Bill C-290 (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 an individual whose employer, and certain employees of that employer, failed to make the contributions required to be made to a registered pension plan.

[Michel Bédard]

Are you referring to Bill C-290?

Pensions

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

Mr. Chair, I feel it is important to take part in this take note debate on Canada's retirement income system, especially since workers in my riding and most members' ridings have been affected by a very unfortunate situation in recent years, especially the past three years.

It used to be that we were especially concerned about people who had no private pension coverage. When people without private pension coverage reached retirement age—65 for most people or 60 for people who qualified for the Quebec pension plan—they received public pension benefits, of necessity. But few of them had enough money to retire.

Two things happened. With the economic crisis, the economic structure or the problems experienced by companies weakened many pension funds. But they were also weakened when one of the major stakeholders was denied a role in managing pension funds. In the past 10 years, pensioners themselves have been excluded from managing many plans. When companies started tampering with pension plans to try to refloat them, if I can put it that way, by giving the employer a contribution holiday or restricting coverage, one stakeholder was missing every time. So when it became necessary to take measures, most of the time, they were taken and the people who were affected right away were those who were receiving private pension benefits.

This is a reflex that is relatively normal under the circumstances and abnormal in other situations. It is normal because we have a survival instinct. We tell ourselves that we will be retiring later, so we will have time to make up for the shortfall in the fund. We do not worry about the people who are receiving their pension when we make this decision.

I would like to remind members of two specific examples, Atlas Steels in Sorel and the Jeffrey mine in Asbestos. These people ended up in a situation in which the union and the employer agreed that the employer's contributions could be suspended or, in some cases, they agreed upon exceptional measures that meant that insufficient contributions were being made to the pension fund. At Atlas Steels, in Sorel, pensioners saw their pension benefits cut by 20%, 30%, 40%, 50% or 60%. That is huge. You are entitled to receive an amount every year because you and your employer contributed. But then all of a sudden your pension goes from $27,000 a year to $13,000 or $14,000 a year. That is terrible.

These situations happened—and this has not been brought up yet this evening—because a key player was disregarded, someone with an opinion on such situations and especially on the management of a pension fund.

We introduced Bill C-290 to partially fix this situation by creating a tax credit.

This tax credit would allow anyone whose benefits were cut to recover approximately 22% of the money they lost. That is not very much, but it is still a significant amount for people who do not earn much to begin with. But, contrary to expectations, some of the Liberals voted with the Conservatives to deny workers from Jeffrey mine in Asbestos and Atlas Steels in Sorel the right to this measure, which would have helped alleviate financial difficulties.

This evening we are debating measures to confront the new realities of pension plans. However, there is still some ambiguity because no action is coming out of all this talk.

I would like to give an example of the elements of the public pension system. There is old age security for seniors, which is their income security. For many of them, it is insufficient because it is their only income. So the guaranteed income supplement was created to give seniors a decent income on which to live. But then what happened? Some of the people who are eligible have been beaten up by life and a large number of them are marginalized. Some of them are isolated by poverty, others by their low level of education or training or simply because they do not know their rights or have communication problems.

In 2001, we learned that 183,000 people in Canada were in that situation, including 81,000 people in Quebec. Since then, the Bloc Québécois has been on the attack. Our colleague at the time, Marcel Gagnon from Shawinigan, the member for Saint-Maurice—Champlain, led a crusade that allowed us to find many of these people. However, 42,000 have not yet been reached. So they are the people we are talking about.

Our Conservative colleague was saying earlier that seniors only have to apply once. However, in order to apply that first time, they need to know they are entitled to the supplement. The government, on the other hand, knows they are entitled to it, so why not just give it to them?

Over the years, the government has misappropriated a great deal of money, $3.3 million to be precise, that belongs to some of our most vulnerable seniors. That money belongs to them. We need to start with measures like that one. We also need to look at the possibilities being discussed right now in Quebec by unions and seniors' advocacy groups, which are proposing increasing the income provided by public pensions. In Quebec, some people have suggested doubling the Quebec Pension Plan with appropriate deductions and contributions to make that possible. This would give people who are working and do not have a private pension plan the opportunity to participate in a group plan that will guarantee them at least enough income to live with a little dignity when they retire.

This is what people should take away from this evening's debate: we need to take a close look at what we are doing wrong and remain open to what we can do better.

[Luc Desnoyers, Bloc, Rivière-des-Mille-Îles, QC]

Madam Chair, I think that it is important to talk about retirement today. When we look at the economic crisis we have just gone through, we see that hundreds of thousands of workers have been affected and/or have lost their pension. This has had a serious impact on workers.

When plants close or lay off huge numbers of workers, these people find themselves unemployed or in precarious part-time or temporary jobs. Workers who have been laid off and are in unstable jobs, as I said, can no longer pay into any sort of pension plan. They cannot save any money anymore, because they no longer have enough money to save for a comfortable retirement.

The economic crisis also brought us face to face with a pension crisis, something we had not been confronted with in many years. When I talk about a pension crisis, I am referring to pension plans that have been changed, abandoned and lost. We talked about workers from Nortel, AbitibiBowater, the Jeffrey mine and Atlas Steel, to name a few. We could name dozens and dozens of companies that have been forced to change or abandon plans. For example, Nortel workers are losing their pension plan altogether.

People who are close to retirement and are faced with this sort of situation are in serious trouble, because they cannot retire with sufficient income to allow them to live in dignity, face the future and keep on going.

Right now, there is only one segment of society that can afford a registered retirement savings plan. Roughly 27% of people can afford an RRSP in addition to their regular plan. It is devastating.

The Bloc Québécois has made a number of important demands over the years. The Bloc Québécois has always supported initiatives for retirees and seniors in Quebec. It will continue to support measures that will help retirees and seniors.

One of the many things we have done is introduce Bill C-290, to provide compensation to retired workers who have been cheated and whose pensions are cut off when a former employer declares bankruptcy and fails to fulfill its obligation to contribute to the employees' pension plan.

The Bloc Québécois was dismayed to see this bill defeated by the Liberals and the Conservatives. The bill set out to protect the retirement income of workers at a company in bankruptcy. Once again, the Liberals and Conservatives are demonstrating their profound indifference toward workers, especially retirees.

The Bloc Québécois will ensure that retirees are not cast aside by the Conservative government. We have not stopped promoting to the government a series of solutions to protect retirees. We have presented a solid plan with a number of income protection measures, namely that the federal government follow Quebec's lead and take trusteeship over the pension plans of federally regulated bankrupt businesses. This would prevent these pension funds from being liquidated while the markets are at their lowest. We also proposed introducing preferred creditor status for disabled employees who lose their benefits following an employer's bankruptcy and amending the investment act to keep the threshold for automatic review of foreign acquisitions at $300 million. Such a measure would ensure that companies like Nortel would not be sold off at a discount to the detriment of retirees.

The Bloc Québécois is also making major efforts to improve the GIS.

Another proposal is the elimination of the six-month delay for the wage earner protection program. Thus, victims of massive layoffs followed by delayed bankruptcy would be eligible for the severance they are due.

We are also proposing that the contribution limits for pension funds be increased to 125% of the break-even point. This measure would encourage the establishment of a significant pension reserve. The government went back to this after trying to pass the buck to the provinces.

The Bloc Québécois supports supervision of pension plans subject to federal jurisdiction to help avoid high-risk investments, such as investments in the company. Furthermore, companies with insolvent pension plans because of stock market downturns generally have five years to replenish their funds. To counter the effects of the downturn, the government has increased this time frame to 10 years in order to give companies some breathing room, prevent bankruptcy and protect both workers and pensioners. The Bloc Québécois approved this exceptional measure that fosters the survival of businesses.

We are asking for minimum funding requirements to make pension funds less sensitive to market fluctuations. As we can see, there are a number of proposals that should be added to the government's agenda to improve pension plans, should there be one in future.

Canada and Quebec have various pension plans: old age security, guaranteed income security, the Canada pension plan and the Régime de rentes du Québec, which falls under Quebec's jurisdiction. It is important to respect Quebec's legitimate right to its own pension plan.

A number of citizens' groups, retiree organizations and unions, such as the Canadian Labour Congress and the Fédération des travailleurs et travailleuses du Québec, are calling for significant changes to the Régime de rentes du Québec and the Canada pension plan, as well as an increase in the guaranteed income supplement. They believe it is vital that the government move forward with pension fund security reform. We must heed this request by various organizations and propose important changes.

Only the Canada Pension Plan and the QPP were not affected by the recent economic crisis. Other plans were all affected in different ways. As advocacy groups were saying, the advantage of the CPP and the QPP is that they are transferable, universal and indexed. These groups are calling for benefits to be increased from an average of 25% of a person's salary to 50%, since 25% is clearly insufficient. Doubling benefits would help lift retired workers over the poverty line. When future CPP and QPP benefits are increased, the guaranteed income supplement must also be substantially increased at the same time.

The CPP and QPP are secure, stable and indexed, and their administrative costs are minimal compared to those of financial institutions in Quebec and Canada. Improvements such as these would significantly reduce the incidence of poverty among the seniors and retirees who benefit from these pension plans.

We are saying yes to improvements to the public plan. We must conduct an in-depth review of what is being proposed and ensure that all the necessary analyses are conducted. The Canadian Labour Congress and the federations have approaches worth considering.

In conclusion, the proposal, which involves gradually increasing QPP and CPP benefits by increasing contributions and raising the limit on pensionable earnings, is an approach that should be thoroughly examined. It must be done right, through meaningful consultation—

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

Madam Chair, I would like to ask the Conservative member a question about a situation pertaining to private pension plans. One of my fellow members just asked about an aspect of public pension plans, and now it is time to look at private plans.

For economic reasons, some employers were unable to respect private pension plans either in terms of their contributions or the security of funds. We recently introduced Bill C-290, which asked the House to alter tax credits. The purpose of this bill was to help the employees of two companies in particular, the Jeffrey mine in Asbestos and Atlas Stainless Steels in Sorel.

I would like to understand the government's philosophy with regard to the existing protection for private pension plans. I would also like to know how the government intends to help those who lose money on their pensions.

Retirement Income Bill of Rights

[Luc Desnoyers, Bloc, Rivière-des-Mille-Îles, QC]

Madam Speaker, Bill C-574, An Act to promote and strengthen the Canadian retirement income system, “creates a bill of rights for a retirement income system that promotes the goals of adequacy, transparency, affordability, equity, flexibility, security and accessibility for all Canadians”.

The bill introduced by the Liberal member for the Ontario riding of York West establishes a bill of rights that aims primarily to protect individuals who participate in pension plans, whether they are retired or still active in the workforce.

Bill C-574 protects various rights related to pension income, particularly the right to accumulate sufficient pension income and the right to receive complete and accurate information, in a timely fashion, when serious risks become known, specifically, a risk of non-payment or reduction in benefits.

The Bloc Québécois will be proposing an amendment to ensure respect for Quebec's jurisdiction. Private pension plans come under Quebec and provincial jurisdiction, with the exception of federally regulated industries like banking, communications and so on. The same is true of the Quebec pension plan.

The Bloc Québécois wants to avoid any confusion. We believe we must make the necessary amendments to make certain that this bill will not interfere with Quebec's areas of jurisdiction. The Bloc Québécois will propose an amendment to Bill C-574 to ensure that this bill targets only public or private pension plans under federal jurisdiction.

Furthermore, the introduction of this bill is a perfect opportunity to look at the issue of environmental, social and governance risk factors and respect for international treaties.

The Bloc Québécois believes that anyone who contributes to a pension plan cannot conduct a fair analysis of the risks involved unless they are informed of the company's environmental and social responsibility practices in the event that these have an impact on risk and performance.

