coverage is associated with union memberships in those jobs.

About 80% of union members belong to workplace pension plans, compared to just under 30% of non-union members. With the overall percentage of people who belong to workplace pensions being in a continual decline, it is imperative that we continue to fight for unionized jobs and to maintain the struggle at the bargaining table for defined benefit plans. It is the only way to ensure predictable retirement incomes for workers.

What is happening now is not sustainable. I am from Hamilton. I have witnessed the economic insecurity faced by industrial workers in Hamilton. One can see the shock on their faces and the fear in their eyes. Every time a plant closes down, the pensions and benefits of workers are threatened. Anyone in the House who followed the CCAA proceedings at Stelco, which is now U.S. Steel, will know what I am talking about. Sadly, that is but one of many local examples where restructuring or plants closures have created pension uncertainty for workers.

It is time for the government to acknowledge that pensions are deferred wages. They are not bonuses paid to workers at the end of their working lives. They are part of an agreed-on compensation package for hours worked. That is why the NDP has been pushing the government to finally enact certain clauses in the Wage Earner Protection Program Act that is already the law of the land.

The purpose of that act was to ensure that workers' pension funds go to the front of the line of creditors in the event of bankruptcy proceedings. The Wage Earner Protection Program Act sets out provisions to ensure that unpaid wages in the event of a bankruptcy are paid to workers and that super creditor status is set up for unpaid pension contributions.

Elements of the amendments to the above pieces of legislation were enacted by the Governor in Council in the summer of 2008. However, not all aspects of the changes were implemented. That left some glaring loopholes that our party's leader made it his mission to close.

On May 13, the member for Toronto—Danforth said:

Mr. Speaker, the truth is that the government will not act even when it is the law.

In December 2007, Parliament took action to protect Canadian pensions by adopting Bill C-12 to amend bankruptcy laws. Section 39(2) prioritizes unpaid pension contributions in the case of bankruptcy. Sections 44 and 131 ensures that the court cannot unilaterally overturn a collective agreement. Section 126 prohibits a court from sanctioning restructuring plans unless all unpaid wage claims and pension obligations have been met. It is the law but the government has refused to put it into force. Why?

At the root of that bill, of course, is the vision that workers must receive the pensions they have earned. Bill C-290 shares that vision as well. I would suggest that, for that reason alone, this bill deserves the support of all members of the House.

Yes, there are some areas that merit further examination. However, the Bloc members who have participated in the debate thus far have acknowledged that and have expressed their willingness to explore these issues further at the committee stage. For example, public data detailing the number of pension plan beneficiaries who would be eligible to claim the tax credit proposed in Bill C-290 is not available.

We do know that in 2003 there were approximately 3 million members of private sector registered plans, of which 73% were members of defined benefit plans. However, at present, no one collects the data on this, so it is really hard to say just what the amount of cost would be. The government does say $10 billion in costs. That is certainly conjecture and I think this bill should be moved to the committee for review.

I call upon my Conservative and Liberal colleagues now to walk the talk. They supported our opposition day motion, which really meant, in its commitment to principles, they should continue in that frame of thought and support Bill C-290. They voted for my motion; they should now vote for Bill C-290. The principles are the same.

I would remind my colleagues that the House also supported the most recent incarnation of Bill C-445 in the 39th Parliament.

Income Tax ActPrivate Members’ Business

June 18th, 2009 / 5:55 p.m.
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Liberal

John McCallum Liberal Markham—Unionville, ON

Madam Speaker, I am pleased to debate Bill C-290, which is an act to amend the Income Tax Act to compensate for the loss of retirement income. The bill is a reintroduction of Bill C-445, which was on its way to finance committee last year before the Prime Minister broke his own fixed election date law and called the 40th general election.

At its heart, Bill C-290 has a very laudable goal, to help protect Canadians' pensions when a business fails and it can no longer meet its pension obligation in full. It would provide a 22% tax credit on the portion of a pension that was promised but not delivered.

Having a pension suddenly reduced or cancelled entirely can be devastating to seniors. A great many of them do not have the option of going back to work to supplement their lost pension income. Instead, they are forced to lower their standard of living, eat less food, keep the thermostat a bit lower in the winter. Nothing about it is pleasant.

Despite the emotional, sociological, and economic toll that loss of retirement income can take, the Conservatives deliberately put thousands of seniors in that exact position two and a half years ago when they hiked taxes on income trusts by 31.5%. In one fell swoop the Conservatives killed an investment vehicle that thousands of seniors relied on for regular monthly distributions to live out their retirement in dignity.

To make matters worse, 10 months before destroying $25 billion of seniors' hard-earned savings, the Prime Minister promised up and down that a Conservative government would never, ever tax income trusts. As a result, seniors flocked to income trusts, putting their life savings in them, only to watch the Prime Minister break his promise and destroy their hopes and dreams.

The worry and the dread of the seniors who suffered at the hands of the Prime Minister is very similar to the worry that seniors who lose their defined benefit pension plan experience. Bill C-290 seeks to alleviate some of that worry. As a result, I am happy to say that my position has not changed since the last Parliament. I do have some concerns about the bill, but it certainly deserves to be sent to the finance committee where MPs can hear from experts and hopefully improve the bill.

Once it arrives in committee, I would specifically like to hear from finance officials about how much the bill would cost the treasury. This is particularly important now because we currently have a Conservative government.

As every Canadian knows, a Conservative government means that Canada is currently running a deficit. The two go hand in hand and they have become synonymous in the minds of voters.

