Bill C-445 (Historical)

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

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.

Income tax Act

[André Bellavance, Bloc, Richmond—Arthabaska, QC]

moved 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.

Mr. Speaker, I hope that you do not get the feeling that I am always talking, since I just spoke during another debate. I want to say that this bill is particularly close to my heart and that I am moved today as I speak to this issue, not only because this is my bill, but because a number of people worked on this bill. These people deserve our consideration, and that is why we drafted such a measure.

I will briefly explain Bill C-445, An Act to amend the Income Tax Act (tax credit for loss of retirement income). 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. It was introduced at first reading on May 17, 2007. Today, nearly one year later, we are ready to debate it at second reading. It is making good progress. We hope that the bill will move quickly through Parliament so that the people affected get what is coming to them.

I will give a brief account of how this bill came to be. In my riding, the Jeffrey mine, a chrysotile mine, went bankrupt, throwing many people out of work. Unfortunately, their retirement fund also disappeared like snow in the sun because there was a loophole when the company went bankrupt. People lost a great deal of money in all this. For years, Jeffrey mine retirees used every possible means to obtain some compensation. The Government of Quebec gave a certain amount of money at a given point, but it was a one-time contribution that did not cover their losses.

What could be done? These people came to see me to determine what could be done. At the same time, retirees from Atlas Steels, in Sorel, also went to see their MP, who will speak in a few moments. We worked together, along with the member for Chambly—Borduas who worked very effectively on this file, to see what could be done at the federal level to help these people.

Mr. Gaston Fréchette, chair of the Jeffrey Mine retirees subcommittee in Asbestos, in my riding, represents more than 1,000 retirees who worked at the mine. There are about 1,200 in all. In addition, Mr. Pierre Saint-Michel is the chair of the Atlas Steels retirees group, which has just under 300 members. These people and their supporters—there are many—truly worked with us. Mr. Fréchette came up with the idea of a tax credit. We met with them here and we held press conferences in Asbestos and in the riding of the member for Bas-Richelieu—Nicolet—Bécancour, who also participated in these discussions. Together, we came up with the basis for Bill C-445.

When I said that this was an issue close to my heart and that I was moved speaking about the bill, it is because I saw these people wrack their brains, approach us and ask what we could do to help them. And then they worked on the bill with us so that we could introduce it. I would therefore like to thank not only Mr. Fréchette and Mr. Saint-Michel but all those individuals and retirees who helped out. I would like to extend a very warm thank you to the members for Bas-Richelieu—Nicolet—Bécancour and Chambly—Borduas because, without them, there would not be a bill.

I would like to briefly explain what this bill will do once it comes into force. As I was saying, it would create a refundable tax credit for loss of retirement income. Many retirees have seen their income drop because their retirement fund was running a deficit when their company ceased operations. That is what happened to people who retired from Atlas Stainless Steels, which belongs to Ontario's Slater Steel, and from the Jeffrey mine in Asbestos, closer to home. To help retirees caught in this situation, we propose creating a refundable tax credit for loss of retirement income.

This refundable tax credit, which would amount to 22% of lost income, would not affect retirees' income, whether or not they pay income tax. The credit would also be transferrable to a surviving spouse and would apply to both money purchase and defined benefit plans. Accordingly, a retiree whose income drops from $30,000 to $20,000 would receive 22% of the $8,000 lost, which would be a non-taxable amount of $1,760.

We do not believe that retirees should have trouble making ends meet because they are not receiving the retirement income they contributed to for years. That is what happened to retirees from Atlas Stainless Steels in Sorel-Tracy, whose income has dropped between 28% and 58% since July 1, 2005, and is still dropping.

Passing this bill will make it possible for all retirees caught in this kind of situation to recover part of the money lost. Take, for example, retirees from the Jeffrey mine. Since 2003, they have lost $55 million from their pension fund and $30 million in benefits.

Of course, this bill would not be retroactive. My colleagues should understand that when it comes into force, this bill will apply to the previous tax year. We will not be able to go any farther back than that.

Retirees whose complementary pension fund is smaller than it should have been will be compensated, as will surviving spouses, when they are entitled to part of the income.

The tax credit is 22%. Some may wonder where we came up with that figure. It corresponds to the federal marginal tax rate that applies to the middle class. For people whose income is between $36,000 and $72,000, the tax rate is 22%. That is where we came up with that percentage.

The tax credit is refundable so that everyone can take advantage of it, even those whose incomes are very low and who do not pay taxes. It is a matter of social justice for us. We thought about this. I know that this morning, a ruling was unfortunately made concerning royal assent. From what I understand, if the tax credit had not been refundable, the decision would have been different. We are bound by the royal assent, but I hope that the government will listen to reason.

We made this choice thinking of the poorest members of society. We knew that some people had lost their retirement income, and that some of them had even less money than others. A non-refundable tax credit would have benefited only those with more money. Some people would have been eligible, but I think, unfortunately, that most of our retirees would not have been able to take advantage of the tax credit. That might have been a step in the right direction, but I think it would have been unfair to do it that way. That is why we went with the idea of a refundable tax credit in the bill.

I just explained that low-income people would have essentially been left out. The elected members, at least these three members, as well as the people from the two retiree committees I mentioned earlier, felt that the bill should apply to everyone, especially the least well off. I would like to congratulate the members of the retiree committees who were also thinking of their less fortunate colleagues.

We have to determine how many people this will affect in Quebec. I have heard rumours that the government thinks this measure would take a big chunk out of the consolidated revenue fund. I can say that in Quebec, we have found only two cases where the bill would help now-retired victims of business closures. I am referring to the two cases we have been talking about since the beginning of this debate— Atlas Steels in Sorel and the Jeffrey mine in Asbestos. These are victims of very exceptional cases—I do not know if we can call them very exceptional, but exceptional at the very least—that should never happen again.

