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.

Speaker's Ruling

[The Acting Speaker, Denise Savoie]

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Income Tax Act

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

[John McCallum, Liberal, Markham—Unionville, ON]

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Bill C-445—Speaker's Ruling

[The Speaker, Peter Milliken]

I am now prepared to rule on the point of order raised by the government House leader and minister for democratic reform on April 8, 2008 concerning the requirement for a royal recommendation for Bill C-445, An Act to amend the Income Tax Act (tax credit for loss of retirement income) standing in the name of the member for Richmond-Arthabaska.

I would like to thank the hon. government House leader as well as the hon. member for Richmond--Arthabaska for their contributions on this issue.

In his intervention, the hon. government House leader stated that refundable tax credits are direct benefits paid to individuals regardless of whether tax is owed or not and are paid out of the consolidated revenue fund. He argued that a legislative proposal creating such a tax credit therefore needed to be accompanied by a royal recommendation.

In support of his argument, he pointed to a Speaker's ruling of June 4, 2007, which did not select a report stage amendment to Bill C-52, the Budget Implementation Act, 2007, that sought to create a refundable tax credit because it required a royal recommendation. He also referred to a ruling of May 11, 2006 from the Speaker of the Senate that ruled out of order Bill S-212, an Act to amend the Income Tax Act (tax relief) on the basis that it increased a refundable tax credit.

In response, the hon. member for Richmond--Arthabaska argued that legislation proposing a reduction in taxes has always been permitted under our parliamentary rules, even if this leads to reimbursements being made to taxpayers.

To support his arguments, he pointed to a ruling by Mr. Speaker Parent of October 16, 1995 regarding Bill S-9, An Act to amend the Canada-United States Tax Convention Act, 1984.

The Chair has carefully reviewed Bill C-445, the previous rulings that were cited as well as the comments from the hon. members and believes that the central issue in the present case is whether the creation of the tax credit found in Bill C-445 is strictly an alleviation of taxation or an authorization to spend for a new and distinct purpose. If it is the latter, the bill would need to be accompanied by a royal recommendation before the third reading motion can be proposed to the House.

The bill standing in the name of the hon. member of Richmond--Arthabaska seeks to amend the Income Tax Act by providing for a tax credit to a taxpayer in respect of whom an employer and the employees failed to make required registered pension plan contributions. Whether or not the tax credit is refundable or non-refundable is the key issue in determining the need for a royal recommendation.

Non-refundable credits are deducted from a person's tax payable rather than being calculated separately: they simply reduce the amount of tax payable by an individual. The amount of the credit is limited to the amount of the tax payable.

This is not the case for refundable tax credits, which are unique in the Income Tax Act: they provide for a taxpayer to receive an amount from the government due to a low amount of taxable income and tax payable. Such credits are calculated separately on an income tax return because they are not simply alleviations of taxes otherwise payable.

Bill C-445 is proposing a refundable tax credit. The Chair is of the opinion that the bill would not only alleviate taxation but also potentially allow monies to be disbursed from the consolidated revenue fund, in the event the taxpayer had taxable income for the year that yielded taxes less than the amount of the credit.

The circumstances of Bill C-445 are quite different from those referred by the hon. member for Richmond--Arthabaska in the ruling concerning Bill S-9. There, reimbursements were limited to tax payable. By making a tax credit refundable, Bill C-445 could lead to refunds that are greater than taxes paid. Such spending, for a new and distinct purpose, would need to be accompanied by a royal recommendation.

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

The debate, later today or on Monday, is currently on the motion for second reading and, as usual, this motion will be put to a vote at the close of the second reading debate.

I thank the hon. government House leader and the member for Richmond—Arthabaska for their comments on this matter.

Royal Recommendation — Bill C-445

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

Mr. Speaker, I would like to correct an injustice or perhaps an error on the government's part. In response to the statements made by the Leader of the Government in the House of Commons and Minister for Democratic Reform when he rose on a point of order on Tuesday, April 8, 2008, I would suggest to the Chair that Bill C-445 does not require a royal recommendation.

It is important to understand that this bill amends the Income Tax Act to provide a 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. This bill seeks to help retirees who have lost retirement income.