Income Tax ActPrivate Members’ Business

June 18th, 2009 / 5:30 p.m.
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Bloc

André Bellavance Bloc Richmond—Arthabaska, QC

moved that Bill C-290, An Act to amend the Income Tax Act (tax credit for loss of retirement income), be read the second time and referred to committee.

Mr. Speaker, it is a great honour to participate in this debate once again. I say once again because, as I will have the opportunity to explain, this is the second time I am tabling this bill. Of course, it has now changed its number. Previously, it was Bill C-445. It has become Bill C-290.

So I am truly very happy to take part in this debate this evening. I also thank my colleague for having seconded this bill. Once again we are returning to the task and not letting up. I am sure that the people watching us at home right now who are affected by this bill are also very happy that we have come back to it before the summer break to have the first hour of debate on the second reading of this bill.

On May 17, 2007, as I was saying, I took the floor in this House to table Bill C-445. One year later, that bill had passed second reading and was about to be debated in committee. It was going to be submitted to the Standing Committee on Finance when elections inopportunely, as I would put it, interrupted the entire process. The people from our region with whom we worked on this bill were aware of the parliamentary process, whereby the bill and the entire initiative could be interrupted by the calling of an election. This delayed all of our work. We always said it was like building a house: you have to go about it brick by brick, and at some point the job might have to be interrupted. However we began again immediately after the election, and two years later, here I am again with Bill C-290, which reintroduces the full text of Bill C-445. You will recall that that bill was intended to grant a refundable tax credit to taxpayers who are the victims of a failure of an employer or certain employees of that employer to make contributions to a registered pension plan.

Bill C-290 is a bill to amend the Income Tax Act (tax credit for loss of retirement income). That is now its title. I must explain that there has been a minor change to the bill, and that was to its title only. Initially, Bill C-445 referred to a tax benefit, whereas now we refer to a tax credit. The legislative drafters said that it was more correct to speak of a tax credit than a tax benefit. For the rest, this is precisely the same bill, which I tabled again last February after promising to do so. In fact I see this as a commitment. One must always pay attention to one’s election promises. Our people knew very well, at the time of the last election campaign, that I was making this commitment in order to keep it. I had to be re-elected, and fortunately I was. I have kept my promise with the tabling of the bill which now bears the number C-290.

This bill proposes a refundable tax credit, as I said earlier, for loss of retirement income equivalent to 22% of lost revenues. The credit would have no impact on the retiree's income, whether or not he pays taxes. In addition, the credit could always be transferred to a surviving spouse, and it would apply to both a determined contribution plan and to a determined benefit plan. The usual example given is that of a retiree whose income would drop from $30,000 to $22,000. That is a loss of $8,000. If we take 22% of this $8,000 loss, as provided in the bill, a non taxable amount of $1,760 would go to this person whose pension was reduced because his company went bankrupt or closed.

This was what happened with the 1,200 retirees of the Jeffrey mine in Asbestos, in my riding. That is why I spoke of my electoral commitment to these people, naturally. It happened as well to the 300 people working at Atlas Steel in Sorel, in the riding of the seconder of this bill, my colleague from Bas-Richelieu—Nicolet—Bécancour. He too told his fellow citizens that the Bloc was going on the attack. Even if the bill unfortunately died on the order paper when the last election was called, we were not going to let go.

Another thing happened as well. We know how it works, but I want to explain it to our viewers. There is the famous draw, in the case of private members' bills, which allows each member the opportunity to introduce a bill at one time or another. My colleague from Bas-Richelieu—Nicolet—Bécancour and I decided that whichever of us was chosen first would introduce the bill again. I do not want to monopolize this bill. We are working as a team.

It did not matter which colleague introduced it, what counted was to move it forward as quickly as possible. I am not very lucky in the lottery or in draws, but this time I was lucky and I was drawn first. So, I reintroduced the bill, and now we have a chance to debate it for the first hour at second reading before the summer recess. I am therefore very happy. My colleague from Bas-Richelieu—Nicolet—Bécancour was drawn right after me. It would not have made much difference. But I won and so I stand before you. You will still have an opportunity to hear my colleague in a few minutes.

The retirees from the Jeffrey mine and Atlas Steel worked hard and honestly all their life. They contributed to a pension fund that was drastically cut through no fault of their own. This is important to say. We have the option of helping them, and this is what we are trying to do with Bill C-290, by giving them part of their loss. Or we could leave them to their fate. Unfortunately, that is what the people in the Conservative government did with Bill C-445, while the Liberals and the NDP supported the Bloc to have it sent to committee.

I want to remind this House that the Conservatives told us that this bill would cost a fortune. Despite my requests, I never did find out how they came up with figures as outrageous as $10 billion. I can talk about this later if I have time, but I asked the people at the Library of Parliament to do some research. I was told that it would take an absolutely unbelievable catastrophe for the figures to reach such incredible levels, even though the economic situation today is not what it was when I first introduced this bill. Other retirees could certainly benefit from this tax credit, but if more people who have been penalized can benefit, then that is good.

I am certain that my Liberal and NDP colleagues will continue to support us. At least, I hope so. Perhaps there will be speeches later to confirm this. Perhaps the Conservatives have changed their minds since this bill was first introduced in 2007 and will recognize that these retirees deserve the little boost that the measure in Bill C-290 will give them.