Take Quebec for example, again. The Quebec government changed its legislation to require improved capitalization of money purchase benefit plans. And there should not be many cases that come up in Canada either. In Ontario, there is a government fund set up to replenish the pension plans of employees who find themselves in a similar situation. Luckily, governments have made adjustments so that there will not be any more situations like those that the retirees in Asbestos and Sorel have had to deal with.

We are now seeing measures like this in a number of provinces. Perhaps there are former workers from the St. Anne Nackawic Pulp Company Limited in New Brunswick who might be eligible—our research service looked into this. We could study the file in committee, since we have not been able to determine if this is the case or not. More examples like this could come up, but it would not involve many workers.

But even though this may not affect many people, we cannot simply wash our hands of it and stop worrying. Quite the opposite. One thing is certain: we are talking about very few cases and about exceptional situations. The fact that they are exceptional does not mean that they are any less important for the people involved.

We are talking about people who contributed to their employer's pension fund their entire lives only to end up with almost nothing once they retire.

The intention of Bill C-445 is not to hand out a lump sum payment, but to provide an annual payment equivalent to 22% of the loss. If we take the actuarial deficit of the two retirement funds for the people we are talking about, we expect this to cost roughly $1.7 million in the first year for Quebec. Obviously, that amount will decrease over the years as the number of former employees decreases. For all of Canada this measure is estimated to cost between $3 million and $5 million, again if we take the example of the retirees I am referring to. More may be discovered with the current provincial measures, and if we look back, but note that this measure is not retroactive. In cases such as Singer and others, retirees have been compensated. At first we thought about including those cases in our bill, but they are different cases. This exception really only concerns two industries, two companies in Quebec and maybe one in New Brunswick.

Why does this issue concern the federal government? The federal government has a constitutional right to legislate while respecting the supremacy of provincial and Quebec legislation, of course, with respect to old age pensions and additional benefits, including survivor benefits and disability benefits, regardless of age. That is one of the reasons. The compensation set out in Bill C-445—and I wish to emphasize this—is provided as a tax credit. It has no impact on other government program benefits, does not interfere in any way in provincial social programs and is therefore very respectful of the division of powers. The Bloc Québécois would never show up with a bill calling on the federal government to interfere in provincial jurisdictions. That is why I wanted to emphasize this, in case that was what anyone was thinking, but that would surprise me. Most parties here understand what I am saying. The government has a say in this type of procedure.

There are other reasons as well. With a monetary policy that produces recurring deficits and a fiscal policy that does not allow the government to build up a surplus in good years, Ottawa is also responsible for providing relief for retirees who have to pay the price. These are good reasons why the federal government has a role to play in this issue.

I should mention that the coverage by the local press has been very interesting, and I want to thank the local media that have taken an interest in the cause. I will give just one example, because I want to give my colleague from Bas-Richelieu—Nicolet—Bécancour a chance to make his speech. The local media in my riding have covered the story of the Jeffrey mine retirees for a long time. They are involved in an ongoing legal battle, but that is something quite apart from what we are discussing today. This is an issue that regularly makes the news.

I want to read from the May 26, 2007 issue of Les Actualités, the Asbestos newspaper, which refers to this issue and gives a good summary of the situation. I am reading from the front page:

The 1,200 Jeffrey mine retirees who have been fighting for four years to obtain redress after losing their group insurance are beginning to see the light at the end of the tunnel. A bill that would create a refundable tax credit for the loss of retirement income has just been introduced in the House of Commons.

This was very good news.

In conclusion, I want to extend my warmest thanks to Gaston Fréchette, the chair of the Jeffrey mine retirees subcommittee, for raising awareness in this House. He decided to send letters—signed also by the president of the Sorel retirees—to all the members to make them aware of this issue. Mr. Fréchette, who is one of the retirees, also called all the members from Quebec, regardless of their party, to ask them to support this bill. That is what I am also doing today. I am calling on my colleagues to do justice to these people and support Bill C-445.

[Mike Wallace, Conservative, Burlington, ON]

Mr. Speaker, I want to thank the hon. member opposite for presenting his bill today. It gives us an opportunity to discuss it. I recognize the concern of the Bloc members on the issue of helping seniors, which is also important to us.

The government has been doing a number of things for seniors. For the first time in history, we provided pension splitting for seniors. There is an increase in the budget of the new horizons for seniors program of $10 million to raise awareness of elder abuse and other issues they face, including fraud. We are giving older workers the choice to stay in the labour market by permitting phased-in retirement. We are doubling the amount of pension income eligibility for the pension income credit, which benefits nearly 2.7 million pensioners.

In his speech, I heard the member talk about the costs of the two, possibly three, locations that he was referring to, and it is not retroactive. I did not hear any long term projections of what this may cost the Government of Canada over the years. If it applies now, would it not apply in the future? Does he have any sense of what the financial issues might be for the Government of Canada in the future?

I find it interesting that he did try to make a distinction between provincial and federal jurisdictions. When the Bloc members want something from the federal government, it is always very easy for them to justify that it is a federal jurisdiction, but when the federal government tries to do something to help Quebeckers, there is often a push back from that party that it is a provincial jurisdiction and that the federal government should stay out of it.

From a finance point of view, I would like to know, has he studied the long term financial issues in presenting this bill?

[André Bellavance, Bloc, Richmond—Arthabaska, QC]

Mr. Speaker, I was very clear in my speech. I gave figures. When it comes to pension benefits, some people do not get the same as others. We estimate that the entire cost would only be $5 million for the two industries, the two we know about. We did not find others, but there may be a third.

We have to understand that it is a question of retirees who will sooner or later be able to use the tax credit once the bill is passed. Some of them will pass away. In some cases, like in Sorel, retired employees who were unfortunately shortchanged when the businesses closed are no longer there. Spouses who are entitled to a pension could also use a portion of this tax credit.