This is supported by the Canada pension plan and the Caisse de dépôt et placement du Québec, which recognize how important it is for investors to have the information they need regarding the company's environmental, social and governance risk management.

“Corporate behaviour with respect to environmental, social and governance (ESG) factors can generally have a positive influence on long-term financial performance, recognizing that the importance of ESG factors varies across industries, geography and time.

Disclosure is the key that allows investors to better understand, evaluate and assess potential risk and return, including the potential impact of ESG factors on a company's performance.”

And so the Bloc Québécois is proposing the addition of one right, the right to receive information on the retirement fund manager's assessment of social, ethical and environmental criteria during the initial risk analysis for each investment.

Clause 9 states:

Every individual who participates in, contributes to or receives benefits from a retirement income plan shall be entitled to receive, in clear and concise language, all the information the individual requires to understand his or her rights, obligations and choices under the retirement income plan, including...

And this could be amended to include the following:

“Regular disclosure of the list of stocks the retirement fund manager has acquired for the retirement plan. This information may be included in the retirement fund manager's annual report.”

The elected members of the Bloc Québécois, who have always supported demands made by retirees and seniors in Quebec, will continue to support measures that help them.

In addition to numerous other actions we have taken, we introduced Bill C-290, which would offer compensation to shortchanged retirees who are seeing cuts to their pension funds because a former employer has gone bankrupt and is not fulfilling its responsibility to contribute to the pension fund.

The Bloc Québécois is confounded by the rejection by both the Liberals and the Conservatives of its Bill C-290 to protect the retirement income of employees of a bankrupt business.

Once again, the Liberals and the Conservatives are showing their profound indifference towards workers, especially pensioners.

The Bloc Québécois will ensure that pensioners are not ignored by the Conservative government. We have continued to offer the government a series of solutions to protect pensioners. In fact, we have put forward a solid plan with a number of measures to protect their income, one of which would have the federal government follow Quebec's lead and put bankrupt companies' pension plans into trusteeship, when they are under federal jurisdiction. This is done in Quebec, under the Supplemental Pension Plans Act, to prevent these pension funds being liquidated while the markets are at their lowest.

The Quebec pension plan is thus able to take over management of the assets of bankrupt companies' pension plans. The government guarantees the payment of benefits owing to affected employees. However, this amount is adjusted to the solvency level of the pension plans, or their ability to pay all benefits to which contributing employees are entitled.

We have also proposed that preferred creditor status be given to disabled employees who lose their benefits due to a bankruptcy. In times of economic crisis, the declining value of securities diminishes the value of pension funds. If a company goes bankrupt during a downturn, the pension fund will be unable to meet its obligations towards its pensioners. This is not the result of the company defaulting on its normal payments to the pension fund.

Beneficiaries of this type of pension plan provided by companies in financial difficulty have often called for the laws governing bankruptcy to be revised so that pension funds would become preferred creditors in the event of bankruptcy.

The amendment to the investment act in order to maintain the threshold for automatic review of foreign acquisitions at $300 million would ensure that major corporations, like Nortel for instance, are not sold off at the expense of its retired workers. Nortel was sold off piece by piece. The foreign investment act does not force the government to review those transactions. In the case of Nortel, it was a very costly decision, and Nortel's Canadian assets could wind up in the United States and the United Kingdom.

Lastly, I would like to talk about improving the guaranteed income supplement. We are extremely concerned about the fact that over 80,000 Quebec seniors are living below the low-income line. The maximum GIS allowance is not even enough to get seniors out of poverty.

The Bloc Québécois has been working very hard to improve the GIS in order to: increase the guaranteed income supplement by $110 per month; continue paying both pension and survivor benefits, for a period of six months, to a surviving spouse; automatically enrol people over 65 who are eligible for the GIS; ensure full retroactive payment of the GIS for all those who were shortchanged; and increase the surviving spouse's allowance to the same amount as the GIS.

As for the thousands of people who rely on old age security, the federal government has unfairly deprived, and is still depriving, these people of the money owing to them. In order to access the guaranteed income supplement, one must apply. Tens of thousands of seniors in Quebec have been cheated because they did not apply for the GIS as soon as they were eligible.

In closing, the Bloc Québécois supports Bill C-574 in principle , but believes it is important to propose various amendments in order to ensure, above all, that it applies only to federally regulated pensions plans.

Income Tax Act

[Francis Scarpaleggia, Liberal, Lac-Saint-Louis, QC]

Mr. Speaker, I rise on a point of order. I would like to register my support for Bill C-290.

[The Deputy Speaker, Conservative, Andrew Scheer]

The House will now proceed to the taking of the deferred recorded division on the report stage of Bill C-290 under private members' business. The question is on the motion.

The House resumed from October 7 consideration of Bill C-290, as reported (without amendment) from the committee.

Taxation

[Earl Dreeshen, Conservative, Red Deer, AB]

Mr. Speaker, later today the House will vote on Bill C-290.

The Bloc-NDP-Liberal coalition supported proposal would let businesses that underfund their own employees' pension plans off the hook, and would cost $10 billion annually for a new scheme to be paid for with higher and higher taxes on Canadians.

These reckless and costly schemes underline why the coalition is bad for our economy. Can the parliamentary secretary please explain the danger of the coalition's tax-and-spend policies?

The House proceeded to the consideration of Bill C-290, An Act to amend the Income Tax Act (tax credit for loss of retirement income), as reported (without amendment) from the committee.

Finance

[James Rajotte, Conservative, Edmonton—Leduc, AB]

Mr. Speaker, I have the honour to present, in both official languages, the second report of the Standing Committee on Finance regarding Bill C-290, An Act to amend the Income Tax Act (tax credit for loss of retirement income).

The committee has studied the bill and has decided to report the bill back to the House without amendments.

[The Chair, Conservative, James Rajotte]

I call this meeting to order, colleagues.

We'll go right to clause-by-clause consideration of Bill C-290. I will call the clauses in order and ask if there's any debate.

(On clause 1)

[Kevin Page]

I think you're right, though. When you are designing legislation and when we are costing legislation, you want to look at behavioural impacts.

In that context, if there were clarity, including clarity on Bill C-290 as to what the intent is and whether we have the legislation right, we would make some assumptions of what the potential behavioural impacts could be.

But other than that, sir, we stay away from policy recommendations.

[Kevin Page, Parliamentary Budget Officer, Library of Parliament]

Good afternoon.

Thank you, Chair.

I want to thank the committee for the opportunity to appear before you today. FINA members and parliamentarians in general have consistently referred interesting issues to my team, which has kept us busy and challenged.

I have a few brief introductory remarks I would like to make regarding my general process for preparing estimates of the proposed legislative amendments to the Income Tax Act and our specific review of Bill C-290.

Following this, I would be pleased to answer any questions members may have regarding the correspondence I sent to the committee chair on May 14 or any other issues.

I want to begin by outlining the general process by which we prepare cost estimates of legislative amendments to the Income Tax Act proposed by private members. Over the past year, we have received 15 requests and completed 4 cost estimates. All have followed the same general three-step approach.

Step 1 is to prepare terms of reference for the study, which specify timelines, resources and key assumptions to be used. These terms of reference are presented to the requesting parliamentarian or other interested Committee members for approval before any formal work begins.

Step 2 is to identify relevant data, research and expertise that can be used to determine how many taxpayers are currently eligible for the proposed legislative amendment, and how many taxpayers may be induced to change their behaviour to make themselves eligible.

The third step involves completing a reality check with people who actually work in the field and who are familiar with the policy area. After the calculations are completed and the draft report prepared, we then examine whether results are reasonable given what policy experts know about this domain.

For example, when I prepared a recent cost estimate regarding Bill C-466, the tax exemption for public transportation benefits, we benefited from the insight provided by U.S. firms that actually administer the proposed programs and indicated that, depending on how the legislation was worded, administration costs and adoption rates could vary widely. This is the type of real-world knowledge that is very relevant to preparing a cost estimate, but it's not typically collected in the data.

In the case of Bill C-290, we did not progress beyond step one, the preparation of the terms of reference. My staff met with several committee members shortly after receiving the request and completed a review of the cost estimates prepared by the Bloc Québécois and the government by early May.

At that time, it became evident that the divergence between the two cost estimates primarily related to differing legislative interpretations of Bill C-290. The Bloc Québécois believe it to be narrowly targeted, while the government believes it to have a wider application.

The government estimate assumes that all recipients of income from registered pension plans are eligible for a tax credit on pension income. In contrast, the legislative interpretation of the Bloc Québécois assumes that only retirees whose pension income has been reduced as a result of financial distress of the sponsoring firm are eligible for a tax credit on lost pension income.

After determining this, my staff asked the committee to clarify these assumptions and reach a common understanding of precisely which legislative proposal was to be costed. After waiting a week, we sent correspondence to the chair of the committee providing a preliminary assessment of the two cost estimates—$5 million per annum and approximately $10 billion per annum—and again highlighted the need to reach a common understanding regarding the legislative interpretation of Bill C-290 before moving forward with this request.

As noted in my correspondence of May 14, both estimates appear to be free of major errors. While a government estimate of $10 billion appears reasonable, given its assumptions, the Bloc Québécois estimate of $5 million may be near the low end of a range, based on their differing assumptions.

I would like to convey to committee members that we would look forward to continued work on a terms of reference for this request should members provide additional direction with respect to the legislative intent of Bill C-290.

I would be pleased to answer any questions Committee members may have regarding our process for preparing cost estimates of legislative amendments to the Income Tax Act or my preliminary analysis of Bill C-290.

[The Chair, Conservative, James Rajotte]

I call to order the 24th meeting of the Standing Committee on Finance. In our orders today, pursuant to the order of reference of Wednesday, March 3, 2010, we are continuing our study of Bill C-290, An Act to amend the Income Tax Act (tax credit for loss of retirement income).

This afternoon we have a panel from 3:30 until 4:30 and then clause-by-clause consideration from 4:30 to 5:30.

I have two items I want to deal with at the beginning of the meeting. First of all, Monsieur Paillé would like the floor to present a motion.

Monsieur Paillé, s'il vous plaît.

[Thomas Mulcair, NDP, Outremont, QC]

Mr. St-Michel, I am happy to see you again, as well as Ms. Blanchard and Mr. Fréchette. It is always a pleasure to receive you. Mr. Langlois, Mr. Beaudoin and Mr. Hamilton, welcome to the committee and thank you for being here this afternoon.

Mr. Chairman, when my colleagues were introducing Bill C-290, I said that the NDP would support it, but I would nevertheless like to congratulate Mr. Fréchette, in particular. I was here when he made his presentation. He begged us not to engage in partisan politics with this bill and to understand that we are talking about human beings.

I think that is the most important part of our job, as members of Parliament—looking after human beings. I am anxious to see what the Conservatives will do. For a year and a half, lengthy consultations have been underway. My colleague, Mr. Menzies, crisscrossed the country in all directions—and more than once—because he is part of consultations on pensions that are going on at the same time. But the only answer we have heard from Minister Flaherty thus far is: “It's complicated”. That is all he has been capable of saying on this. But it is not that complicated, even for him; he is capable of understanding the issue. The Conservatives are just trying to provoke a federal-provincial squabble, which does, or does not, involve the Bloc and Quebec.

This bill simply aims to help human beings who worked all their lives and who have every right to be helped by the federal Parliament in an area that falls within its jurisdiction.

We can assure you of our support, but I am really anxious to see what the MP for Montmagny—L'Islet—Kamouraska—Rivière-du-Loup will do when the time comes to vote on this. I promise you, Mr. Fréchette, that I will call you personally to tell you how Mr. Généreux voted on this important bill.