I want to give some background on this bill to show how the idea came about. The bill was the result of extraordinary cooperation between the subcommittee of retirees from the Jeffrey mine in Asbestos and from Atlas Steel and my colleagues from Bas-Richelieu—Nicolet—Bécancour and Chambly—Borduas. My colleague from Chambly—Borduas attended the initial meetings here in Ottawa. The retirees came to meet with us, and we asked our human resources and social development critic to come with us to see whether we could find any common ground. Our former labour critic was also present. We wanted to try to see what we could do to help these people. It is all well and good to say that we support them, but can we do something tangible to help them?

When they explained their problem to us we did not have an immediate solution. It would not have been fair to these people, who have certain expectations of their elected members when they tell them their problems, to present a bill and not have a tangible solution. Thus, we took our time and had discussions with them and, finally, agreed that it would be possible to present a bill. My colleague from Chambly—Borduas was very involved from the beginning and quite active in the discussions that led to the idea of a bill for a refundable tax credit for people who lose retirement income when the company closes its doors or goes bankrupt.

Creating a tax credit was the idea of Gaston Fréchette, the chair of the Jeffrey Mine retirees subcommittee in Asbestos, who lives in my riding. We had been talking about this for quite some time. Not only is he very involved in this matter but he is also helping retirees with something else. Mr. Fréchette is working very hard to help people with a legal battle. He is also very involved in his community.

I would have to say that it was rewarding. At the same time, we realized that we might have something that one day could be put on the table as a real solution. As I said earlier, Rome was not built in a day and we had to start somewhere. This is what we finally came up with. The parliamentary process is somewhat difficult and it can also be lengthy. That is obvious from the fact that two elections have taken place since we started this.

As for me, this is my third term. It was during my second that I introduced this bill for the first time, and here we go again. There is no doubt that there will be another vote this fall to see whether there is agreement to refer this bill to committee. That was the solution we had, and there was no other solution anyway for us to get this file through the federal government.

As I said, Mr. Fréchette worked very hard on the first introduction of this bill and we will certainly hear from him again just before we vote on it in the fall, when we will of course be seeking the support of my 307 colleagues in this House of Commons for our bill.

Back when we introduced Bill C-445, Mr. Fréchette sent a letter to each member, as well as taking time to personally phone every Quebec member, regardless of party, soliciting their support for the bill. He also circulated a petition, which originated in my riding, calling for public support for our bill. That was a great success, with more than 2,000 signatures gathered in a relatively short period of time from people willing to sign in favour of Bill C-445.

As I said, exactly the same bill has now become Bill C-290. In my opinion, if people signed the petition on Bill C-445, it is abundantly clear that they still support the demands made in the petition which circulated immediately after the first bill was introduced.

So this has been a team effort involving people from both Sorel-Tracy and Asbestos. There was great solidarity and they focused their efforts on enabling us to advance this idea, introduce it here in the House of Commons, get it through an initial vote and to achieve the right to have it go to committee. I know that the pensioners are prepared to appear before the committee. This is something we have been waiting for for a long time, and I hope that it will become reality when the time comes to vote on it, which will, as I said, likely be in October. It is always a bit risky to set a date, but it ought to be somewhere around that time .

The people who have supported us, the ones who signed the petition, believe that no retiree should have trouble making ends meet because he is not receiving the retirement income to which he contributed all those years.

Since 2003, Asbestos retirees have lost $55 million from their pension fund and $30 million in benefits. With Bill C-290, compensation will be available to retirees whose supplementary pension funds have been cut.

I see that I have one minute left, so I will get to my conclusion. I must say that surviving spouses would also be eligible if their spouse was entitled to part of the pension.

In addition to all the support we have in our respective ridings, we also have the support of the NDP and Liberal members in this House. Also, just recently, Ernest Boyer, the president of the FADOQ network, the Quebec federation of seniors, said:

Too often, in such a situation, we hear the same old arguments: retirees who have a supplementary defined benefit pension fund are very lucky, almost like the bosses who got generous bonuses from their companies, so the Quebec government [or the Canadian government] does not need to assist these so-called fat cats.

He said that on the contrary, they believe these retirees need assistance.

Income Tax ActPetitionsRoutine Proceedings

December 1st, 2008 / 3:15 p.m.
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Bloc

André Bellavance Bloc Richmond—Arthabaska, QC

Mr. Speaker, I am pleased to present a petition signed by nearly 2,000 people calling on Parliament to support a bill that was numbered C-445, which I introduced during the previous Parliament with the support of the hon. member for Bas-Richelieu—Nicolet—Bécancour. The purpose of the bill was to create a refundable tax credit for retirement income losses of 22%, for the victims of these substantial financial looses.

A number of retired employees of the Jeffrey mine in Asbestos in my riding and of Atlas Steels in Sorel-Tracy saw their retirement income drastically reduced after their former employer went bankrupt. Since February 2003, $55 million has been lost in retirement funds and $30 million in benefits for retired workers of the Jeffrey mine, while incomes have been reduced by between 28% and 58% since April 1, 2005, for retired workers of Atlas Steels.

As I present this petition, I can assure the House that my colleague and I remain committed to pursuing the fight to provide justice to the retired workers of the Atlas Steels facility and the Jeffrey mine in Asbestos.

The House resumed from May 26 consideration of the motion that Bill C-445, An Act to amend the Income Tax Act (tax credit for loss of retirement income), be read the second time and referred to a committee.