In total, the entire cost of this measure would not exceed much more than $5 million.

That is my answer to the member's question. In all fairness, this is the type of proposal or bill that everyone in this House should make sure gets passed.

[Louis Plamondon, Bloc, Bas-Richelieu—Nicolet—Bécancour, QC]

Mr. Speaker, I would like to congratulate my hon. colleague on his fine speech. He summarized the problem very well and explained the solution we are proposing for the former workers of Atlas Steels and the Jeffrey mine.

I would like to come back to the previous remarks by the Conservative member who expressed some concerns. Those same concerns regarding costs have been expressed to me and the hon. member for Richmond—Arthabaska. People are wondering if there will be many cases like those. When people say that, they are forgetting that there cannot be others, because the provinces now have legislation to prevent a deficit in such funds.

As a result, we have seen a number of plant closures over the past year, but no other employees have been left in the same situation as those two groups of citizens.

It really is a unique case and one we hope to rectify with this bill. Does the hon. member for Richmond—Arthabaska agree?

[The Acting Speaker, Royal Galipeau]

The hon. member for Richmond—Arthabaska has 15 seconds to answer.

[André Bellavance, Bloc, Richmond—Arthabaska, QC]

Mr. Speaker, with 15 seconds, here is my answer: I agree entirely.

To allay the members' fears, we can provide all the necessary information, if they agree to send the bill to committee. That would obviously be the best solution.

[Ted Menzies, Conservative, Parliamentary Secretary to the Minister of Finance]

Mr. Speaker, I appreciate the opportunity to speak to Bill C-445, a proposal for a refundable tax credit for shortfalls in pension income, which has been introduced by my good friend, the member for Richmond—Arthabaska.

The intention of the member's proposal is somewhat laudable. It seeks to assist Canadians who have seen their retirement incomes negatively impacted by a failed business. Unfortunately, it is fundamentally flawed to such a degree that we cannot support it.

The biggest problem with Bill C-445 is its annual cost, as was referred to previously by my colleague in a question, which is estimated to be approximately $10 billion. Clearly, were Bill C-445 to be enacted, it would have a negative impact on Canada's fiscal position.

This proposal also raises serious concerns with respect to pension and tax policy, while also failing to take into account the multitude of prudent ways we are improving Canada's retirement income system. Again, as previously mentioned, Bill C-445 relates to the tax treatment of pensions and savings, an area that this Conservative government has recognized as a key priority, an important element for economic growth as well as an improvement for living standards.

As I am sure the House is well aware, our Conservative government has implemented an ambitious and aggressive agenda to reduce the tax burden on Canadians by cutting corporate taxes and personal income taxes, cutting the GST and many more. Tax cuts have prompted Canada's competitiveness and improved our standard of living, but tax cuts also spur investment while creating jobs, encouraging economic growth and allowing the freedom for Canadians to save.

Personal savings provide Canadians a means to invest in their own future and improve their standard of living. Savings also bring the peace of mind that comes with the knowledge that funds will be available in the event of an emergency or for future endeavours like starting a small business, purchasing a home, or a child's education.

Our Conservative government has taken major steps to improve incentives for Canadians to save. Most significantly I would point to the introduction in budget 2008 of the tax-free savings account, commonly known in the House as TFSA, whose introduction has been heralded in nearly all corners as an exceedingly positive initiative, perhaps the single most important personal savings vehicle since the introduction of RRSPs in 1957.

Indeed McGill University Professor William Watson praised it as a “great step forward for the country...almost all Canadians will now be able to shelter all their savings from tax”.

TFSA will be a flexible, registered, general purpose account that will allow Canadians to earn tax-free investment income. As the TFSA matures over the next 20 years it will permit over 90% of Canadians to hold all of their financial assets in tax efficient savings vehicles in combination with existing registered plans. In 20 years, relative to the size of today's economy, the tax relief provided by the TFSA will grow to over $3 billion annually.

In addition to the landmark TFSA, our Conservative government has introduced a number of tax measures to improve the pension and RRSP system, such as: doubling the amount of eligible income that can be claimed under the pension income tax credit to $2,000, the first increase since 1975; increasing the maximum age to 71 by which Canadians must convert their RRSPs to registered retirement income funds and begin receiving pension payments; permitting employers to offer more flexible phased retirement programs in order to retain older, experienced workers and ease succession planning pressures; increasing the age credit amount; and permitting pension income splitting. The cumulative effect of these important measures represents nearly $1.6 billion in tax relief every year for pensioners and seniors.

Clearly, this Conservative government has worked to improve the tax treatment of pensions and RRSPs and to make our retirement income system even more effective in meeting the needs of Canadians, and we will do more. However, we must make certain that policies are prudent and consistent with sound pension and tax policy principles.

Regrettably, Bill C-445's proposal to introduce a refundable tax credit for pension shortfalls is neither the most prudent nor 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 the tax system. As well, it would be exceedingly costly and unfair in its application.

I will now expand on the points to which I have just alluded.

Bill C-445 would go far beyond its proposed intent. It would not provide a refundable tax credit in respect of shortfalls in pension income but would instead effectively provide a refundable credit on the full amount of pension benefits received by most retirees.

This is because, as drafted, the proposed credit would be based on the difference between the pension benefits payable to an individual from a registered pension plan and the amount of benefits received by the individual from a retirement compensation arrangement. As a result, the proposed credit would be extremely costly. In fact, it would cost about $10 billion annually. I am assuming that this is why the Speaker ruled earlier today that this private member's bill does require a royal recommendation. I would concur with his decision.

Such a costly measure clearly would not be supportable. Let us make no mistake: it would put Canada into deficit and would put at risk the fiscal health of future generations of Canadians. Regardless of whether Bill C-445 has been drafted properly, its underlying objective is to provide a government-backed guarantee for pension benefits. This would not be good tax or economic policy and would not be fair to the taxpayers of the country.