[Gaston Fréchette]

Anything we receive will already be greatly appreciated.

We noted that Bill C-290 talks about a 22% credit, which would be very satisfactory. We would be very pleased with that.

[Jacques Beaudoin, President, Fédération des associations de retraités du Québec]

Mr. Chairman, members of the committee, ladies and gentlemen, good afternoon.

My name is Jacques Beaudoin and I am president of the Fédération des associations de retraités du Québec.

First I would like to thank the Standing Committee on Finance for giving me the opportunity to present the Federation's views on Bill C-290, which we support.

I also wish to say that we greatly appreciate the fact that the House of Commons is allowing retirees and their associations to express their concerns to the committee and speak to issues related to their retirement benefits.

Our Federation comprises about 15 member associations, representing approximately 25,000 retirees who are covered by private pension plans. Entirely run by volunteers, these associations mainly aim to promote and defend their members' rights under their former employers' pension plans.

Our organization, the FARQ, is making representations to the Government of Quebec and the Government of Canada, as well as to those agencies responsible for enforcing the various laws affecting pension plans. Overall, we are coordinating our action with Quebec's major associations of seniors and retirees, including the Quebec Federation of Senior Citizens, which boasts 260,000 members.

We are currently making representations in relation to a number of different demands by retirees, which are summarized in the brief that I forwarded and which has been provided to you. Several of our affiliated associations could certainly be considered serious cases—pardon the expression—because their retiree members have had their pensions slashed in recent years after their former employers went bankrupt.

I refer here to retirees from the Jeffrey Mine in Asbestos—which you are familiar with—from Atlas Stainless Steel, in Sorel-Tracy, and the Davie Shipyards in Lévis-Lauzon, as well as from AbitibiBowater, who are very worried right now that they could suffer the same fate.

It is these retirees across Quebec who have experienced similar situations, with all the social trauma that this entails for themselves, their family and their region. As was explained earlier, these retirees have seen their retirement benefits cut by as much as 50% in some cases. And yet these now-retired workers had paid into their pension plan and made the mandatory contributions asked of them—or rather, imposed on them—in order to be eligible for a full pension.

Furthermore, when they retired, they received a contract from their employer, as provided for by the legislation, promising a full pension, not one cut by one quarter or one half.

So why, after the fact, are these retirees the principal victims of their former employer's bankruptcy, something over which they had no control and for which they are not responsible? When an employer goes bankrupt and pensions are cut, it is too late for retired employees to start over again or improve their situation because of their age.

Are our laws not adequate, not properly enforced or not complied with? Or are both factors at play in our tolerance of such situations? We honestly think that there is a serious problem of unfairness and that you, as parliamentarians, can rectify it. We are therefore appealing to you to do so.

Bill C-290 is on the right track. Employers and active workers are well organized and able to defend their rights. That is not the case for retirees in terms of their pension plan. Do we need to tell you that retirees urgently require protection from governments and parliamentarians, as well as adequate legislation?

FARQ supports Bill C-290, which would provide a refundable tax credit to retirees who have fallen victim to pension cuts following their former employer's bankruptcy.

In closing, FARQ hopes that the Standing Committee on Finance will recommend that the House of Commons unanimously pass this bill.

Thank you very much for your attention.

[Diane Blanchard, Secretary, Regroupement des retraité(es) des Aciers Atlas]

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

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

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

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

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

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

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

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

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

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

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

[Thomas Mulcair, NDP, Outremont, QC]

Mr. Chairman, I would like to say to our colleagues that the NDP continues to support Bill C-290.

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

Thank you very much, Mr. Chairman.

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

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

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

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

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

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

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

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

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

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

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

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

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

Thank you very much.

[The Chair, Conservative, James Rajotte]

Order, please.

This is meeting number 23 of the Standing Committee on Finance. For our orders of the day, we have Bill C-290, An Act to amend the Income Tax Act (tax credit for loss of retirement income).

Colleagues, we have two panels today of one hour each, so we have a very tight timeline.

Today, we have with us two colleagues from the House of Commons. First, Mr. André Bellavance, the member of Parliament for Richmond—Arthabaska, whom I welcome to the committee.

We also have with us Mr. Louis Plamondon, the member of Parliament for Bas-Richelieu—Nicolet—Bécancour, who is also the dean of the House of Commons. Welcome to you as well.

You have 10 minutes for your presentation. After that, committee members will have questions for you.

Mr. Bellavance, please.

Bankruptcy and Insolvency Act

[Luc Desnoyers, Bloc, Rivière-des-Mille-Îles, QC]

Madam Speaker, I am pleased to take part in this important debate, in light of the situation facing Canadians and Quebeckers.

We have weathered all sorts of financial and economic crises, but now, because of a major pension plan crisis, pensioners are faced with major reductions in their pensions. I am talking about people like the employees of Nortel, Atlas Stainless Steels and the Jeffrey mine. We have to look at all the possible solutions to these problems.

Bill C-501 amends the Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement Act to ensure that unfunded pension plan liabilities are accorded the status of secure debts in the event of bankruptcy proceedings. It also amends the Canada Business Corporations Act to provide a new procedure by which former employees of a bankrupt corporation who are owed amounts by the corporation can proceed with claims against its directors.

In times of economic crisis, pension funds lose value when security prices drop. If a company goes bankrupt at that point, its pension fund will not be able to cover retirees' pensions.

I would now like to talk about the protections that pension plans currently provide. Under the new provisions in the legislation, regular contributions that have not been paid when a company goes bankrupt or into receivership take priority over all the debtor's assets. But the same does not hold true for unfunded pension plan liabilities.

Regular contributions that have not been paid at the time of bankruptcy include the amounts deducted from employees' paycheques to be paid into the pension plan and all unpaid employer's contributions. This priority does not apply to special payments ordered by the pension regulator to liquidate an unfunded liability or claims related to such unfunded liability.

The limited super-priority ranks below the rights of unpaid suppliers to repossess goods under section 81.1 of the BIA; the claims of farmers, fishermen and aquaculturalists in respect of unpaid products supplied to the bankrupt or insolvent employer, under section 81.2 of the BIA; unremitted income tax deductions, which are deemed to be held in trust; and priority wage claims.

Bill C-501 contains three measures. First, it would give priority status to pensions plans with unfunded liabilities. This way, in case of bankruptcy, retirees will be among the first to be paid and will have precedence over the banks.

Second, the bill ensures that the assets guarantee the termination or severance pay of any clerk, servant, travelling salesperson, labourer or worker.

Third, it offers retirees who were wronged by their employer a procedure that is supposedly more effective for making claims against directors—members of the board of directors. In fact, subsection 119(1) of the Canada Business Corporations Act states:

Directors of a corporation are jointly and severally, or solidarily, liable to employees of the corporation for all debts not exceeding six months wages payable to each such employee for services performed for the corporation while they are such directors respectively.

The Bloc Québécois supports workers and retired workers. We have always promoted social justice.

We can understand the frustrations and the concerns of people who have lost their retirement income because their retirement fund was inadequate at the time the company they worked for ceased operations. They are unfairly deprived of a source of income they were counting on.

For a long time, we have been wanting to look at giving pensions plans with unfunded liabilities preferred creditor status, as well as making directors accountable.

We feel these measures are fair as long as they do not compromise business development or competitiveness or unduly affect the labour market.

The Bloc Québécois would like to hear from witnesses in committee in order to understand these effects. For example, an increase in unemployment and social assistance recipients would be too high a price to pay to protect pension funds against stock exchange fluctuations. Other measures could then be considered.

We must remember that despite the urgent need to help pensioners who were hard hit by the economic crisis, the Conservatives prorogued Parliament, thus slowing down the process of studying bills.

The Bloc Québécois' interest in protecting pensioners and workers is not a recent phenomenon. Not only have we waged a lengthy battle to stop the looting of the employment insurance fund and increase benefits for recipients, but we have spoken in favour of many other initiatives, including wage protection in the event of bankruptcy and the creation of a tax credit to protect pensions, which are measures that we ourselves proposed.

During the summer of 2009, we defended Nortel pensioners and we continue to do so. At that time, we should have given them the opportunity to appear before the committee that was studying the impact of the sale of, among other things, Nortel's wireless division to Ericsson in order to allow them to share their fears and questions with elected members. Unfortunately, the Conservatives and Liberals preferred to shut down the debate.

This fall, to deal with the pension situation, the Bloc Québécois proposed a series of measures, one of which was that the federal government follow Quebec's lead and take trusteeship over the pension plans of federally regulated bankrupt businesses. This would prevent these pension funds from being liquidated while the markets are at their lowest.

Another proposal was to get rid of the six-month delay for the wage earner protection program. Victims of massive layoffs followed by delayed bankruptcy, which is something we have seen, would then be eligible for the severance they are due.

We also proposed raising the contribution limits for pension funds to 125% of the break-even point, which would encourage a pension reserve. The government went back to this after trying to pass the buck to the provinces.

Another measure is Bill C-290, which would provide a refundable tax credit equal to 22% of the loss sustained by beneficiaries of a pension running a deficit. Despite Conservative opposition to the bill, it will soon be studied in committee.

We are also talking about changing the threshold for automatic review of foreign acquisitions from $1 billion to $300 million. Such a measure would ensure that companies like Nortel would not be sold off at a discount or piece by piece.

We are also discussing bringing in preferred creditor status for disabled employees who lose their benefits following an employer's bankruptcy. These people are desperate and destitute because, in Nortel's case, they will lose over 70% of their benefits even though they still have to cover significant medical costs. None of these people were negligent. They had every reason to believe that they were properly insured by an insurance company.

The Bloc Québécois supports pension supervision to help avoid high-risk investments, such as numerous investments in a single company. We have to consider all of our options.

Lastly, workers expect to benefit from the pensions funds that they spend their lives contributing to. Parliament cannot ignore the needs of these workers and those who have already retired.

That is why the Bloc Québécois supports Bill C-501 in principle.

[Robert Carrier, Bloc, Alfred-Pellan, QC]

Good afternoon and welcome to our Committee.

Among the different pieces of testimony we have received, there is one that seems a little offside—the comments made by Ms. Nielson, who spoke a lot of private companies and pension plan insurance companies.

In fact, Ms. Nielson, since you hold the chair in insurance and risk management, it is perfectly normal that you should have talked about that. However, as parliamentarians, we have been hearing from people for several weeks now with the aim of enhancing pension plans for workers all across Canada. We are confronted with cases like that of the former Nortel workers and others we are aware of, including the Jeffrey mine in Asbestos, Atlas Stainless Steel, and so on. The people who worked for these companies contributed to unsecured pension plans and ended up losing all of their pension income.

Earlier, Mr. Marston seemed to say that our approach is not that different from that of the Conservatives. I certainly hope we are coming closer together because, last fall, the Bloc Québécois tabled Bill C-290, An Act to amend the Income Tax Act (tax credit for loss of retirement income) to at least provide a refundable tax credit to people who lose their pension benefits when the company they work for goes bankrupt. That will not resolve all the issues, but the Conservatives actually voted against even that minor protection.

Mr. Lockwood mentioned earlier that he was hopeful with respect to the bill currently before the Senate, Bill S-216. If the government wanted to quickly provide assistance in the above mentioned cases—particularly since it now has a majority in the Senate—it could speed up that review in order to resolve the rare cases of people who lose their disability insurance and find themselves with nothing.

Personally, I feel that all the parties have to make a real effort to move closer together, so that we can make these improvements. I would like to ask Ms. Nielson to comment on what Mr. Cadieux was proposing,—a doubling of CPP so that all workers will at least have a secure pension system, one that does not depend on a company's profitability or the way the insurance fund was managed. It has been proven, however, that the Canada Pension Plan is safely managed.