Income Tax ActPrivate Members' Business

May 26th, 2008 / 7:45 p.m.
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Bloc

André Bellavance Bloc Richmond—Arthabaska, QC

Mr. Speaker, five minutes is a very short time, so I will get right to the point. I would, however, like to thank a few people. First, I thank all the members who participated in the debate. In a democracy it is important to make progress on such issues. I would especially like to thank the hon. members for Bas-Richelieu—Nicolet—Bécancour and Chambly—Borduas. Not only did they take part in the debate, but they also helped draft Bill C-445.

I would also like to thank the Liberal and NDP members who showed common sense, as clearly mentioned by the member who just spoke. They want to see some progress on this issue and refer the bill to committee.

I informed the people of my riding any time amendments were made to the bill. I do not understand the Conservatives' arguments to the effect that it could cost $10 billion. However, if someone provides some evidence of that and if we need to amend or change the bill somewhat in order for it to maintain its substance without costing a fortune, clearly, we would be open to that. I made a commitment to the people of my riding and my colleague from Bas-Richelieu—Nicolet—Bécancour will do the same in his riding. We promised to talk to them and discuss things with them to see if people agree with any proposed amendments. For our part, we are remaining open, as are the Liberals and the NDP, but the Conservative government remains completely uncompromising. It is appalling.

I will continue with my thanks, to keep things on a positive note. Indeed, I am delighted by my colleagues' decision to pass this bill to the next step. That is what matters. We will not give up and we will continue to try to make the Conservatives come to their senses.

I would like to thank those who often go unmentioned and who work in the shadows, our researchers. All of the parties have research services, and in our case Marc-André Roche did an extraordinary job helping us create this bill and making it what it is today—an excellent bill that will help retirees who were shortchanged. Obviously, the House of Commons' law clerks and the people at the Library of Parliament helped as well. We do not often thank them. We do not often talk about them, but we should. As for Marc-André, he is sometimes a night owl. He works at night, and I am convinced that there were times when he was working at three or four in the morning for the workers of Asbestos and Sorel. That deserves a round of applause.

We mentioned their work earlier. The member for Chambly—Borduas spoke about it, but I must do the same. I am talking about the members of the Jeffrey Mine retirees subcommittee in Asbestos and Gaston Fréchette, their president. This man has done an extraordinary job calling all of the members of parliament, signing letters and ensuring that they had the most support possible. Just recently, I was in Asbestos to talk to the Jeffrey mine retirees about everything that has happened to date and where we are in terms of the bill. Once again, there were 120 people in the room to hear what I had to say. Mr. Fréchette had done his job of inviting them; he keeps them incredibly well informed. The Atlas Stainless Steels retirees in Sorel also worked to help develop this bill.

I want to remind members what Bill C-445 is all about. It has to do with a tax credit for loss of retirement income. It would provide a refundable tax credit to a taxpayer in respect of whom an employer and the employees failed to make the contributions required to be made to a registered pension plan. That is what happened with the retirees in Sorel and Asbestos. For example, a retiree whose income drops from $30,000 to $22,000 would receive 22% of the $8,000 lost, which would be a non-taxable amount of $1,760 per year. That is not a fortune.

I often use this example because it can be an average of what people lost. It is worth repeating so that we understand that it does not solve everything, but it would at least partially rectify an injustice.

I see that I have only one minute left. This is the first time I have ever made such a short speech in the House.

I can say and repeat to my constituents, to the people of Sorel, that we will not give up on them. I am calling on the Conservative members from Quebec in particular. Mr. Fréchette personally called the Conservative members from Quebec to ask them to support this bill. When you speak out against the Bloc Québécois, you often say that you have an influence in the government and that you can make things happen. Prove it. Make things happen for the retirees of Asbestos and Sorel. We must ensure that the government, that the Conservatives, listen to these people for once. Then, we will be able to say that you have an influence and that you have done something for the retirees.

Until then, unfortunately, the opposite will be true. You still have time. The vote has not happened yet. We are counting on you to have an influence and live up to your claims.

Income Tax ActPrivate Members' Business

May 26th, 2008 / 7:30 p.m.
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Conservative

Dean Allison Conservative Niagara West—Glanbrook, ON

Mr. Speaker, thank you for the opportunity to speak in opposition to this bill sponsored by the member for Richmond—Arthabaska. While the bill touches on a matter of importance to all Canadians' retirement income, it does so in a manner that is inconsistent with sound pension and tax policy. We have been hearing many concerns from seniors lately, especially those on fixed income, about talk among the official opposition to make them pay new taxes, taxes that could make it more expensive for them to buy food, heat their homes, visit their grandkids, and so much more.

Bill C-445 attempts to address another concern of seniors, shortfalls in pension income. However, as I mentioned earlier, this bill does so in such a way that it raises serious issues with respect to pension and tax policy while disregarding the fact that our retirement income system remains sound and effective.

Canada's retirement income system is based on three pillars. The old age security, OAS, and the guaranteed income supplement, GIS, programs provide a basic minimum income guarantee for seniors. The Canada and Quebec pension plans, CPP and QPP, ensure a basic level of earnings replacement in retirement for all working Canadians.

The system of tax deferred savings in registered pension plans and RRSPs encourages and assists Canadians to save for retirement to supplement their public pensions. It has been recognized that Canada's retirement income system has helped reduce the incidence of low income among seniors and it ensures that Canadians achieve an adequate retirement income to maintain their living standards.

While most acknowledge our retirement income system is effective, sustainable and sound, our Conservative government has worked to improve it even further. Budget 2006 doubled the amount of eligible income that can be claimed under the pension income tax credit to $2,000. This is the first time the credit amount has been increased since it was introduced in 1975.