The tax system is not intended to ensure or compensate individuals for the loss of pension benefits due to the underfunding of pension plans. Indeed, the proposed refundable credit would set a significant precedent for government compensation of shortfalls in expected retirement income in other situations.

Let us consider the example of an RRSP saver or an individual in a defined contribution pension plan who does not achieve the pension income he or she expects because of poor investment performance. Bill C-445 would mean he or she could request that a similar credit or other compensation be provided to help offset such shortfalls.

There are a number of other significant concerns with the proposal. For example, it would effectively mean that the federal government would provide compensation for shortfalls in pension income for provincially regulated plans. Moreover, providing a government-backed guarantee is not the best way to protect pension benefits.

The best way of ensuring that promised pension benefits are secure is to have healthy plans with good supervision. 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 that the costs would be borne by all taxpayers while the benefits would accrue only to a minority of those participating in pension plans.

Therefore, I urge members not to support this fundamentally flawed proposal.

[Rodger Cuzner, Liberal, Cape Breton—Canso, NS]

Mr. Speaker, I am happy to join this debate. I cannot help but make the comparison between what our Conservative government is doing and the same approach that the American Republicans have taken with their interventions abroad. With the $10 billion price tag on this piece of legislation, I think the government wants to “shock and awe” my Bloc colleague into pulling the bill out of the House. I do not think that is going to work in this House.

This is a very important issue. Certainly it is important to make sure that seniors, Canadians who have worked their entire lives, are able to retire with some degree of health, support and dignity. I want to commend my colleague from Richmond—Arthabaska for bringing this legislation forward.

As has been brought up in previous interventions and in the parliamentary secretary's speech, there are aspects of the bill that are of much concern. Certainly, our finance critic is not comfortable with a couple of areas of the bill, and I would like to bring them forward later on in my address. Finance officials also have concerns with how the bill reads and if it is as focused as it should be.

Nonetheless, I want to state on the record that I think it is important to bring this bill forward to committee so that these issues are addressed in committee. That is where we will able to have a full hearing. That is where we will be able to tap into the advice and recommendations from expert witnesses. We think that is where the bill belongs. We will be supporting that.

As I understand it, the bill deals with defined benefit pensions. When seniors retire, they anticipate that the defined package is going to be there for them, but let us say that they are not able to have the income they anticipated, for whatever reason. That certainly would have an impact on lifestyle and on people's ability to provide for themselves and their families.

The bill provides for a 22% tax credit for any lost income. If a person thought he or she was going to be drawing $35,000 and was only able to draw $30,000, then that 22% tax credit would be applied to the $5,000 difference, for about $1,100.

I think this bill deserves to be brought forward and looked at in committee. The member for Burlington made his intervention and talked about all the great tax room that has been given by the government since it came to power, but I will give the government just a little reminder.

I will use this opportunity in debate to remind the government of one tax increase, and that would be the tax increase on income trusts. We all remember income trusts. We remember the Prime Minister, through the 2005 election campaign, looking into the eyes of Canadians and promising outright that there would be no increase in the tax applied on income trusts. Therefore, Canadians felt confident and very comfortable in putting their money into those income trusts, but we know what happened.

On Halloween 2006, the Conservatives pulled the plug. They put the tax on the income trusts. Within two days, $25 billion of money earned by and invested by Canadians was lost from the markets.

Probably thousands of people were directly impacted by this broken promise, by this intervention of a 37.5% tax placed on income trusts. Thousands of Canadians were impacted, and probably millions indirectly, because most pension plans were invested in income trusts. Certainly CPP, which impacts or will impact every Canadian, was heavily invested in income trusts, so it did have an impact on all Canadians. We want to remind the government of that tax increase and the broken promise.

The Saskatoon StarPhoenix summed it up for me with regard to the reality of the income trust tax when it stated: “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 what was said: “like going back to work for 10 more years”. I know seniors, the people who contributed to this country, the people who paid taxes all the way through, the people who are looking to retire with a little dignity. They deserve better. They deserve more.

Here we are talking about Canadians who have pension plans or who have had the opportunity to contribute to RRSPs and prepare a little for their retirement, but I want to remind the government about something else, too, because its members go to great lengths about some of the steps they have taken to help seniors.

The Minister of Human Resources was at committee the other day and he almost separated his shoulder from patting himself on the back. He talked about increasing the amount for someone who receives the guaranteed income supplement. He talked about raising the ceiling as to how much he or she can earn. He thought this would be good for the labour market.

It may have a minimal impact on the labour market, but he talked about how great it is for seniors. How many people who receive the guaranteed income supplement will that have an impact on? Some 4% of Canadians who receive the guaranteed income supplement are able to go to work. So really what the government has done is fail the 96% of Canadians who receive the guaranteed income supplement. They will receive no benefit whatsoever from that intervention.

What really scares me and my colleagues on this side of the House is the rise in food prices and the rise in gasoline prices. We see the cost of living going up, but we do not see any action on the other side to help those seniors who are most vulnerable. We have seen that this measure fails 96% of the seniors receiving GIS.

Mr. Speaker, this coming fall--and mark my words, you will go back and refer to this in Hansard--we are going to have seniors in this country who will be up against it. We are going to see seniors who will have to decide if they will fill their fuel tank, fill their cupboards or fill their prescriptions. It is going to become that stark. The government has to do something.

Certainly I believe we will be able to bring these issues forward when the bill goes to committee for study. We do have some concerns. We will see what the bill looks like coming out of committee.

There are concerns that were shared with me by the critic and members on this side. We want to know if through this bill the government will guarantee all pension funds. Will this act as a disincentive for employers or employees to properly and fully contribute to and manage their funds? That is an important question. Hopefully the expert witnesses will be able to shed some light on that.