I would like to hear your views on this. It would still be possible to have private pension plans.

[Mike Wallace, Conservative, Burlington, ON]

Thank you, Mr. Chair.

I'd like to move the motion, which was handed out, to request the Parliamentary Budget Officer to provide an estimate on the cost of Bill C-290, the private member's bill that is coming back to this committee.

Jobs and Economic Growth Act

[Meili Faille, Bloc, Vaudreuil—Soulanges, QC]

Mr. Speaker, I am pleased to speak today to Bill C-9 on the implementation of the 2010 budget. I will share my time with my colleague, the member for Sherbrooke.

In the 2010 budget, the demands of our constituents have been completely ignored or perhaps deliberately undervalued. That is completely unacceptable. For several years, we have been doing our job and have told the government that it needed to help Quebeckers. It needed to come up with a plan to help workers in the hardest hit sectors in Quebec.

We presented measures in good faith to help businesses make it through the economic crisis and to help people. The Bloc Québécois told the federal government that it could take this opportunity to settle a number of compensation claims with Quebec.

We proposed ways to combat the sophisticated schemes that enable the extremely wealthy to avoid paying taxes on their income. We proposed a 1% tax on individuals with a yearly income of over $150,000.

What is even more appalling is that the government ignored our proposal to eliminate the tax breaks given to the oil industry. We asked the government to treat Quebec's forestry and manufacturing industries fairly and equitably, by giving the Quebec industries the same breaks it gave to Ontario.

What does the government propose? It is maintaining the increases in military spending and completely ignoring the reality facing our forestry industry, investing very little in Quebec. It is completely ignoring sectors that have been suffering harshly for far too long.

In Bill C-290, the Bloc Québécois proposed a measure to help thousands of retirees who have been cheated. Over 20,000 workers and retirees will see their pension plans cut by about 30% following an Ontario Superior Court decision to reject an agreement between Nortel and its pensioners. The Conservative government is doing nothing to help them, and yet there are solutions.

The question asked by my colleague from Rivière-des-Mille-Îles is clear. Will the government support the Bloc Québécois' bill to help the Nortel, Atlas and Jeffrey mine workers whose pension plans have been cut off?

The Prime Minister wants to review Canada's retirement income system. If the past is any indication and we remember what the government did to the employment insurance system, we have every reason to fear the worst: we will find ourselves with a program that does not meet the needs of retirees.

The Bloc Québécois is pleased to see that the federal government recognizes that we must make major changes to better protect salaries and pensions. However, these measures do not allay the Bloc Québécois' concerns about declining securities values that, in times of economic crisis, lower the value of pension funds.

If a company goes bankrupt, its pension fund will be unable to fulfill its obligation to beneficiaries, but not because the company fails to make its regular contributions to the pension fund.

The Bloc Québécois wants the federal government to put pension plans set up by companies under federal jurisdiction in trust. That is what Quebec does to prevent companies from liquidating pension funds when the securities market is at a low point. The Bloc Québécois also wants disabled workers insured through self-insurance plans to have preferred creditor status.

The proposal in the budget is not good enough. It does not meet people's needs.

Let us turn now to seniors, who have been largely forgotten in the federal budget. How can the government claim to defend people's interests? For over nine years now, we have been calling for improvements to the guaranteed income supplement. In December 2001, we learned that over 270,000 Canadian seniors, including over 68,000 in Quebec, who were eligible for the guaranteed income supplement were not receiving it. They were entitled to that money. Our poorest seniors are suffering as a result. They are the ones bearing the burden of this government's spending.

Last week, my colleague from Berthier—Maskinongé rose in the House to criticize the rising rate of poverty among seniors. He cited a Conference Board of Canada study showing that between 1995 and 2005, the poverty rate among seniors doubled.

In an effort to promote equality and social justice, the Bloc Québécois has proposed simple, realistic measures to solve this problem and fight poverty among society's poorest.

Nowhere does Bill C-9, the budget implementation bill, propose ways to decrease the poverty rate among seniors. The bill says nothing about this, and that is unacceptable. Improving benefits and paying seniors money that is owing them would prevent an increase in poverty.

The government should start by increasing by $100 a month the guaranteed income supplement that people currently receive. It should also consider the poverty in which many seniors live. Given the cost of urban housing—we can all do this exercise in our own ridings—and the fact that this cost and many utility charges are rising, the amount seniors currently receive is not enough. It should be increased, but neither budget 2010 nor the minister's Bill C-9 provides for an increase.

The program should also include individuals aged 65 and over who are entitled to the guaranteed income supplement. The government says that it cannot locate these people. It needs to make an effort to find them, even if it tries just once.

One reason why people do not receive the guaranteed income supplement is that they are not aware of the program. Administrative delays are also to blame. The result is that people do not get everything they are entitled to.

The Conservative government should introduce a measure to pay the guaranteed income supplement retroactively. People have been hurt. The solution is simple: make retroactive payments. But Bill C-9 contains no such measure.

The measures in Bill C-9 are not enough and do not meet people's needs.

We also proposed that the government keep paying old age security and the guaranteed income supplement for at least six months after the recipient's death, to help his or her survivor through that difficult time. Again, there is nothing in the bill to meet these expressed needs, such as an amendment to the Income Tax Act or changes to other programs.

Bill C-9, however, contains measures that were not in the budget, for instance, amendments to the Employment Insurance Act and the creation of an employment insurance operating account. There is no mention of a need for reform.

Among the measures not included in the budget which are included in Bill C-9, there is the liberalization of one of Canada Post's business lines. In the last session and previous ones, the government tried to pass Bill C-44 without much success in the House. With this bill now, it is trying to put something in place that the members of this House did not agree with.

To sum up the first part of my speech, I would say that the government did not listen to the various associations that support what I just said, associations like the Quebec Federation of Senior Citizens, also known as FADOQ. The government is also ignoring the motion passed unanimously by the Quebec National Assembly calling on the federal government to compensate those seniors who have been shortchanged. It was asking that seniors be refunded. Despite all this support, the federal government simply failed to act.

Allow me to pass on what the seniors with whom I met in February told me. They are asking that the public sign their petition. They are currently campaigning to raise public awareness of what is not in the budget.

I think that the government's message is pretty simple, and the campaign slogan pretty clear. I am mentioning it here because these people need the government to hear their slogan at least one. Their slogan is: “The alarm is sounding. React!” That is what seniors want the government to do.

Pensions

[Luc Desnoyers, Bloc, Rivière-des-Mille-Îles, QC]

Mr. Speaker, pension benefits for more than 20,000 workers and retirees will be cut by about 30% following a Superior Court of Ontario decision to reject an agreement between Nortel and its pension beneficiaries. Solutions exist, but the Conservative government is doing nothing to help these people.

Will the government support the Bloc Québécois' Bill C-290 to help Nortel, Atlas and Jeffrey mine workers whose pension plans have been cut?

[Pierre St-Michel]

If the laws were changed today, making pension funds into secured creditors would not affect us because our situation is already in the past. But we would be exceptional cases, and that has its importance.

A bill has gone through the first two stages. I am referring to Bill C-290. The bill actually acknowledges the losses we have faced. Some say that, if the laws are changed, it would be very expensive; others say that it would not.

If the law were to change and retirement funds became secured creditors, ours would be exceptional cases that could be addressed under Bill C-290. I do not know when third reading will take place. I think that would help to make things a little fairer for us.

[Gaston Fréchette]

We had handed him a huge pile of documents and called him repeatedly. However, I can say that we received replies from many of you, to whom we had sent a letter. Many of you sent us responses.

That leads me to talk about the same issue raised by people from Nortel: the Companies' Creditors Arrangement Act, or CCAA. That legislation really has to be changed. It is costing us at least $20 million. Why? Because the banks, credit unions and QPP investment board got their share in the bankruptcy. We were treated as if we had been selling Pepsi. We received $1,000 each. That was the amount received by our mine. That is to say that, to date, each Jeffrey Mine worker has lost at least $100,000. The average age of our pensioner-members is 75 years.

People think that Mr. Bellavance's bill, C-290, which we talked about, will be too expensive. If only the Companies' Creditors Arrangement Act had placed employees on the same level as the secured creditors, our losses would have been quite minimal. Yet, we are told that, with such an arrangement, banks would not be able to raise money as easily.

The only thing that companies could do is not to promise pensions if they are not able to pay them. If they do promise them, then there should be a 100% solvency ratio. Since 1991, Jeffrey Mine has never had a solvency ratio of 100% for its pensions, and I can prove that to you anytime.

You must realize that the retirees are the biggest losers in all of this. Just put yourself in the shoes of these retirees for a moment. I have something to say. If the teachers of Quebec lost 35% of their pensions, people would be talking about nothing else. There would be more people who would stand up and defend themselves.

What we want are things that we have really lost. We think we have the right to go after them. Thanks to a great deal of diligent work, we finally managed to get people to listen to us.

Why are we the only creditors who cannot deduct their losses from their taxes? All other creditors of Jeffrey Mine who lost money were able to deduct it from their taxes on their tax return the following year. Why not us?

Remember this: you are the ones who make the laws. You invited us today to try to improve them, and we appreciate that very much. We just want to be able to live decently in Canada.

I can tell you that we are prepared to answer all of your questions. I don't want to take up too much time either. We are 73, 74 years old and we have been working on this for eight years flat out. We have just settled out of court for our class action suit, and we received $7.5 million. The court ruling was handed down on Thursday, so you can see that we have not been twiddling our thumbs.

We are here today to say thank you for listening to us, and if you need us, we are available anytime. We want to see the end of this matter before we are dead and buried.

Thank you very much.

[The Chair, Conservative, James Rajotte]

It's Bill C-290, An Act to amend the Income Tax Act (tax credit for loss of retirement income), by André Bellavance. I'm just highlighting that for members.

That's all I have for business today.

We do have two new members on the committee. We had a new member prior to prorogation, Monsieur Paillé, who is now the vice-chair, but we also have two new members. We have Monsieur Généreux, and Mr. Hiebert. I want to welcome them to the committee.

I'd also like to welcome back to the fold Mr. Carrier, who was away for a few months for health reasons.

[Martha Hall Findlay, Liberal, Willowdale, ON]

Was it Bill C-230 or Bill C-290?

[The Chair, Conservative, James Rajotte]

That's fine. We'll do one meeting, then, for the supplementary estimates. We have to report the main estimates back by Monday, May 31. Because we have time, we don't have to decide today. I just want to highlight that deadline for colleagues.

Bill C-290 was reported to us. The deadline to report that back to the House is Friday, June 11.

Is this a bill introduced by a Bloc Québécois Member?

Royal Recommendation and Ways and Means Motions

[The Deputy Speaker, Conservative, Andrew Scheer]

Before we begin private members' business today, I would like to make a brief statement regarding the issue of royal recommendation and ways and means motions with respect to private members' business

Just as individual items of private members' business continue their legislative progress from session to session, the Chair's rulings on those same items likewise survive prorogation.

Specifically there are nine bills on which the Chair either commented, ruled or has heard a point of order with regard to the issue of the royal recommendation. There was also one bill on which a point of order was raised regarding the requirement for a ways and means motion.

The purpose of this statement is to remind the House of those rulings and of the questions that remain to be dealt with.

Members will recall that, during the last session, some private members’ bills were found by the Chair to require a royal recommendation. At the time of prorogation, there were seven such bills on the order of precedence or in committee.

Let us review briefly the situation in each of these seven cases.