Budget 2006 also provided funding relief for federally regulated defined benefit pension plans by introducing several changes that will help re-establish funding for federally regulated defined benefit pension plans in an orderly fashion, while providing safeguards for promised pension benefits. To improve work and savings incentives, budget 2007 increased the maximum age from 69 to 71, by which Canadians must convert their RRSPs to registered retirement income funds, RRIFs, and begin receiving pension payments.

As well, budget 2007 announced tax changes to permit employers to offer more flexible phased retirement programs in order to retain older experienced workers and ease succession planning pressures. Budget 2007 also confirmed the tax fairness plan announced in the fall of 2006 which increased the age credit amount by $1,000 and permitted pension income splitting.

We continued to make improvements for seniors in budget 2008. In particular, this year's budget proposes to invest $60 million per year to ensure that low income seniors who work can realize greater benefits from their employment earnings through an increase in the guaranteed income supplement, GIS, exemption to $3,500 of employment earnings. This means that those who earn up to $3,500 per year from employment, the average amount earned by GIS recipients, will have their earnings fully exempted without any reduction in GIS benefits. This encourages labour market participation and provides support for low income seniors.

This is something we heard as we were looking at the employability study. As we went across the country, we heard from seniors that they would like the opportunity to still participate in the labour market, but they do not want that income to be clawed back. Once again, this shows that this Conservative government has been listening to what seniors are looking for. This will enable them to work longer and not have all their income clawed back.

In addition, budget 2008 proposed a number of provisions to significantly enhance the flexibility for holders of federally regulated life income funds, LIFs, to withdraw funds from those plans. These provisions will ensure that LIF holders will have the flexibility they need to manage their retirement savings according to their circumstances, better reflecting the wide range of choices available to seniors today.

Budget 2008 also announced the introduction of the tax-free savings account, the TFSA, a benefit to all Canadians, especially our seniors. The TFSA will provide an additional general purpose savings vehicle to complement existing registered savings plans. It will be a flexible savings account to allow Canadians to earn tax-free investment income to more easily meet their lifetime savings needs.

For seniors, one of the key features of the TFSA is that neither investment income earned in a TFSA nor withdrawals will affect the person's eligibility for federal income tested benefits and credits, such as OAS and GIS benefits. The TFSA will also provide seniors with a savings vehicle to meet any ongoing savings needs. Little wonder when commenting on budget 2008 the Canadian Association of Retired Persons thanked our government for “listening to many of its recommendations over the years and taking steps in the right direction”.

Canadians can see that the government has worked to ensure that the retirement income system is responsive to the needs of savers, pensioners and seniors.

This brings me to the matter at hand, Bill C-445. This bill would be extremely costly. In fact, according to the Department of Finance, it would cost about $10 billion, as the bill would effectively provide a refundable credit on the full amount of registered pension plan benefits received by most retirees. Clearly, it would not be feasible to support such a costly measure.

Moreover, not only would the measure represent an unjustifiable transfer of resources from all taxpayers to those receiving pension benefits, it would undo the hard-earned results of responsible fiscal management and put at risk the sustainability of the tax relief and investments that this government has introduced. For this reason alone, the bill should not be supported.

More than that, to adopt the measures proposed in this bill would not be good pension or economic policy and certainly would not be fair to the taxpayers of this country.

This bill would place on the Government of Canada's shoulders the responsibility for providing compensation in respect of all pension plans that reduced pension benefits. However, the Government of Canada is responsible for pension benefit standards for plans sponsored by federally regulated employers only. Since provinces are responsible for the protection of pension benefits for plans sponsored by provincially regulated employers, the onus placed on the Government of Canada for such compensation would be unjustified.

The best way of ensuring that promised pension benefits are secure is to have healthy plans with good supervision. At the federal level, pension plans are regulated under the Pension Benefits Standards Act, 1985 and are supervised by the Office of the Superintendent of Financial Institutions. The superintendent's mandate is to protect the rights and interests of plan beneficiaries. The PBSA sets forth a number of requirements in respect of the funding and administration of pension plans.

Providing any kind of guarantee or compensation for pension benefits, whether through the tax system or otherwise, is potentially costly for taxpayers. In addition, as I mentioned earlier, it raises issues of fairness, given that the costs would be borne by all taxpayers, while the benefits would accrue only to a minority of those participating in pension plans.

In short, a refundable tax credit in respect of shortfalls of pension income would not be the best way to promote the security of pension benefits. It would create undesirable economic incentives for pension plan sponsors and would be an improper use of our tax system. It would also be potentially costly and unfair in its application. Therefore, I urge members not to support this bill.

Income Tax ActPrivate Members' Business

May 26th, 2008 / 7:10 p.m.
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NDP

Chris Charlton NDP Hamilton Mountain, ON

Mr. Speaker, I am delighted to participate in tonight's debate on Bill C-445 as the NDP critic for seniors and pensions.

Let me begin by thanking the member for Richmond—Arthabaska for bringing this bill forward. For those who may have just tuned into the debate, let me just take a moment to remind television viewers of what we are debating.

Bill C-445 would grant a refundable tax credit equal to 22% of the reduction in pension benefits experienced by beneficiaries of registered pension plans, other than trusts, who suffer a loss of pension benefits, normally when their pension plans are wound up in whole or in part. It applies both to defined benefit plans and defined contribution plans.

Without the legalese, what that essentially means is that if a retiree's pension income drops from $30,000 to $20,000, let us say, he or she would receive 22% of the $8,000 lost, which would be a non-taxable amount of $1,760.