For Canadians who do not have a defined benefit package or pension plan, we want to ask if it is fair for them to subsidize this. This is a question that has to be asked.

We want to find out if the bill is worded properly. Does it ensure that it targets only retirees with these pensions?

We do not know if this bill is a proper solution, but it does merit further consideration. We have every confidence that the standing committee will bring forward the appropriate witnesses. We will get answers to these questions and hopefully from those answers we will find out whether or not the bill deserves further support.

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

Mr. Speaker, I rise today to speak to Bill C-445, An Act to amend the Income Tax Act, specifically to provide a tax credit, which we have been hearing about in this debate, for the loss of retirement income. It was introduced by the member for Richmond—Arthabaska and I appreciate that member's concern for the workers of his province and how this bill may help all workers across our country.

However, before I get into my remarks, recently in this debate we heard from the Conservatives a list of all of the things that they have done for seniors. I have one more thing for them to put on their list and that is the $1 billion they owe seniors from the CPI mistake that was made a number of years ago. Each and every senior who is owed that $500 for each year should be addressed by the government and should receive the money. If they owed the government money, they certainly would have somebody knocking on their doors.

Back to Bill C-445, it would grant a refundable tax credit equal to 22% of the reduction in pension benefits experienced by beneficiaries, other than trusts, of registered pension plans who suffer a loss of pension benefits, normally when their pension plan is wound up in whole or in part. It applies to both defined benefit and defined combination plans. This bill certainly will catch the ear of Stelco workers in Hamilton who went through the CCAA bankruptcy protection recently. They saw the sale by their employer of their company and all the insecurity about their pension and benefits. They had to deal with this stress for two years.

Seniors who have already retired and those who are about to retire have worked hard. They have played by the rules all of their lives and now they need their pension plans. They need their income to retire in dignity and respect. They too often find their retirement benefits reduced through no fault of their own.

I will not suggest this bill would address fully the problems they will face but it offers some modest fairness for retirees.

In addition to Bill C-445, we in the NDP call on the federal government to explore other options to help retirees which should be based on the premises: that all workers deserve decent pension coverage, that all workers deserve to get the pension they have earned, that we show respect for today's and tomorrow's retirees, that retirement investments must work for and not against workers, and that the government has a national job strategy so that dignified retirement is possible.

A recent polling of Canadians found that 73% are worried about not having enough money to live on after retiring. Canadian workers worry about the solvency of their private pensions. They worry about the adequacy of both CPP and public income supports.

They know, for instance, that inflation does far more damage to retirees than any other group of Canadians. Over 250,000 seniors today live under the poverty line, under that cutoff point. Too many retirees are living in poverty. It is the responsibility of the government to protect seniors and not leave them hung out to dry.

A particularly alarming statistic is that one-third of seniors, most of whom are women, have little income outside of OAS and GIS, and have an average annual income of around $12,000. How are these seniors expected to live in dignity on barely $1,000 a month?

How are they expected to afford to stay in their family homes or expensive senior retirement residences or afford the cost of living and utility bills, not to mention the high price of gasoline for those who can still afford a car?

How are they expected to afford the medications each month, especially since the government will not provide a national pharmacare program? How are seniors expected, after all of those expenses, to meet the high cost of food?

Since the middle 1990s, according to the National Advisory Council on Aging, seniors' income levels have reached a ceiling and are no longer keeping pace with the rest of Canadians. In fact, the mean income of seniors rose only $4,100 compared to other Canadian households, which rose $9,000 between 1997 and 2003. Thirty per cent of families today have no private pension assets at all.

In this age of insecurity and tremendous job loss in our manufacturing sector, as well as the pulp and paper sector, the federal government must look beyond today and beyond the next election cycle. It is time for some long range planning in conjunction with our defined pension plans as to how to support workers in their retirement years.

In my riding of Hamilton East—Stoney Creek, I hear repeatedly about the moneys owed to seniors that I spoke about before. Regarding the error in the cost of living, we should imagine what a $500 per year repayment would do for somebody with an income of $12,000 per year and what it would mean to them.

The Conservative government has handed corporate Canada $14 billion in tax breaks each and every year, and only a pittance to seniors. When seniors owe tax to the government, they have to pay or they are charged interest that compounds daily. However, when the government owes money to seniors, it simply dismisses those seniors and tells them that they do not matter.

The Conservatives tout their two point cut to the GST and the $60 billion they took out of the fiscal capacity of the Government of Canada to respond in a reasonable way to the plight of seniors. Seniors across Canada have to choose between buying medication and eating. That is disgraceful and the government should be ashamed.

The government should cancel the corporate tax cuts and use the money to give seniors a reasonable raise in their CPP benefits. The Conservatives should follow the lead of the NDP and start a national prescription drug program for all Canadians.

The Conservatives should follow through on the promises they already made to seniors and implement the seniors charter, created by my colleague from Hamilton Mountain.

In June 2006, nearly two years ago, the House passed the NDP's seniors charter, which called for the government to work with the provinces to rectify decades of underfunding of seniors programs. The seniors charter called for the recognition of older Canadians as creative, active and valued members of our society.

The charter would have enshrined the right of every senior living in Canada to the following: income security, through protected pensions and indexed public income support that provides a reasonable state of economic welfare; housing, through secure, accessible and affordable housing; wellness, through health promotion and preventive care; health care, through secure, public, accessible, universal health care, including primary care, dental care, home care, palliative care, geriatric care and pharmacare; self development, through lifelong access to affordable recreation, education and training; government services, through timely access to all federal government programs and services, including family reunification.