Three of these bills were awaiting report stage in the House at the time of prorogation, namely: Bill C-201, An Act to amend the Canadian Forces Superannuation Act and the Royal Canadian Mounted Police Superannuation Act (deletion of deduction from annuity), standing in the name of the member for Sackville—Eastern Shore;

Bill C-241, An Act to amend the Employment Insurance Act (removal of waiting period), standing in the name of the hon. member for Brome—Missisquoi;

Bill C-280, An Act to amend the Employment Insurance Act (qualification for and entitlement to benefits), standing in the name of the hon. member for Algoma—Manitoulin—Kapuskasing.

On May 12, 2009, the chair had ruled that Bill C-201, in its form at second reading, needed to be accompanied by a royal recommendation. In committee, all clauses of the bill were deleted. In its present eviscerated form, Bill C-201 need no longer be accompanied by a royal recommendation.

As for Bill C-241 and Bill C-280, the chair ruled on April 22, 2009 and on June 3, 2009 respectively, that these bills in their present forms required royal recommendation. The committee stage has not altered this finding.

The following four bills were at committee stage: Bill C-290, 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 was before the Standing Committee on Finance; Bill C-308, An Act to amend the Employment Insurance Act (improvement of the employment insurance system), standing in the name of the hon. member for Chambly—Borduas was before the Standing Committee on Human Resources, Skills and Social Development and the Status of Persons with Disabilities;

Bill C-309, An Act establishing the Economic Development Agency of Canada for the Region of Northern Ontario, standing in the name of the hon. member for Nipissing—Timiskaming, was before the Standing Committee on Industry, Science and Technology;

finally, Bill C-395, An Act to amend the Employment Insurance Act (labour dispute), standing in the name of the hon. member for Berthier—Maskinongé was before the Standing Committee on Human Resources, Skills and Social Development and the Status of Persons with Disabilities.

The Chair ruled that all these bills in their present forms needed to be accompanied by a royal recommendation. The rulings were given on October 23, 2009 for Bill C-290, on October 29, 2009 for Bill C-308, on June 16, 2009 for Bill C-309 and, more recently, on November 16, 2009 for Bill C-395.

Furthermore, points of order were raised by the hon. Parliamentary Secretary to the Government House Leader at the end of the last session with respect to the need for a royal recommendation for two bills. These are: Bill C-343, An Act to amend the Canada Labour Code and the Employment Insurance Act (family leave) standing in the name of the hon. member for Compton—Stanstead and Bill C-471, An Act respecting the implementation of the recommendations of the Pay Equity Task Force and amending another Act in consequence standing in the name of the hon. member for Etobicoke—Lakeshore. Both of these bills were at second reading.

Just as was done in the last session, the Chair invites other members who would like to make arguments regarding the need for a royal recommendation for those two bills or any of the other bills on the order of precedence to do so at an early opportunity in order for the Chair to come back to the House with a ruling as soon as possible.

Finally, a point of order was raised during the last session regarding Bill C-470, An Act to amend the Income Tax Act (revocation of registration), standing in the name of the hon. member for Mississauga East—Cooksville, arguing that it should have been proceeded by a ways and means motion. The Chair has taken the matter under consideration and a ruling will be delivered in the days to come.

I thank hon. members for their attention.

It being 1:35, the House will now proceed to the consideration of private members' business as listed on today's order paper.

Business of the House

[The Speaker, Liberal, Peter Milliken]

I would like to make a statement concerning private members' business. Standing Order 86.1 states that all items of private members' business originating in the House of Commons that have been listed on the order paper during the previous session shall be deemed to have been considered and approved at all stages completed at the time of prorogation.

In practical terms, this means that notwithstanding prorogation, the list for the consideration of private members' business established at the beginning of the 40th Parliament shall continue for the duration of this Parliament.

All items will keep the same number as in the first and second sessions of the 40th Parliament. More specifically, all bills and motions standing on the list of items outside the order of precedence shall continue to stand. Bills that had met the notice requirement and were printed in the order paper, but had not yet been introduced, will be republished on the order paper under the heading “Introduction of Private Members' Bills”. Bills that had not yet been published on the order paper need to be re-certified by the office of the Law Clerk and Parliamentary Counsel and be resubmitted for publication on the notice paper.

All items in the order of precedence are deemed to have been considered and approved at all stages completed at the time of prorogation. Thus, they shall stand, if necessary, on the order paper in the same place or, as the case may be, referred to the appropriate committee or sent to the Senate.

At prorogation, there were 11 private members' bills originating in the House of Commons adopted at second reading and referred to the appropriate committee. Therefore, pursuant to Standing Order 86.1: Bill C-290, An Act to amend the Income Tax Act (tax credit for loss of retirement income), is deemed referred to the Standing Committee on Finance.

Bill C-300, An Act respecting Corporate Accountability for the Activities of Mining, Oil or Gas in Developing Countries, is deemed referred to the Standing Committee on Foreign Affairs and International Development.

Bill C-304, An Act to ensure secure, adequate, accessible and affordable housing for Canadians, is deemed referred to the Standing Committee on Human Resources, Skills and Social Development and the Status of Persons with Disabilities.

Bill C-308, An Act to amend the Employment Insurance Act (improvement of the employment insurance system), is deemed referred to the Standing Committee on Human Resources, Skills and Social Development and the Status of Persons with Disabilities.

Bill C-309, An Act establishing the Economic Development Agency of Canada for the Region of Northern Ontario, is deemed referred to the Standing Committee on Industry, Science and Technology.

Bill C-310, An Act to Provide Certain Rights to Air Passengers, is deemed referred to the Standing Committee on Transport, Infrastructure and Communities.

Bill C-391, An Act to amend the Criminal Code and the Firearms Act (repeal of long-gun registry), is deemed referred to the Standing Committee on Public Safety and National Security.

Bill C-393, An Act to amend the Patent Act (drugs for international humanitarian purposes) and to make a consequential amendment to another Act, is deemed referred to the Standing Committee on Industry, Science and Technology.

Bill C-395, An Act to amend the Employment Insurance Act (labour dispute), is deemed referred to the Standing Committee on Human Resources, Skills and Social Development and the Status of Persons with Disabilities.

Bill C-442, An Act to establish a National Holocaust Monument, is deemed referred to the Standing Committee on Transport, Infrastructure and Communities.

Bill C-464, An Act to amend the Criminal Code (justification for detention in custody), is deemed referred to the Standing Committee on Justice and Human Rights.

Pursuant to Standing Order 97, committees will be required to report on these reinstated private members’ bills within 60 sitting days of this statement.

In addition, one private members’ bill originating in the House of Commons had been read the third time and passed. Therefore, pursuant to Standing Order 86.1, the following bill is deemed adopted at all stages and passed by the House.

Bill C-268, An Act to amend the Criminal Code (minimum sentence for offences involving trafficking of persons under the age of eighteen years). Accordingly, a message will be sent to the Senate to inform it that this House has adopted this bill.

As they are no longer members of this House, all the items standing in the name of Ms. Dawn Black, Mr. Bill Casey and Mr. Paul Crête will be dropped from the order paper.

Consideration of Private Members’ Business will start on Friday, March 5, 2010.

To conclude, hon. members will find at their desks an explanatory note recapitulating these remarks. I trust that these measures will assist the House in understanding how private members' business will be conducted in the third session. In addition, the table can answer any questions members may have.

Economic Recovery Act (stimulus)

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

Madam Speaker, I want to thank the hon. member from the NDP for his question. When I was talking about a comprehensive plan, the Bloc Québécois did indeed ask for certain measures to help the less fortunate. I was talking about people who receive employment insurance and also retirees, older people who could use a little extra in their guaranteed income supplement. We know that with CPP and the guaranteed income supplement combined, those people are still currently living below the low income cutoff. Increasing the guaranteed income supplement to $110 a month would at least allow them to reach the low income cutoff. That is one measure.

The measure the hon. member is talking about is quite interesting. My own bill, Bill C-290, has just reached second reading stage and will be referred to committee. This bill will help retirees who may unfortunately have lost part of their pension because of the bankruptcy or closure of their employer. For instance, a person who was supposed to get $30,000 and is getting only $22,000 and therefore lost $8,000, could get a 22% refundable tax credit. That more or less puts them on the margins of the middle class. It would allow that retired person to receive $1,760 a year. It is a type of compensation, and not full compensation, but it is better than nothing. Other measures like that and like the one mentioned by the hon. member as well, could be implemented by the government to help stimulate the economy. It is the best approach. We can start with the people who need it the most.

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

I have something to say. When the subcommittee met, it completely disregarded Bill C-290.

Since the committee was not scheduled to meet the week of November 16 to 20, I move that we meet on November 17 to consider Bill C-290, which, like Bill C-288, seeks to amend the Income Tax Act. By the way, that bill was referred to us last week.

Since we do not have anything that week and given the fact that these workers have lost money because of their pension plan, I move that we hear from them that week. It would give us an opportunity to expedite our work, even after the holidays.

Income Tax Act

[The Acting Speaker, Conservative, Barry Devolin]

It being 5:30 p.m., the House will now proceed to the taking of the deferred recorded division on the motion at second reading stage of Bill C-290 under private members' business.

Call in the members.

The House resumed from October 23 consideration of the motion 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 a committee.

Second Reading

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

Madam Speaker, I am not surprised, but at the same time, I am flabbergasted. What I just said may be contradictory, but I cannot get over hearing yet another Conservative member talk about the supposed cost of the measure in Bill C-290. The Conservatives have been coming up with figures like $10 billion a year since we introduced what was then called Bill C-445. But they have never proven that this measure could actually cost that much.

One thing is certain, though: by shaving two points off the GST, this government is willing to sacrifice $12 billion to $13 billion a year, yet it is not willing to shell out any money to help retirees who have been cheated.

That is why I ask that this bill be sent to committee. I want the Conservatives to come with their figures and prove that this measure would cost that much. I did my homework. According to the economists we consulted, it would not cost anywhere near the ridiculous figure of $10 billion a year.

I want to see the Conservative Party prove its claims, prove how much it will cost, and show up in committee to discuss this file and this bill. If amendments need to be made or if any measures need to be added in order to correct anything that does not make sense in terms of sound management, we are prepared to look at it all together. I have always said that I am very open in that regard, but at the end of the day, we must do something to help those retired workers who have been cheated.

Nevertheless, I must thank the members who have spoken in favour of Bill C-290, which would provide a refundable tax credit to taxpayers whose employer has failed to contribute to their pension plan. My colleague, the hon. member for Sherbrooke, spoke earlier about the Jeffrey Mine in my riding in Asbestos, and about Atlas Steel and the people of Sorel-Tracy. I prepared this bill with their help, along with that of my colleagues from Chambly—Borduas and Bas-Richelieu—Nicolet—Bécancour.

I think it is important to point out that there are new facts in this matter. More and more people are becoming aware of this problem of workers losing their pension plans. On Wednesday, the leader of the Bloc Québécois, a number of colleagues from my party and the two other opposition party leaders—the Liberal leader and the NDP leader were there as well—took part in a demonstration by thousands of retired employees of Nortel and other companies, who came here to call for change in the pension plan system, which is not protecting them properly. Unfortunately, I did not see any representatives of the Conservative Party there, and, as we heard again today, they are claiming that Bill C-290 would cost far too much. As I was saying earlier, this same government, by cutting the GST by 2%, is depriving itself of $12 billion to $13 billion a year.

I am challenging the Conservatives to vote in favour of my bill to refer it to committee and to prove their claims about the cost of this measure, which they have not done to this day in any of the speeches made since I introduced this bill for the first time in May 2007, when it was Bill C-445.