This bill is very timely. It allows us to discuss pension protection and retirement security on the cusp of a demographic trend that will see almost one-quarter of Canada's population over the age of 65 by 2041.

For some, as the comments made by the Conservative MPs in this debate have made clear, our aging society presents a policy challenge that focuses solely on the need for cost containment, but for more progressive voices it represents an opportunity to re-examine the growing gap between the rich and the rest of us and to make decisions that protect the public interest instead of the interests of the wealthy few.

At a time when more wealth is being created in this country than at any other time in our history, people in Canada are working longer and harder not to get ahead but simply to keep up. In fact, average Canadians today are squeezing 200 more hours of work out of each year than they did just nine years ago.

While a few people at the top are enjoying the benefits of the current economy, everyone else is not. Sure, we have seen the windfall salaries and extraordinary bonuses of CEOs, but wages for everyone else are essentially stagnant or falling. The middle class and its retirees are falling farther and farther behind.

One of the reasons, of course, is tied to what is happening in the economy. In the manufacturing sector alone, our economy has lost over 350,000 jobs since 2002. The forestry sector is similarly being devastated, yet despite repeated calls by NDP members in this House, the government is refusing even to acknowledge the need for creating a national jobs strategy.

It is absolutely essential that the government sit down with leaders from both the labour movement and business to develop a plan to maintain and build both the manufacturing and resource sectors of our economy. Not only are these jobs crucial for sustaining families, but we know empirically that the highest levels of pension coverage are associated with union membership in those jobs.

About 80% of union members belong to workplace pension plans compared to just under 30% of non-union members. With the overall percentage of people who belong to workplace pensions on a continual decline, it is imperative that we continue to fight for unionized jobs and maintain the struggle at the bargaining table for defined benefit plans. It is the only way to ensure predictable retirement incomes for workers.

What is happening now is not sustainable. I am from Hamilton, so I have witnessed at first hand the economic insecurity faced by industrial workers. Every time a plant closes its doors, the pensions and benefits of its workers are threatened. Anyone in this House who has followed the CCAA proceedings at Stelco will know what I am talking about. Sadly, that is but one of many local examples where restructuring or plant closure has created pension uncertainty for workers.

It is time for the government to acknowledge that pensions are deferred wages. They are not bonuses paid to workers at the end of their working lives. They are part of an agreed upon compensation package for hours worked. That is why I was proud to introduce Bill C-270, the workers first bill, in the House of Commons as my very first legislative initiative upon being elected.

As members here will know, Bill C-270 will ensure that workers' wages, pensions and benefits receive super-priority in cases of commercial bankruptcy. If we really want to ensure that workers can retire with dignity and respect, then we must ensure they have an adequate retirement income. Bill C-270 and a federal, employer-funded system of pension insurance are essential to achieving that goal.

At the root of that bill, of course, is the vision that workers must receive the pensions they have earned. That is what is at stake in Bill C-445 as well. For that reason alone, it deserves the support of all members in this House at second reading.

Yes, there are some areas that merit further examination, but the BQ members who have participated in the debate thus far have acknowledged that and have expressed their willingness to explore those issues further at the committee stage. For example, public data detailing the number of pension plan beneficiaries who would be eligible to claim the tax credit proposed in Bill C-445 are not available.

We do know that in 2003 there were approximately three million members of private sector registered pension plans, of which 73% were members of defined benefit plans. However, at present, no one collects data that would assist us in determining the number of pension plan beneficiaries who may be eligible for this type of tax credit.

Therefore, for the government members to suggest that the cost of Bill C-445 is $10 billion is pure conjecture. I would welcome the opportunity in committee to have them share their detailed financial analysis. I suspect that at the moment they would have no such document they could table.

Conversely, the BQ members concede that the bill may impact more than Jeffrey Mine and Atlas Steel in Quebec and the St. Anne Nackawic Pulp Co. in New Brunswick. So be it. Let us send this bill to committee and do the research, but let us not throw out the baby with the bathwater.

This bill simply wants to provide some fairness: fairness for pensioners who find that their retirement benefits are reduced through no fault of their own. That is a laudable goal and ought to be supported by all members of the House.

Yes, this bill represents but one option for providing fairness for retirees. Maybe there are others that would achieve the same goal differently. If there are, let us talk about them at committee.

I believe the members of the BQ are sincere in their objective, which would suggest that they may be flexible on the means for achieving their goal. I, for one, welcome the opportunity to explore any option, including Bill C-445, that would give workers the ability to retire with the dignity and respect they deserve.

What is paramount is that we as policy makers recognize the five keys to solid pensions. First, workers must get the pension that they earned. Second, it should be a given that all workers deserve decent pension coverage. Third, there must be respect for both today's and tomorrow's retirees. Fourth, pension money must work for, not against, workers. Finally, as I said at the outset, we must develop a national good jobs strategy so that a dignified retirement is possible.

If we can all agree on these five principles, then I think the work that we do in committee on Bill C-445 would indeed move the yardsticks in the right direction. Despite the fact that the comments made by the Conservative members thus far in this debate and the equivocation that has been articulated by the Liberal members may call into question their commitment to the rights of workers and retirees in this country, I would like to remind them of a vote that they all cast in this very chamber not that long ago.

I had the privilege of introducing the seniors charter in the House of Commons on behalf of the NDP caucus. That charter, as members will recall, created a road map for ensuring that seniors can retire with the dignity and respect they deserve. One of the enumerated rights in that charter was the right of income security for seniors.