It would create a seniors advocate to: conduct public education and awareness initiatives on the rights of seniors; ensure that all new and revised policies and programs affecting seniors receive public input from older persons; require that all new policies and programs affecting seniors are announced with specific timelines for implementation; act as an ombudsman for seniors with respect to all government services and programs in making recommendations as appropriate that assist seniors; and that would advocate and report annually to Parliament on government policies and programs affecting seniors, including the effectiveness of federal funding related to the needs of older persons.

I wonder how many members present have had to eat cat food. I read an article on how seniors choose cat food because of its low price in order to get some protein because they simply cannot afford to purchase groceries. That is one of the great shames in this country. We have to do better. The government has to do better for our seniors and this is a national disgrace that can no longer be ignored.

[Louis Plamondon, Bloc, Bas-Richelieu—Nicolet—Bécancour, QC]

Mr. Speaker, it is also a pleasure for me to speak at second reading to Bill C-445, which was introduced by my colleague for Richmond—Arthabaska and which I was honoured to second. I would first like to thank him for all the work he has done with me to prepare this bill. I would also like to thank the member for Chambly—Borduas, the Bloc Québécois researchers and the officers of the House of Commons who advised us on the legal aspects and the drafting of the bill.

I would like to congratulate the member for Richmond—Arthabaska because he expressed in his speech the very thoughts of the former employees of Atlas Steels and the Jeffrey mine. These people were treated unfairly and they were victims. This request is not based on a whim. They want to redress a wrong. He explained the financial blow dealt to these individuals who had already retired in the belief that their pensions were guaranteed for the rest of their lives.

I would like to thank the NDP member who spoke just before me. He definitely extended the debate to the complex issues faced by seniors, including health. From the outset, he said he was prepared, together with his party, to support the bill. I thank him. As for the few questions he may have, we will attempt to reassure him when we study the bill in committee.

I would also like to thank the Liberal Party critic whose speech was very clear. From the start, he said that this bill deserved to be referred to committee. He said he had questions, and I understand that. He is entitled to have questions. But I think that he did not completely understand the purpose behind this bill.

The member for Richmond—Arthabaska, the member for Chambly—Borduas and I would be very happy to answer his questions and to appear before the committee. The former employees are also prepared to come and work with us, including Mr. Saint-Michel and the Jeffrey mine retirees' representative, Mr. Fréchette. They will come to explain the situation and I do not think they will have any problem answering the Liberal critic's questions. I thank him for supporting this bill. These two pledges of support, along with the support of all the Bloc members, ensure that this bill will be sent to committee so that it can move to the next stage.

However, the Conservative member's statement surprised me. I did tell several Conservative members from Quebec about this bill. I am not judging them, but it seems they may have forgotten to inform the parliamentary secretary, who spoke earlier. Talking about $10 billion shows that either he is trying to get people worked up about this or he has gone crazy. Imagine: $10 billion! We are talking about some 260 workers in one place and about 900 in another. The total per year would be $1.7 million. These people are not going to live forever. Every now and then, some of them die. They are not young, and a few years from now, this will not cost the government anything. Yet he was saying that it would cost $10 billion. Where did he get that number from?

Perhaps his speech was influenced by the combined deficit of all public and private retirement funds in Canada. If all of those people lost their jobs and were covered by this bill, it would cost $10 billion. What kind of logic is that? It does not make sense. This is a matter of a few million dollars, and we are asking the government to fix an injustice. As I said earlier, it is not as though these workers acted on a whim. We have to demonstrate compassion for workers who have been deprived of income to which they had a legal right.

These people, like all workers, including the members of this House, paid contributions out of their income. The employer also paid, of course. Those contributions went into a fund and, all of a sudden, one third of the money was taken away without giving the retirees a say in the matter.

However, this fund was supposed to be guaranteed. If hon. members who retire were suddenly told, a year later, that their pension was being cut by one third, I think the reaction would be violent or at least very noisy. An injustice has been done and we want to correct it. The people suffering this injustice worked hard for many years. They have managed to build up a strong claim and a bill was born out of this claim.

Like my colleague from Richmond—Arthabaska before me, I would like to pay tribute to Pierre Saint-Michel and Gaston Fréchette and their two teams. They looked for a legal way to provide the workers with partial compensation for their losses. Today, after consulting experts, legislative drafters and House experts, they have finally found a solution to recover some of the loss. They will get that solution if every member of this House sets partisanship aside and understands the need to be compassionate and provide these people with social justice. This gesture, which would cost the government barely a few million dollars in the early years, would allow these people to obtain some compensation for their losses.

Today, I am calling on the Conservative members from Quebec to influence their government. I have chosen to sit as a sovereignist MP with a vision of Quebec sovereignty. They have chosen to sit within a party in power that claims to better defend the interests of Quebec. Well, ladies and gentlemen, now you have the opportunity to prove it.

I am calling on the members for Lévis—Bellechasse, Beauport—Limoilou, Pontiac, Beauce, Jonquière—Alma, Lotbinière—Chutes-de-la-Chaudière, Louis-Hébert, Roberval—Lac-Saint-Jean, Mégantic—L'Érable, Charlesbourg—Haute-Saint-Charles and Louis-Saint-Laurent. They have said they might have some influence. Perhaps the critic and parliamentary secretary who spoke earlier might change his mind when the second hour of debate takes place in early June.

I hope this bill will be referred to committee by a unanimous vote. I ask them to use their influence. It is time for these members to prove they do have some influence and to act to change the parliamentary secretary's speech and their party's vision.

The Liberal members have agreed to refer this bill to committee, and I thank them. The NDP members have also agreed, and I thank them. Of course, the Bloc Québécois will support this private member's bill, and I ask the Conservative members to do the same.

I repeat, this is not a partisan gesture, but an act of human compassion and social justice. I therefore ask that all members support this bill and that, during the next hour of debate in early June, there be only speeches in support of this bill in this House so that we can act to reassure these people following the injustice they suffered a few years ago.