Bill C-290 is one of many measures proposed by the Bloc Québécois in response to the needs expressed by demonstrators who were on the Hill on Wednesday.

There are other measures: the federal government could put pension funds in trust. The federal government could reverse its decision to gradually raise the threshold for automatic review of foreign acquisitions to $1 billion and reinstate the $300 million threshold. It could raise the contributions ceiling to 120%. It could also give disabled workers insured by a self-insurance plan preferred creditor status.

Citizens themselves have already suggested several measures like these. I remember how, when we started talking about this bill, we were looking for ideas. We were wondering what could be done. It was not clear that something like a refundable tax credit, as it was presented, could be a solution. There did not seem to be any good solutions, but the president of the Jeffrey Mine retirees' sub-committee came up with this idea. Since then, more and more people have become aware of the situation, especially because of the economic crisis we are going through now.

I am proud to have introduced this bill, which is gaining support. As I have said, a majority of members of the House of Commons, the thousands of demonstrators on Wednesday and the 2,000 people who signed a petition in my riding support this measure.

Once again, I urge members of the House of Commons to vote in favour of Bill C-290.

[Tilly O'Neill-Gordon, Conservative, Miramichi, NB]

Madam Speaker, Bill C-290 proposes a costly refundable tax credit related to shortfalls in pension plans with a potential estimated cost of about $10 billion per year. This Bloc proposal would not be good pension or economic policy. It would not be fair to the taxpayers of the country.

This Bloc proposal essentially suggests that corporations and big businesses be let off the hook from the important responsibility to properly manage their pension plans and to control risks. This is because in a situation like Bill C-290 plan sponsors may exercise less due diligence knowing that benefits are backstopped by the government through a refundable tax credit.

The fact that these corporations and big businesses would not be required to contribute anything whatsoever to cover the cost of the refundable credit would worsen that potential. The Bloc proposal not only would be costly for taxpayers, it also would raise fairness issues, given that the costs would be borne by all taxpayers and it would only benefit a minority of those participating in the pension plan.

What is worse, the Bloc proposal would place on the federal government's shoulders the responsibility for providing compensation for all pension plans that were unable to meet pension obligations, even though only about 10% of all pension plan members participate in federally regulated plans. Since the provinces are responsible for the protection of pension benefits for plans sponsored by provincially regulated employers, this makes little to no sense.

This Bloc proposal is undoubtedly not the best way to promote the security of pension benefits. It would undermine sound pension policy objectives and be unfair to taxpayers. It would reduce incentives for employers to properly fund and manage their pension plans. And it would place the responsibility on the federal government for providing compensation for provincially regulated plans.

This Bloc proposal also ignores our government's comprehensive agenda to improve the retirement savings system and provide tax relief to pensioners and seniors since 2006. For example, as part of Canada's economic action plan, we increased the age credit amount by $1,000. This is on top of the $1,000 increase in the age credit amount.

That is why, to improve incentives for Canadians to save, our government has established the landmark tax-free savings account, the TFSA, what BMO Financial Group called “the single most important savings vehicle since the introduction of the RRSP in the 1950s”. The TFSA will assist Canadians in meeting their retirement savings goals by allowing investments to grow tax free. In this respect—

[Tilly O'Neill-Gordon, Conservative, Miramichi, NB]

Madam Speaker, today I will address the many deficiencies in the Bloc proposal being debated, and also highlight the important work our Conservative government has done to address concerns surrounding pensions and pension security. Before outlining the numerous flaws in this costly Bloc proposal, we should look at the broader context of Canada's pension system and the actions taken by our Conservative government to ensure it remains sound.

Clearly, all parliamentarians recognize that pension security is a matter of the utmost importance to all workers and a key element in ensuring the effectiveness of Canada's retirement income system.

Canada has a diversified retirement income system based on a mix of public and private pensions. The two public pension pillars, the old age security and the guaranteed income supplement programs, along with the Canada and Quebec pension plans ensure a basic level of income in retirement for Canadians.

The third pillar, tax deferred private retirement savings, includes registered pension plans and RRSPs. These plans provide Canadians with incentives to save for retirement and to help bridge the gap between public pension benefits and their retirement income goals.

Employer-sponsored pension plans are a key component of the third pillar of the retirement income system. The best way of ensuring that pension benefits are secure is to have healthy supervision. Pension benefit standards are a responsibility of both the federal government and the provincial governments.

I note here that only about 10% of all pension plan members participate in federally regulated plans. At the federal level, pension plans are regulated under the Pension Benefits Standards Act and are supervised by the Office of the Superintendent of Financial Institutions.

This retirement income system has been relatively successful when compared to other jurisdictions internationally in ensuring Canadians achieve acceptable levels of income in retirement in order to maintain their living standards.

As was reported in the Toronto Star earlier this week, Canada actually has one of the best retirement systems in the world. This country is essentially tied with the Netherlands, Australia and Sweden for pensioner protection, as measured by adequacy of funding, long-term sustainability of payouts and integrity in management. The survey of 11 industrial nations was conducted by Mercer LLC, one of the leading world corporate benefit consultants, and the Melbourne Centre for Financial Studies.

Nevertheless, all parliamentarians would concede that while our retirement income system is effective and sound, that does not mean we should not be working to improve it further. That is exactly what our Conservative government has been doing.

Since the beginning of the year, we have been looking at ways to ensure that the retirement income system is responsive to the needs of workers, pensioners and seniors, consistent with sound and sustainable policy principles. In January, we released a major research paper on federally regulated pension plans for comment, after which we conducted a cross-country and online public consultation open to all.

Indeed as part of the consultation process, the Parliamentary Secretary to the Minister of Finance, the member for Macleod, engaged with Canadians through public meetings across Canada, including stops in Halifax, Montreal, Ottawa, Toronto, Winnipeg, Edmonton, Whitehorse and Vancouver. Based on the feedback we received from Canadians, comprehensive regulatory changes to improve the federal pension framework are being drafted and will be released shortly.

Also, we have long recognized the need to work with our provincial partners to examine the larger pension concerns facing Canadians. That is why we raised the issue at the annual meeting of finance ministers in late 2008, and earlier this year set up a joint federal-provincial research working group with respected academic Jack Mintz as director of research to conduct an in-depth examination of retirement income adequacy.

The Minister of Finance has already convened a national summit of his provincial and territorial counterparts for this coming December to discuss the findings of this important group.

Without a doubt, our Conservative government has taken the pension issue seriously and is treating the issues surrounding it in a comprehensive manner.

On the other hand, Bill C-290 falls short in this respect.—

[Serge Cardin, Bloc, Sherbrooke, QC]

Madam Speaker, I would like to begin by thanking and congratulating my colleague from Richmond—Arthabaska, who worked on human resources issues with other colleagues, including the members for Chambly—Borduas and Bas-Richelieu—Nicolet—Bécancour. They worked especially hard on two files: Atlas Steels in Sorel-Tracy and the Jeffrey Mine in Asbestos. They took an interest in these cases involving retirees who were deprived of so much of their pension income that it caught our attention and got us thinking of ways to alleviate their losses.

Like all Bloc members, and I say this often and without partisan bias, my three colleagues consult their fellow citizens and listen to their needs and expectations more than anyone else. They are also very aware of the responsibilities of different levels of government. In this case, the federal government has a clear responsibility.

For example, I would like to describe some of the meetings that took place at the Jeffrey Mine in Asbestos, because I want to focus on this case. The mine is just a few minutes' drive from my riding and I visit the area often. We know that the municipality has taken some serious hits economically because of the mines located there.

Naturally, retirees have a lot riding on Bill C-290. It was previously introduced by the member for Richmond—Arthabaska during the last Parliament. However, the Conservative government was so determined to have an election that it stopped the work in its tracks.

In the case of the Jeffrey Mine, over 1,200 retired workers saw most of their retirement funds cut off. This had a major impact on their living standard and quality of life. So, after speaking with those affected, this refundable tax credit—which this clearly is—was developed and proposed. We also know that, unfortunately, the Conservative government often creates non-refundable tax credits, which means that people in the lowest income brackets can never benefit from these tax credits. In fact, they cannot benefit from them, because they do not pay taxes. In cases where retirement pensions are largely cut off, and if those people's incomes are low, they can still benefit from this refundable tax credit. As my colleague said earlier, this tax credit is not equivalent to the losses these retired workers can face. It is a tax credit of 22% on what they lose. Therefore, it is not a huge bailout. Another important point is that it is not taxable.

So what this does is soften the blow and ensure that retired people can benefit from this money.

I would like to quickly explain what is happening with pension funds, especially in this economic environment. As we all know, there are two kinds of pension plans. There are defined benefit plans and defined contribution plans. Specifically in order to avoid creating differences and disparities between the two systems, the bill tries to respond to both systems, since it calculates the gap between the pension that should have been received and the pension that is actually received. The 22% refundable tax credit is calculated based on that difference.

With a defined benefit plan, it is possible to calculate in advance the pension a person will receive, for example, 2% per year of service, based on the individual's best five years on average. The benefit is determined and the employee's and employer's contributions are adjusted using actuarial analyses and calculations.

Sometimes there are surpluses during periods when rates of return are high. There are also sometimes deficits, as we have seen recently. However, the employer is normally responsible for making up any deficits so that the predetermined benefit does not change and is always equal to 2% of the best five years for the number of years for which contributions were made.

There is also the money purchase plan. The name says it all: people agree on pension contributions and actuarial studies determine what the benefits will be. The employer and the employee both contribute to the plan. All sorts of things can happen. Additional contributions may be needed to maintain a pension at a level similar to what was anticipated. As I said, this is not a defined benefit plan. Benefits can therefore vary, but one thing is certain: if the pension plan is underfunded, it is still possible to calculate the difference between the pension that would have been received if all the contributions had been made and the pension actually received. Here again, there is a difference between the two. Whether the plan is a defined benefit plan or a money purchase plan, a refundable tax credit will be determined by multiplying 22% by the difference.

What is the government's responsibility in all this? I believe the federal government has a responsibility. Take the defined benefit plan. There are periods when the interest rate and performance are fantastic and everyone wants to invest. We know how that works. As a result, there are surpluses. When there is a surplus in the fund, the employees no longer need to contribute. When there are surpluses the employer can keep contributing or this can be negotiated. The Conservatives will surely ask us why there is no contingency fund for the lean years when there might be a deficit and no plan to keep the surplus high enough to avoid actuarial deficits.

The Conservatives might blame management, but it is not necessarily management's fault. It is the federal income tax act that does not allow surpluses to exceed 10%. Accordingly, the federal government bears a significant share of the responsibility because it does not allow surpluses to exceed 10%. If that had been allowed, I am sure that people would have acted responsibly and would have built up this surplus in order to help cope with the difficult years. We have to hold the government accountable for not allowing pension fund managers to have the necessary tools.

I am calling on all hon. members in this House to vote in favour of this bill so that it can be referred to committee. We can then discuss it and make the government aware of its share of the responsibility. We have to pass this wonderful bill introduced by my colleague from Richmond—Arthabaska.

[Bill Siksay, NDP, Burnaby—Douglas, BC]

Madam Speaker, I am pleased to have the opportunity to speak to Bill C-290, An Act to amend the Income Tax Act (tax credit for loss of retirement income) that has been put forward by the member for Richmond—Arthabaska. I know the member has tried on a number of occasions to move the bill through the House. In the last Parliament he succeeded in getting it a considerable way through the process, but the early election call short-circuited that effort and unfortunately we have had to start all over again in consideration of this piece of legislation.