It was passed in the House by a vote of 231 to 52. Obviously we in the NDP voted for it unanimously, but so did all of the Conservative and Liberal MPs. Ironically, it was only the BQ that was opposed.

I call on my Conservative and Liberal colleagues to now walk the talk. If their support of the charter really meant a commitment to its principles, then their vote on Bill C-445 will be the proof in the pudding.

The charter clearly stated that seniors have the right to “income security, through protected pensions and indexed public income support that provides a reasonable state of economic welfare”. Those members voted for the charter, so they must now vote for Bill C-445 and send it to committee. The principles in each are the same.

I cannot wait for the vote because workers and retirees will then finally see who takes the principled position.

Income Tax ActPrivate Members' Business

May 26th, 2008 / 7:05 p.m.
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Liberal

John McCallum Liberal Markham—Unionville, ON

Mr. Speaker, I am pleased to rise here today to debate Bill C-445, An Act to amend the Income Tax Act (tax credit for loss of retirement income).

First, the bill is certainly worthy of study. It would provide a refundable tax credit to retirees whose pension funds had shrunk to the point that they would be unable to pay out what was promised to the retirees. The credit would be worth 22% of the amount lost from the pension fund payouts. For example, if their pension plans were reduced from $35,000 a year to $28,000, they would get a tax credit worth 22% of the $7,000 reduction. In other words, just over $1,500 would be their tax exempt amount.

There are few things that could be more nerve racking for people than being of retirement age and finding out that their pension plan would be unable to pay what they had expected that it would. What can they do at this point? If they are 70 years old, do they go back to work? For many Canadians this is not a realistic option. Instead, what they do is they lower their standard of living. They do not buy their grand kids the birthday presents they really wanted to give them. They move to a smaller home. They do not take vacations. They eat less food. In short, they take all the dreams they have had for their retirement years and make them all a little smaller.

Many seniors experience just this nightmare scenario when, in October 2006, the Prime Minister broke his solemn election promise not to tax income trusts. Many seniors relied on their regular, often monthly distributions from income trusts to help supplement their retirement income and lifestyle. Knowing this, the Prime Minister looked right into their eyes during the last election and promised that a Conservative government would never endanger that retirement income by taxing income trusts. Once he had their votes, however, the Prime Minister's interest in protecting the savings and investments of seniors disappeared.

On Halloween of 2006, he hiked taxes on income trusts by an astounding 31.5%. The resulting market losses over the next two days left the investment portfolios of Canadians $25 billion smaller. Since then, some seniors have had to adjust. They have been unable to enjoy the lifestyle for which they had worked and saved a lifetime.

As one analyst put it in the Saskatoon StarPhoenix:

It's a huge impact for seniors....If you worked 40 years to create that nest egg and in a short time you lose one-quarter of that wealth, it's like going back to work for 10 more years.

That is the government's record on seniors and retirement savings. I hope any member of the House who told a single voter that they would never tax income trusts knows just how much pain and how many sleepless nights they have caused in many households across the country.

As I mentioned earlier, there is a principle contained in Bill C-445 that I think we should all appreciate, helping to ensure that seniors have the support and income they need to retire with dignity. That is why I feel this bill merits further study.

That being said, I also have some concerns as to whether the bill's scope will be limited to the intent that the member for Richmond—Arthabaska has in mind. I have heard some concerns raised, due to the wording of the bill, that the tax credit might be available to almost every retired person who enjoys a defined benefit pension plan. They would do so regardless of whether their own pension plan had recently reduced the benefits that were promised to them under the terms of the plan. There is also a large matter of fairness that must be considered as we consider the bill.

Many millions of Canadians do not have the benefit of being part of a defined contribution pension plan. It is these people with no pension of their own whose tax money will act as a guarantee for the pension incomes of people who do in fact belong to such plans.

A third concern, as the bill now stands, is if it could create a disincentive for people or a company to contribute to their defined benefit pension plan. Why pay the full amount if the government will back up a portion of the plan? I imagine that this certainly is not the intent of the member for Richmond—Arthabaska. He is of course trying to help those who have honestly contributed to their own plan. Nevertheless, I could see some less scrupulous individuals or companies take advantage of these new measures. This will need to be examined in committee

As I mentioned earlier in my speech, there are few things more nerve-racking than having a pension reduced, especially in the years when it is impossible to return to the workforce to supplement that lost income. For that reason, I believe the bill merits further study. We should send it to the finance committee where members can determine if this is the best way to go about helping retired individuals whose pension benefits are reduced.

As I have also indicated, however, the bill raises many questions in my mind. I am not convinced that its scope will be limited to what is intended by its sponsor. I hope these concerns can be alleviated during further study of the bill and if amendments are required to improve the bill, I hope the sponsoring member would be amenable to accepting them.

Income Tax ActPrivate Members' Business

May 26th, 2008 / 6:55 p.m.
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Conservative

Harold Albrecht Conservative Kitchener—Conestoga, ON

Mr. Speaker, I thank the House for the opportunity to resume my comments on Bill C-445. As I indicated earlier, we do not support this proposal as it is fundamentally flawed.

First and foremost, the largest issue with Bill C-445 is the exorbitant cost which would be fiscally irresponsible and threaten Canada's fiscal health.

A key pillar of Canada's pension system is tax deferred retirement savings, including registered pension plans and RRSPs. These plans provide Canadians with incentives to save for retirement and help bridge the gap between public pension benefits and retirement income goals.