[The Acting Speaker, Royal Galipeau]

The hon. member for Kitchener—Conestoga has the floor for 10 minutes but he has advance notice that it will only be for 2 minutes today.

[Harold Albrecht, Conservative, Kitchener—Conestoga, ON]

Mr. Speaker, perhaps once you hear the beginning of my speech, you will want to extend the time to allow me to get in my entire speech.

Bill C-445, which is sponsored by the member for Richmond—Arthabaska, is a proposal for a refundable tax credit to deal with shortfalls in pension income. From the onset, I will state that we do not support this proposal as it is fundamentally flawed.

First and foremost, the largest issue with Bill C-445 is cost, which the Department of Finance estimated to be approximately $10 billion. Clearly, supporting a proposal with a cost of this magnitude would be fiscally irresponsible and it would threaten Canada's fiscal health.

Furthermore, the proposal also raises serious issues with respect to pension and tax policy and ignores the present state of Canada's retirement income system. Bill C-445 touches on a matter of importance to all workers, the security of their pensions.

This government recognizes that the security of workers' pension benefits is a key element in ensuring the effectiveness of Canada's retirement income system. It has been recognized that Canada has a diversified retirement income system based on a mix of public and private pensions. The old age security and guaranteed income supplement programs, along with the Canada and Quebec pension plans, are considered to be the pillars of that system, ensuring a minimum level of income in retirement for Canadian seniors.

[The Acting Speaker, 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.)

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 Act

[The Acting Speaker, Andrew Scheer]

Order, please. The hon. member for Kitchener--Conestoga has eight minutes left in his remarks. I will ask for a little order so members can hear the hon. member. If members need to carry on conversations, please go outside of the House.

[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.

[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.

[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.

[Yves Lessard, Bloc, Chambly—Borduas, QC]

Mr. Speaker, let us get things straight. First, I would like to remind hon. members that the bill my NDP colleague was referring to interferes in the jurisdictions of the provinces and Quebec. That is why we opposed the bill she was referring to.

Nonetheless, we are pleased that the NDP and the Liberals are voting in favour of studying the bill at second reading stage. The problem is when we get to third reading. I will come back to that later.

First I think we should congratulate and thank the hon. member for Richmond—Arthabaska, for taking this initiative, as well as the hon. member for Bas-Richelieu—Nicolet—Bécancour. They both have done remarkable work. They worked with me on the research that led to this bill.

This was all initiated by the workers themselves, the representatives of former workers who have been and still are affected by this situation and with whom we sympathize, of course. I am talking about those from Atlas Steel in Sorel and the Jeffrey Mine in Asbestos. These people have had the misfortune of seeing their pensions cut significantly. The cuts range from 28%, at Atlas Steel, up to 58%. Imagine, Mr. Speaker, being told on the day you retire that your pension is being cut by 58%. That is what has happened to those workers.

The bill before us amends the Income Tax Act (tax credit for loss of retirement income). We have got this far thanks to the leaders of the groups affected. I am referring to Pierre St-Michel from Atlas Steel, Gaston Fréchette from Jeffrey Mine, and their colleagues from their pension fund executive committee. These people have not only thought about their own situation but also about measures that could be introduced that do not compromise the other workers, that do not compromise the state as such and do not compromise the treasury. We will see this later.

The purpose of this bill is to compensate retirees who suffer pension losses because of their former employer's bankruptcy. The compensation would take the form of a tax credit equivalent to 22% of the loss. Why 22%? Because that is the federal marginal tax rate that applies to middle class people with income between $36,000 and $72,000 per year. That is the taxable base.

This compensation for retirees will also be available to surviving spouses. I am pointing this out for the benefit of those just joining us so that we all know what is at issue in this debate.

Contrary to the utterly false claims of the Conservatives, this bill does not apply to very many people. We found two very specific cases involving those who initiated this measure and possibly one case in New Brunswick mentioned by my NDP colleague earlier.

The people I am referring to—I mentioned them earlier—live in Asbestos and Sorel. What happened to them? There are two types of pension plans: defined benefit pension plans, where the retirement fund goes into deficit when the employer ceases operations, and defined contribution plans, where a business in trouble may give itself a contribution holiday, resulting in the same outcome.

Today, this would no longer be possible, at least in Quebec, because pension funds are now governed by a law requiring that contributions and cash flow always be sufficient to meet the obligations of the fund.

Let us look at an example of how the bill would apply. If a retiree were entitled to a pension of $20,000—which is not very much, but a typical pension for most retirees—but received only $12,000, he would lose $8,000 because the pension fund could not longer pay benefits. If he took advantage of the 22% tax credit on the $8,000 loss, he would receive $1,700 a year. That is not much. A surviving spouse would receive a tax credit of $880 for the year.

This tax credit is refundable so that it applies to all those who suffer because the fund did not have enough money to pay benefits, including people who do not pay tax because their income is too low.

This is a very generous formula that benefits everyone who contributed to the plan. Most of the people who contributed would have benefited from a 22% non-refundable tax credit, but it would have done nothing for people who do not pay tax. This is therefore a generous approach that reflects well on the people who proposed it.

Earlier, I said that this was an inexpensive measure. In fact, it would cost $3 million to $5 million a year, including $1.7 million for Quebec. In the worst-case scenario, if there were measures that applied in certain places, it would cost $5 million. That is the actual cost.

The Conservatives put forward two arguments that I wish to refute right away. First, they argued that Canada may not have a role to play in pension funds. In fact, Canada formulated a request in 1951, which it reiterated in 1964, and that request resulted in a constitutional change giving the Canadian government the right to legislate all forms of seniors' pensions, as long as it did not encroach on provincial laws that took precedence. That obligation was created.

The Canadian government is also responsible for determining the interest rate that applies with respect to financial policy under Ottawa's jurisdiction. As such, a low interest rate puts pressure on funds.