According to a ruling by the Chair on October 16, 1995 about Bill S-9, a tax reduction would not contravene Standing Orders 79 and 80. The Chair at the time said this:

The bill will also have the effect of granting some tax relief retroactively and there may be some reimbursements payable for taxes paid under the law as it now reads, should Bill S-9 be passed by the House and receive royal assent.

The bill does not appropriate tax revenue, but rather exempts or reduces taxes otherwise payable, in some cases retroactively.

...

In conclusion, Standing Orders 79 and 80 have not been contravened, as Bill S-9 neither imposes a tax nor appropriates money for any purpose. Since the bill relinquishes funds it might otherwise have gained, it is not appropriating money but forfeiting revenue it would have raised without such changes.

It seems to us that this is the same, because it would reduce the tax revenues, as permitted by the Standing Orders. The Speaker will have to consider the fact that this measure seeks not to create a specific program to help workers who have lost their pension funds, but to enable citizens who have paid taxes their whole lives to benefit via tax credits.

This fiscal measure will result in a reduced tax burden on individuals whose retirement income was downsized because their retirement plan was in a deficit situation when the company that employed them ceased operations.

Take, for example, the 1,200 Jeffrey mine retirees in Asbestos, in my riding. Since February 2003, these retirees have lost no less than $55 million from their pension fund and $30 million in benefits. As a result, a retired worker who was supposed to collect $30,000 can now collect only $22,000. When my Bill C-445 comes into force, retirees will receive 22% of the $8,000 lost, a $1,760 tax credit.

I could also have talked about the workers at Atlas Steel in Sorel, who are struggling with the same problem.

If this bill is passed, all retirees who have been victims of this kind of situation will be able to get back some of the money lost as tax credits—that is important to mention. This will amount to reduced revenues for the state, not a new social program.

In conclusion, I am sure that this explanation will enable the Speaker to reconsider the need for a royal recommendation on Bill C-445.

Mr. Speaker, I have faith in your good judgment. I believe that you will come to an enlightened decision in favour of workers, justice and democracy.

Royal Recommendation--Bill C-445 and Bill C-490

[Peter Van Loan, Conservative, Leader of the Government in the House of Commons and Minister for Democratic Reform]

Mr. Speaker, I rise on a point of order. I want to speak to the question of the need for a royal recommendation on two private members' bills.

On March 11, 2008, you noted that the spending provisions in two private members' bills appear to infringe on the financial initiative of the Crown. You invited members to make arguments on whether those bills require a royal recommendation. That is what I intend to do at this time.

The two bills are Bill C-445, An Act to amend the Income Tax Act (tax credit for loss of retirement income), and Bill C-490, An Act to amend the Old Age Security Act (application for supplement, retroactive payments and other amendments).

Let me begin with Bill C-445. This bill would create a new refundable tax credit for the loss of retirement income.

Refundable credits are direct benefits paid to individuals regardless of whether tax is owed or not and are paid out of the consolidated revenue fund. As a result, any legislative proposal to create a refundable tax credit requires a royal recommendation.

I would draw to the attention of the House two recent rulings wherein the Speaker of the House and the Speaker of the Senate concluded that creating or increasing a refundable tax credit requires a royal recommendation.

On June 4, 2007, there was a Speaker's ruling that a proposed amendment to Bill C-52 to create a refundable tax credit could not be selected for report stage because the amendment required a royal recommendation.

On May 11, 2006, the Speaker of the Senate ruled that Bill S-212 was out of order because it would have increased a refundable tax credit. The Speaker of the Senate stated:

--bills proposing to alter refundable tax credits need a Royal Recommendation.

This is because the payouts that will be made to taxpayers, who are entitled to claim them, must be authorized. This authorization is the Royal Recommendation. These payments can only be made from the Consolidated Revenue Fund; they are expenditures of public money.

Since Bill C-445 would create a refundable tax credit, it needs to be accompanied by a royal recommendation.

Now, in regard to Bill C-490, this bill proposes a number of changes to the old age security program which would result in increased spending and would therefore require a royal recommendation.

Clause 1 of Bill C-490 would apply to a person who ceases to have a spouse or common law partner because of the spouse's or common law partner's death and would provide that person with the old age security pension that would have been payable to the person's spouse or common law partner, for a period of six months. This extension of benefits would be a new program requirement, which would result in additional spending.