I believe we all acknowledge that the best way to ensure that promised pension benefits are secure is healthy plans with good supervision. At the federal level, pension plans are regulated under the Pension Benefits Standards Act, or PBSA, and are supervised by the Office of the Superintendent of Financial Institutions. The superintendent's mandate is to protect the rights and interests of plan beneficiaries. Moreover, the PBSA sets requirements related to the funding and administration of pension plans.

For example, it requires that plan assets be kept separate from those of the plan sponsor. In the case of defined benefit plans, actuarial valuations of the plan's liabilities must be regularly conducted. If there is a funding deficiency, the sponsor is required to remit to the pension fund, over a certain period of time, amounts by which the estimated liabilities exceed plan assets.

It also provides that contributions owing but not yet remitted to the pension plan are subject to a deemed trust. This means that these amounts are considered separate from the employer's estate in bankruptcy proceedings. Recent changes to federal bankruptcy legislation granted a super priority to employer and employee contributions not yet remitted.

In addition, after widespread consultations on benefit security and the viability of defined benefit pension plans under federal regulation, our Conservative government has brought forward measures to ensure Canada's regulatory framework continues to be responsive to the needs and circumstances of pension plan sponsors.

In budget 2006, we provided funding relief for federally regulated defined benefit pension plans by introducing several temporary measures. These included: allowing solvency payment schedules to be consolidated in order to smooth solvency payment obligations; extending the period of making solvency funding payments to 10 years from 5 years, subject to a condition of buy-in by plan members and retirees; and, extending the solvency funding payment period to 10 years through the use of letters of credit.

Such changes will help re-establish funding for federally regulated defined benefit pension plans in an orderly fashion, while providing safeguards for promised pension benefits. What is more, we will continue to work to ensure the retirement income system is responsive to the needs of workers, pensioners and seniors in a way that is consistent with sound pension and tax policy principles.

Regrettably, the proposal currently being debated would not support the basic objectives of the pension and retirement saving system nor the tax system.

Bill C-445 recommends a government backed guarantee for pension benefits through the introduction of a refundable tax credit for pension income shortfalls, a proposal that would not be good pension or economic policy and would not be fair to the taxpayers of this country.

To begin, such a guarantee could provide a disincentive for employers to properly manage their pension plans to control financing risks. The fact that plan sponsors would not be required to contribute anything whatsoever to cover the cost of the refundable credit would exacerbate this affect.

Providing any kind of guarantee or compensation for pension benefits, whether through the tax system or otherwise, is potentially costly for taxpayers. In addition, it raises issues of fairness given the costs would be borne by all taxpayers while benefiting only a minority of those participating in pension plans.

As well, Bill C-445 would place on the federal government the responsibility for providing compensation in respect of all, and I underline all, pension plans that reduce pension benefits. Placing such an onus on the federal government for such compensation, which is estimated to be in the vicinity of $10 billion dollars, would not be justified.

Before concluding my remarks, I would like to briefly touch on some of the measures our Conservative government has taken to support seniors, specifically through the tax system. I am speaking of measures like passing legislation that will allow, for the very first time in Canadian history, pension income splitting for seniors and pensioners, a significant major change that will benefit seniors.

As Jamie Golombek, a well known taxation and estate planning specialist recently declared, “Pension splitting is probably one of the biggest tax changes in decades, in terms of the amount of tax savings this can mean for pensioners”.

We have done much more, though. We are fully exempting the first $3,500, up from the current maximum exemption of $500 of earned income from the guaranteed income supplement calculation, to extend further benefits to seniors. We are giving older workers the choice to stay in the labour market by permitting phased retirement. We are increasing the age limit to 71 for converting an RRSP to strengthen incentives for older Canadians to work and save.

We are doubling the amount of pension income eligible for the pension income credit. This measure alone will benefit nearly 2.7 million pensioners. We are enhancing the flexibility to withdraw funds from life income funds, also known as locked in pensions, to ensure that holders of such funds have the necessary flexibility to manage their retirement savings according to their own circumstances.

Measures like these I have mentioned are just part of the reasons that seniors and seniors' organizations right across Canada have applauded our Conservative government's initiatives like our recent federal budget, a budget which the former Canadian Association of Retired Persons commended, “for listening to many of its recommendations over the years and taking steps in the right direction”.

The Federal Superannuates National Association, a major organization representing 155,000 federal pension members, also welcomed budget 2008 because it addressed “a number of concerns of seniors. FSNA is particularly supportive of the 2008 budget measures aimed at low-income seniors”.

To recap, I urge members not to support Bill C-445. It would not be the best way to promote the security of pension benefits. Rather it would create undesirable economic incentives for pension plan sponsors and be an improper use of the tax system, not to mention costly and unfair in its application.

The House resumed from May 2 consideration of the motion that Bill C-445, An Act to amend the Income Tax Act (tax credit for loss of retirement income), be read the second time and referred to a committee.

Income tax ActPrivate Members' Business

May 2nd, 2008 / 2:30 p.m.
See context

Conservative

The Acting Speaker Conservative Royal Galipeau

The time provided for the consideration of private members' business has now expired and the order is dropped to the bottom of the order of precedence on the order paper. When we next return to the study of Bill C-445, there will be eight minutes left for the hon. member for Kitchener—Conestoga.

It being 2:30 p.m., this House stands adjourned until Monday next at 11 a.m., pursuant to Standing Order 24(1).

(The House adjourned at 2:30 p.m.)