Their second argument had to do with the cost of this measure. The $10 billion figure is utter nonsense. This morning, a Liberal member apologized for mistakenly misleading the House. Now, the Conservatives are deliberately misleading the House. That is very serious. It is wrong to suggest that this measure would cost $10 billion. These people are not credible. If they did their jobs, like they are supposed to, they would see that it will cost between $3 million and $6 million.

We invite our Conservative colleagues from Quebec to vote with us, though they have systematically voted against the program for older worker adjustment, against the guaranteed income supplement, against help for the forestry and manufacturing sectors, and against the application of the Charter of the French Language for federal workers.

In all of those cases, they voted against workers. Now that they have an opportunity to help the—

[The Acting Speaker, Royal Galipeau]

It is with great regret that I must interrupt the hon. member, but I did signal him, twice, in fact.

The hon. member for Niagara West—Glanbrook.

[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.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, having listened to the debate, I want to add a few comments.

It is an interesting bill that would provide a tax credit to a taxpayer in respect of whom an employer or employee has failed to make the contributions required to be made under a registered pension plan. The issue is that there have been cases, and I know members of the Bloc have raised some, where this occurs. The intent of the bill, as I see it, is to mitigate the loss of benefit to a retiree.

In terms of the benefit issue, this is one approach. However, when we have private members' items, the issue is to look at the intent and principle of the bill and then determine whether the mechanics can be changed. I find this bill to be an appropriate instrument to consider whether the existing laws of Canada provide reasonable protection for employees whose retirement income situation has been dealt a blow through no fault of their own and maybe through the negligence of others.

It is not clear to me at this time whether the issue has to do with negligence on behalf of any other party, whether funding and payments need to be made, whether there is an unfunded liability, what happens if there is a surplus or what happens in subsequent years when the investments may change.

I have heard members suggest that this is a very expensive proposition. We know from experience that we can craft any kind of an argument that would take the worst possible scenario and say that this is the amount of dollars that would occur in this particular case and therefore the cost is several billions of dollars, which is not affordable and so we should not do it. That kind of argument does not help the situation because we need to know where the problem is and what we can do under a legislative framework to ensure the benefits would not be totally lost to a prospective employee.

I want to give an example of how we can play with the numbers. One member talked about some things the government has done for seniors and said that we could forget this one because we now have pension income splitting. Now that we have come through the first tax year, under which pension income splitting is applicable, one of the things that has happened is that Canadians who thought they were eligible for this found out that they do not get a benefit.

As a matter of fact, only about 14% of retired seniors have registered pension plan benefits. If we take away all of those who do not have a spouse with whom they could split, that reduces the number of eligible pensioners. If we take out all those who receive a pension but at the lowest tax rate, splitting it, obviously, would not have any benefit.

The economic analysis shows that, after all is said and done, only between 2% and 4% of seniors will actually benefit from this, particularly the highest income seniors. The intent of trying to help low and modest income Canadian seniors by allowing them to split their income is, in fact, not the case. Only a very narrow band of people benefit, which are those who have a significant level of income.

As we can see, there is much to be discussed in this bill. I do not think it should be summarily dismissed as a costly exercise that would have no potential merit or benefit to Canadians in this particular situation.

This bill warrants being passed at second reading and going to committee where we can hear from expert witnesses, hear about the real examples and hear about the real numbers, whether it is $1.3 billion as opposed to $10 million. We have heard such a range here that someone may have put some facts on the table or proposed that certain facts were the case when they are not.

Taking a bill to committee says that in principle this is a matter we should look at. Amendments can be made at the committee stage and further amendments can be made at report stage. If we still do not get it right, at the third reading stage a motion can be moved to revert back to the committee to fix it yet again.

I think we have a lot of opportunities. I do not think this is a situation where we should summarily dismiss a bill because the numbers just do not seem to satisfy some members, for whatever reason. It could very well be that this is just a darn good idea and maybe the government members simply do not like to have anybody else have any ideas that are worth looking into.

I think we will find that the majority of members in this place will be supporting this bill to go to committee so we can find out the facts, develop the arguments, have an opportunity to hear from the expert witnesses, have our questions answered and, if appropriate, amendments can be considered. That is an appropriate way to deal with this bill and I will be supporting it.

[The Acting Speaker, Andrew Scheer]

Since no other members wish to speak, I recognize the hon. member for Richmond—Arthabaska, who has a five minute right of reply.

[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.

[The Acting Speaker, Andrew Scheer]

I would just remind the hon. member to address his comments through the Chair and not directly at his colleagues.

Is the House ready for the question?

[Some hon. members]

Question.

[The Acting Speaker, Andrew Scheer]

The question is on the motion. Is it the pleasure of the House to adopt the motion?

[Some hon. members]

Agreed.

No.

[The Acting Speaker, Andrew Scheer]

All those in favour of the motion will please say yea.

[Some hon. members]

Yea.

[The Acting Speaker, Andrew Scheer]

All those opposed will please say nay.

[Some hon. members]

Nay.

[The Acting Speaker, Andrew Scheer]

In my opinion the nays have it.

And five or more members having risen:

[The Acting Speaker, Andrew Scheer]

Pursuant to Standing Order 93 the division stands deferred until Wednesday, May 28, immediately before the time provided for private members' business.

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.

[The Deputy Speaker, Bill Blaikie]

The House will now proceed to the taking of the deferred recorded division on the motion at second reading stage of Bill C-445 under private members' business.

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

Vote #117

[The Deputy Speaker, Bill Blaikie]

I declare the motion carried. Consequently, this bill is referred to the Standing Committee on Finance.

(Bill read the second time and referred to a committee)

[The Deputy Speaker, Bill Blaikie]

It being 6:18 p.m., the House will now proceed to the consideration of private member's business as listed on today's order paper.