On December 8, 2004, a Speaker's ruling in the case of Bill C-278 concluded that a similar extension of benefits for the employment insurance program constituted a new and additional requirement for spending, and therefore required a royal recommendation.

Clause 2 of Bill C-490 would eliminate the requirement to make an application for a supplement for old age security benefits. Formal application is needed since the information available from the Canada Revenue Agency is sometimes insufficient to determine eligibility. This change would result in benefits under the old age security program being provided to persons who otherwise would not be eligible to receive them. This would be a new program requirement that would require additional spending.

On October 24, 2005, a Speaker's ruling with respect to a provision in Bill C-301, dealing with other proposed retroactive payments under the old age security program, concluded that:

Bill C-301...proposes to alter the process by which compensation is awarded to old age security recipients in the manner that retroactivity is handled.

Clauses 2, 3 and 4 remove the requirement that the recipient must make an application before they can receive a payment...This changes the conditions of the compensation process and creates new or additional spending.

Clause 3 of Bill C-490 would increase the guaranteed income supplement monthly benefit by $110. The Department of Human Resources and Social Development estimates that this change could cost up to $2 billion a year. This would constitute additional spending for a new and distinct purpose and would therefore require a royal recommendation.

Clause 6 of Bill C-490 would provide for retroactive payments where a person has not received a supplement, or a portion of a supplement, to which that person would have been entitled under the act.

On October 24, 2005, a Speaker's ruling on the retroactivity of payments in the case of Bill C-301, respecting the monthly guaranteed income supplement under the Old Age Security Act, concluded that:

--retroactivity is limited by the date upon which the application was made. Late applicants may only be eligible for the period dating from the application. It would appear then that this modification authorizes increased spending which would require a royal recommendation.

The Department of Human Resources and Social Development estimates that Bill C-490's provision of unlimited retroactivity for guaranteed income supplement monthly benefits could represent an initial lump sum payment to beneficiaries of up to $6 billion.

In conclusion, Bill C-490 would result in increased spending for the old age security program in the new and distinct ways I have just outlined. The bill therefore requires a royal recommendation.

Private Members' Business

[The Speaker, Peter Milliken]

The Chair would like to take a brief moment to provide some information to the House regarding the management of private members' business.

After a replenishment of the order of precedence, the Chair has developed the practice of reviewing the items there so that the House can be alerted to bills which, at first glance, appear to infringe on the financial initiative of the Crown. The aim of this practice is to allow members the opportunity to intervene in a timely fashion to present their views about the need for a royal recommendation.

Accordingly, following the March 3 replenishment of the order of precedence with 15 new items, I wish to inform the House that two bills give the Chair some concern as to the spending provisions they contemplate. They are: Bill C-490, An Act to amend the Old Age Security Act (application for supplement, retroactive payments and other amendments), standing in the name of the member for Alfred-Pellan; and Bill C-445, An Act to amend the Income Tax Act (tax credit for loss of retirement income), standing in the name of the hon. member for Richmond—Arthabaska.

I would encourage hon. members who wish to make arguments regarding the need for a royal recommendation in the case of Bill C-490 and Bill C-445, or in the case of any of the other bills now on the order of precedence, to do so at an early opportunity.

I thank the House for its attention.

The Chair has notice of a question of privilege from the hon. member for Ajax—Pickering. I will hear him now.

Income Tax Act

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

moved for leave to introduce Bill C-445, An Act to amend the Income Tax Act (tax credit for loss of retirement income).

Mr. Speaker, it is a privilege to introduce this bill today on behalf of thousands of retirees who have been cheated because their employer failed to assume its obligations with respect to their retirement plan, or because it stopped fulfilling those obligations.

In particular, there is the case of retirees from the Jeffrey mine in Asbestos, in my riding, Richmond—Arthabaska, and retirees from Aciers Inoxydables Atlas in Sorel-Tracy, in the riding of my colleague from Bas-Richelieu—Nicolet—Bécancour, whom I would like to thank for his support in this matter.

I would also like to thank my colleague from Chambly—Borduas, who met with these retirees, and drafted this bill with them—which is important to note—to provide a refundable tax credit for the loss of retirement income.

Of course, I hope to have the support of all members of this House to help these retirees, who have become victims, recover part of the money they have lost.

(Motions deemed adopted, bill read the first time and printed)