I know too that the legislation came out of the member's discussions with workers and retirees in his riding and other ridings in the province of Quebec who faced a loss of income in their retirement pensions. This was one of the solutions that came about as a result of those discussions, those conversations. I commend him for that process and for putting this idea before the House of Commons.

New Democrats believe this is an important idea and that it merits support. New Democrats are supporting the idea although we recognize that it is only a small piece of what needs to be done in terms of ensuring pension security, retirement income security for Canadians. I am sure the member also recognizes that this is only one piece of a much larger puzzle.

What does the bill do? It 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 would apply to both defined benefit plans and defined contribution plans.

What exactly does that mean? That is the official description or account of what the bill does. One of the examples of what the bill would actually mean is 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 mean a non-taxable amount of $1,760. So it does not go the whole way to recovering the loss someone might experience in their registered pension plan, but it would be of some assistance to the folks who do find themselves in that difficult position. This is a contribution to dealing with the situation of loss in pension income and income security for retirees in Canada.

My colleague, the NDP critic for seniors and pensions, the member for Hamilton East—Stoney Creek, has been working diligently on this issue holding consultations and conversations with retirees and seniors across Canada to find out exactly what would be helpful to them much in the same way that the member for Richmond—Arthabaska has done in coming up with this legislation.

The NDP's pensions critic has come up with a very detailed and broad-based plan to assist Canadians with the security of their retirement income. We know that is very important these days. It was important when the bill was originally introduced, but the change in the economic situation, the recession, has made it even more necessary because more and more people are feeling that pinch and have seen a reduction in their retirement income.

We know there are two facets to retirement income in Canada. There is the private system of workplace pensions, of RRSPs, of private savings. We know those private elements of our retirement income system have taken the biggest hit in this recession with the collapse of financial markets.

The parts of the system that have maintained themselves, that have been rock solid in many people's opinion, are the public elements: the old age security program, the guaranteed income supplement and the Canada and Quebec pension plans. It is very important for us to realize that in planning a public retirement income system we have designed a system that can weather this kind of economic storm where the private system has taken significant hits and retirees who have had significant investment in the private elements of the system have taken a significant hit.

The public system has been there to support people through this kind of crisis. I hope we hold that experience close at hand when we are considering how we might approach security and retirement income in the coming months and years. People put a lot into saving for their retirement and they need to depend on that when they are no longer able to work or choose not to work any longer.

The NDP has put forward a very detailed plan. Part of that plan was passed unanimously in the House back in the spring. Hon. members will remember when all parties in the House agreed that significant action was needed on pension reform and to ensure income security in our retirement. That was good news, although the government has yet to act on that unanimous sentiment of the House and has yet to act in any way to shore up, to expand or to make better our pension system in Canada. We are hoping we will see that kind of movement from the government in the not too distant future.

New Democrats continue to put forward other ideas and expand on those we have already made. One of those ideas is to expand the CPP-QPP for the 93% of Canadians who already are members of that plan and who benefit from it. The NDP is proposing that there be a phased-in doubling of benefits in the CPP-QPP from the current maximum of $908.75 a month to $1,817.50 a month. It would take the pressure off both people's savings and private workplace plans and create a more stable savings environment for people on pensions.

We know there is a cost associated with this. It is estimated that this plan to double CPP-QPP benefits would need to see an additional payroll deduction of about 2.5%. That is often less than the annual administration fees of many RRSPs. Therefore, in that sense, it is a very good bargain for people who are trying to find a stable and reliable source of retirement income.

Our proposal goes on to mention that there could be a tax credit to soften the burden of that increased payroll deduction for low income people. This would go a long way to ensuring stable and reasonable retirement income for Canadians. It would also go some way to increasing the benefit of able people. In fact, this plan would see up to 63% replacement of pre-retirement income for Canadians, as opposed to the current 38% under the existing terms of the CPP-QPP.

It is a great idea and it is one that we could accomplish. It is one that we collectively contribute to and that we could actually make happen if we decided to move in that way. I hope the government will consider this very serious idea.

Another great idea would be to increase the old age security. This is the basic bottom line plan that should ensure that no Canadian senior lives in poverty. The NDP is saying that an investment of $700 million in the OAS program would accomplish lifting all Canadian seniors out of poverty. I know that is a significant amount of money but it is not a significant amount of money when we consider some of the other places in which the current government is spending money, including the $60 billion in tax cuts it is giving to large corporations in Canada. That is $60 billion for the large corporations when $700 million would ensure that no Canadian senior would live below the poverty line.

It seems to me that would be an excellent investment, especially during a recession when we know that anybody who is collecting OAS is spending that money in their community. If we can lift all Canadian seniors out of poverty with that kind of investment, we should go about it and do it right away.

The final piece of the NDP plan is to ensure that there is a pension insurance scheme, like the deposit insurance scheme that we have on our bank and credit union deposits. This scheme would be self-funded. It would go some way to ensuring that if there were a problem with the pension, there would be an insurance program that guaranteed some continuation of that pension. We also think there should be some kind of federal government mechanism to ensure that when a pension plan is falling apart, the government has a mechanism for intervening and ensuring that some continuation of that pension is possible.

We have some specific examples on the table for discussion, which we hope the government will look at carefully. We have costed them out and we think they are cost effective. We think they will help Canadians. Like the suggestion in Bill C-290, we think they are all necessary to move forward in ensuring retirement income security for Canadians, something that is particularly important today during the economic crisis that we are experiencing.

[John McKay, Liberal, Scarborough—Guildwood, ON]

Madam Speaker, thank you for this opportunity and your ruling. That was in fact one of the points that I was going to raise in debate. This bill did appear to require a royal recommendation and I think that you have clarified that point. In some respects, it makes the debate a bit moot because it is very doubtful that the government will give a royal recommendation to this particular bill.

This debate takes place in the context that Canadians are exceedingly worried about their pensions. We saw a demonstration this week by Nortel employees in front of Parliament Hill. It was a very moving and powerful demonstration of people who have worked for a very long time with a particular company that has gone bankrupt.

They experience a double whammy. First, their pensions have literally gone south with the bankruptcy because the assets of Nortel have in some measure gone to the United States to be distributed according to the laws in the United States, which leaves Canadian pensioners out in the cold.

Here, the pensioners rank behind certain categories of creditors. It is a double hit as far as they are concerned. They rank below secured creditors here and those assets that are attributable to the American operation take priority and go south, so those assets cannot be realized either.

The Nortel folks are in real difficulty. There was a particular scene on television two nights ago where a woman was asking where her prime minister was? Her pension and retirement are devastated. Where is the government? The truth of the matter is that the government is missing in action on this file. It has proposed no legislation whatsoever with respect to pension protection.

While the hon. member has proposed Bill C-290, which may be in and of itself be a flawed bill, it is probably a greater response than we have received from the government in the four years in which it has been the government.

I do commend the hon. parliamentary secretary for his work in this area. I know that he has engaged others in this conversation, but having engaged others in this conversation is too little, too late. The pensions of Canadians melted down last year and a lot of them have not come back. It is very sad and difficult.

While Rome literally burns, the government fiddles. We have no comprehensive response to either the Nortel people or others. When questions are raised on this side of the House, the Minister of Industry says that it is a provincial problem. As a consequence, the government says that it is washing its hands of it and that it is just too bad for the folks who do not have pensions.

People put in 30 to 35 years of work at a particular company and they are set to enjoy their retirement, but they are out of luck. That is the sad state of affairs in our country and it is a sad state of affairs with respect to the government's response to the pension crisis that is happening in this country.

The bill itself raises a number of interesting difficulties. I suppose that our party is in the position of saying that it is probably worth going to committee, even though we know full well that it will require a royal recommendation and that this bill will never receive royal assent. Nevertheless, it does raise some interesting questions.

The first question has to do with the government funding shortfalls of pensions. The concept of the bill is that if an employer does not contribute the proportion that he, she or it is supposed to contribute to the pension plan that year, the taxpaying employee will receive, in this case, a refundable tax credit, which is the operative difficulty. Effectively, that means that the employee of company A, which does not contribute, will get a tax credit. However, the employee of company B, which does contribute, will not receive a tax credit.

This brings us into a kind of moral hazard, slippery slope argument. The problem is that the government, or the taxpayer in this case, is effectively bailing out companies that do not contribute to pension plans for whatever reason. That in and of itself is a difficulty because we should not encourage competition among companies in the same industry to not contribute.

For example, let me use companies A, B and C. Companies B and C contribute to pension plans and are therefore draining their own capital. Company A does not contribute. Companies B and C are actually at a competitive disadvantage with company A, all at the cost of the taxpayer of Canada. That is a fairly significant flaw. I commend the hon. member for bringing this legislation forward, but that is a difficulty that is problematic for those of us on the committee that would look at this legislation. I do not know whether the member anticipated this difficulty.

The second difficulty I see with the bill is that it would only deal with people who have pensions. I am given to understand that something in the order of 70% of Canadians do not have pensions. Therefore, taxpayers are contributing to a pension plan out of taxpayer-funded dollars where 70% of those same taxpayers have no plan at all. The no plan taxpayer is contributing to the plan taxpayer. While we would like to redress all of the inequities in this world, this does not seem to me to be quite fair to those who fund their retirement through RRSPs or investments of some kind or another.

It is a bit difficult to rationalize to constituents of mine who have lived in their houses for 35 years, have worked, have no pension, and have lived frugally, to contribute to this pension through their tax dollars. That is a difficulty in itself.

Those are two of the difficulties that I would raise with the bill independent of the requirement for a royal recommendation.

Just for the purposes of those who may or may not understand what a royal recommendation is, a private member's bill cannot cause the Government of Canada to spend money. Any private member's bill has to be shaped and framed so that it does not cause an expenditure out of the treasury.

Having made your ruling, Madam Speaker, and having given us fair warning that this legislation would require a royal recommendation, means that when a vote takes place and if the vote is positive and the bill ends up in committee, there is a very slim likelihood that it will emerge from committee.

On the face of it, I again commend the hon. member for his diligence in putting the bill forward, but in addition to the royal recommendation problem it does seem to have some flaws which would make it difficult. Nonetheless, the bill is an attempt on the part of a private member to address issues relating to pensions. I am rather saddened that we are not looking at comprehensive legislation from the government to deal with what is really a pension crisis in this country.

Speaker's Ruling

[The Acting Speaker, NDP, Denise Savoie]

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The House resumed from June 18 consideration of the motion 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 a committee.

Income Tax Act

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

Madam Speaker, I am pleased to have the opportunity to respond to Bill C-290, the proposal for a refundable tax credit related to pension income.

This extremely flawed proposal raises a number of concerns, primarily the one that was referred to earlier. This proposal would easily cost $10 billion, which is a very substantial sum, especially considering the significant pressure on fiscal resources at the present time.

I would refer back to a question by my colleague from Mississauga—Erindale. He asked the honourable sponsor of this bill, the member for Richmond—Arthabaska, if he had put in a request to the Parliamentary Budget Officer to have a costing done on this proposal. The hon. member was unable to or did not provide an answer as to whether he had or had not.

As we know, part of the mandate of the Parliamentary Budget Officer is to cost out private members' bills, proposals that private members bring forward, to see whether they require a royal recommendation, which I would suggest this one does, but also to tell the House whether this is a reasonable request. The number we have now is $10 billion. We did not receive an answer and I would encourage the hon. member to proceed with that process.

He suggested that $10 billion was too large an amount. The critic for the Liberal Party, the member for Markham—Unionville, also suggested it was too large an amount. However, they did not back that up with anything, other than saying that number was wrong. There are facts available. The Parliamentary Budget Officer could provide those facts and I would encourage the hon. member to do it. If he thinks the number is not accurate, then he should ask the Parliamentary Budget Officer to provide us with the realistic number.

Not only that, the bill would reduce the employer incentive to properly fund and manage its pension plans to control financial risks. Overwhelmingly, the benefit of a small group of taxpayers would benefit, while the costs would be borne by all taxpayers. This ignores the strengths of our present retirement income system.

It also fails to take into account our government's action to improve the retirement savings system for Canadians.

First, this proposal would entail substantial costs, as I say, a projected $10 billion. Not only would it provide a refundable tax credit for pension income shortfalls, but it suggests that it would in fact 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 pension compensation arrangement. As a result, the proposed credit would cost about, as I say, $10 billion annually. Clearly, such a costly measure would be untenable.

Second, by providing a partial government-backed guarantee for pension benefits, we would be creating a disincentive for employers to properly fund and manage their pension plans to control financial risks.

Third, such a guarantee would raise issues of fairness because the costs would be borne by all taxpayers, while benefiting a minority of those participating in pension plans. For example, RRSP savers or those in defined contribution pension plans who do not achieve the pension income they expect because of poor investments could demand similar compensation.

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

Madam Speaker, I am pleased to support Bill C-290, tabled by the hon. member for Richmond—Arthabaska.

We worked hard on this issue together, and we met the former workers of Atlas Steel and the Jeffrey mine on several occasions. I also want to mention that we had an exceptional partner from the Bloc Québécois, namely the hon. member for Chambly—Borduas, who helped us a lot with his experience in this area, and who supported us, as did the researchers working for the Bloc Québécois. We also consulted senior officials from the Department of Finance and from the House, as well as our law clerks, who provided advice to us.

The Conservative member who spoke earlier said that today's bill was a botched piece of legislation. He asked whether we had consulted people. Does he think that one can table a bill here, in the House of Commons, without checking the facts? Before a bill can be introduced, it must comply with the financial regulations, and also with the other regulations. It is a requirement. It is an obligation. We did what we had to do and we were advised by senior officials from his government, from Parliament, and by law clerks who told us that this legislation is very consistent with Canadian laws. Therefore, our bill is financially and legally acceptable.

I also want to congratulate the hon. member for Richmond—Arthabaska, who, earlier, conveyed so well the trauma of these former workers, because of the awful situation that they are experiencing. They have been receiving a pension for 10 to 12 years and then, all of a sudden, that pension is reduced by one third. We are not talking about a commitment that had been made, but could no longer be met: that pension fund was started many years ago.

I should also point out to the Conservative member who spoke earlier that it is not 1,000 or 10,000 plants that are affected in Canada, but only two, namely Atlas Steel and the Jeffrey mine. So, this is very much an isolated problem. If these people find themselves in this situation, it is because of government measures that allowed contributions to be stopped for a while in these plants, in an attempt to save the companies. However, we did not manage to save them and they went bankrupt, with the result that the fund found itself in a deficit and that these people's pensions had to be cut by one third.

So, this measure would not cost $10 billion. In one case, we are talking about some 300 workers, and 800 or 900 in the other case. The tax credit that the government would provide has been estimated at about $1.7 million. This amount would gradually diminish because, like everyone else, these people are going to die some day. They have already reached a certain age, since they are retired. So, at some point, this measure would no longer cost anything.

We want to correct a mistake that was not made by workers who might have gambled their money away, or made bad investments. No, the mistake was made by a government. So, we must correct it with the help of a government. We got the support of the Quebec government. If this bill is adopted here, it will also be passed by the Quebec National Assembly, with the result that these 22% would become 44%. This would help workers recover a significant part of their annual loss, as the member for Richmond—Arthabaska explained in the example that he provided earlier.

I want to thank the Liberal member who spoke a little while ago. He raised questions—and we will be able to answer those questions when the bill is referred to committee—but he has nevertheless agreed, in good faith, to referring this legislation to committee. In order to do so, the bill must get the support of a majority in the House at second reading.

He agreed to that on the Liberals' behalf. We will check and discuss it in committee. It will take about a week and we will have a chance to hear from witnesses.

I would also like to thank my NDP colleague who expressed himself so honourably earlier when he said that the bill was timely and would give us cause to consider pension funds as a whole. That might not happen when we discuss this particular bill, but it might be a starting point for us to do some more looking into the complex world of pension funds.

I would also like to express how disappointed I am in the Conservative members from Quebec. I have not heard a single Conservative member discuss this issue or stand up in support of it. This is an issue that affects Quebec workers, some of whom have cousins, brothers and sisters in my riding. It also affects the people in their ridings. The Quebec members have not said a word. That is remarkable. Every time we talk about social measures, compassionate measures, measures to help people in need, they are nowhere to be found. But when we talk about protecting oil companies by giving them $2.5 billion, they give the minister a standing ovation. They are in league with those profiteers.

I have a question that I want to ask them one by one. I want to ask the member for Lévis—Bellechasse, who is always ready to take a stand when it comes to helping the well-off, the member for Beauport—Limoilou, the member for Pontiac, the members for Beauce, Jonquière—Alma, Lotbinière—Chutes-de-la-Chaudière, Roberval—Lac-Saint-Jean, Mégantic—L'Érable, Charlesbourg—Haute-Saint-Charles and Louis-Saint-Laurent, what are you waiting for? You made a choice. I made the choice to come here and stand with the other members of the Bloc Québécois to defend the interests of Quebeckers, including the Atlas Steel and Jeffrey mine workers and other workers. I am here to stand up for National Assembly consensus issues, such as demanding $2.6 billion in equalization—which is what Ontario and Nova Scotia got—and whatever else might be in Quebec's interest. You made a different choice. That was your right, and when you made that choice, you were saying: “I will get elected as a member of the party in power and I will be able to influence decisions made by the party in power when I am part of that caucus”.

Well now, it is time to act. So far, the 10 Conservative members from Quebec have not said a word. As the second hour of debate on this issue will not take place until October, you will have until then to think about whether you are representing Quebec's interests here in Ottawa.

[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]

Tory times are tough times, as my colleague so wisely says, Mr. Speaker.

As long as Canada has a Conservative government, Canada will have a Conservative deficit. Because we have a big, fat, juicy Conservative deficit, Bill C-290 would reduce taxes for today's pensioners, but our children and grandchildren would pay those taxes down the road. If we are going to ask a teenager in Richmond—Arthabaska to pay taxes 10 years from now in order for a senior in Prince George to use this tax credit today, we should know how much tax we are talking about. Before a third reading vote, it would be vital that members know how much revenue the bill would cost the government, and more important, our children.

During the second reading of Bill C-290's predecessor, the Parliamentary Secretary to the Minister of Finance suggested that the cost would be upward of $10 billion a year. That number is suspiciously round. It is reminiscent of the alleged $50 billion deficit created by the finance minister, and I suspect it may be equally inaccurate. When the government says $10 billion, it may be $10 million or $2,000. The government is not good with numbers.

It is our position that the bill should be sent to committee. Then we can hear from real experts, finance department officials, not the Minister of Finance and his friends, as to what the costs of the bill are in reality.

Let us be clear: there is no doubt that we need to take action on pension reform in this country. Today, at the finance committee, we heard from Nortel employees and retirees. As we all know, Nortel is currently in bankruptcy protection and there are some serious concerns about the pensions of current and former employees. They have concerns that their underfunded pension plan does not have preferred creditor status in bankruptcy negotiations.

We also heard from many experts at the finance committee that the 110% maximum funding limit on pension plans acts against the interests of retirees. For this and many other reasons there is much more work to be done on the subject of pensions.

Few things could be more nerve racking than having one's pension reduced, especially in the years when one cannot return to the workforce to supplement that lost income. While that reason alone is sufficient, I believe that the principle of the bill certainly merits further study. Therefore, we in the Liberal Party believe that the bill should be sent to the finance committee where members can determine if it is the best way to go about helping retired individuals whose pension benefits are reduced.

[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.

[Bob Dechert, Conservative, Mississauga—Erindale, ON]

Madam Speaker, I appreciate the opportunity to speak about this Bloc proposal.

Bill C-290 proposes a costly refundable tax credit related to pension income at an estimated cost of about $10 billion per year. Such a costly measure would be untenable at any time, but it is particularly unsupportable in the current fiscal context. However, the cost of this proposal is not its only problem. It also raises serious issues, such as serving as a disincentive for employers in financial difficulty to properly manage their pension plans to control risks.

Clearly, having adequate retirement savings is important to all Canadians. While Canada's retirement income system is strong, with a balanced mix of public and private retirement savings programs, with both compulsory and voluntary components, our government has sought, and will continue to seek, improvements.

Indeed, our Conservative government has introduced a litany of tax-cutting measures to provide much needed relief to seniors and those saving for retirement.

We doubled the amount of eligible income that can be claimed under the pension income tax credit to $2,000. It is the first time the credit amount has been increased since it was introduced in 1975.

To improve work and savings incentives, we increased the maximum age to 71 by which Canadians must convert their RRSPs to registered retirement income funds and begin receiving pension payments.

We brought in tax changes to permit employers to offer more flexible phased retirement programs in order to retain older experienced workers and ease succession planning measures.

We introduced the landmark pension income splitting, a move that Cynthia Kett of Stewart and Kett Financial Advisors Inc. called “a huge gift from the government that more and more senior Canadians are taking into consideration in their financial and retirement planning”. And we increased the age credit by $2,000.

Our Conservative government's tax-cutting agenda since we formed government in 2006 has provided nearly $2 billion in tax relief every year for Canadian pensioners and seniors.

Additionally, we provided a 25% one-time reduction in the required minimum withdrawal amount for registered retirement income funds for 2008. This will provide approximately $200 million in tax relief to RRIF holders, while allowing retirees to keep more of their savings in their RRIFs sheltered during an extraordinary drop in market conditions.

We also recognize that Canadians need stronger incentives to help meet ongoing savings needs. As a recent HSBC Insurance Agency survey indicated, almost half of Canadians think, “The best way the government can support aging people planning for their retirement is to give them tax breaks and to allow them to look after themselves”.

This is one of the many reasons our government introduced the historic tax-free savings account, or TFSA. The TFSA is a flexible savings vehicle that complements existing registered savings plans by allowing Canadians to earn tax-free investment income to more easily meet their lifetime savings needs.

Starting this year, Canadians 18 or older can contribute up to $5,000 annually to a TFSA, with unused room being carried forward. While contributions to a TFSA are not tax deductible, all investment income, including capital gains, earned in the account will be tax-free even when withdrawn.

Important TFSA features for retirees include the fact that TFSAs have no upper age limit and that neither investment income earned in a TFSA nor withdrawals affect a senior's eligibility for federal income tested benefits, such as OAS or GIS. It is little wonder then that renowned financial author Gordon Pape has proclaimed that TFSAs are “a welcome tax shelter for Canadian seniors”.

Clearly, our Conservative government has worked aggressively to ensure that the retirement income system is responsive to the needs of savers, pensioners and seniors. We will continue to build upon and enhance the system in a way that supports its objectives, consistent with sound pension and economic policy principles.

This brings us to the Bloc's flawed proposal outlined in Bill C-290.

The measure proposed here would go far beyond its stated intent. Not only would it provide a refundable tax credit in respect of shortfalls and pension income, but it would also 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 cost approximately $10 billion per year. This represents a major and ongoing cost, and one that is clearly irresponsible in the current fiscal context. For this reason alone, I submit that the proposal should not be supported.

Regardless of whether the bill has been drafted properly to achieve its intended result, its objective is to provide a partial government-backed guarantee for pension benefits. Such a guarantee would reduce the incentive for employers to properly fund and manage their pension plans to control financial risks. This is because sponsors may exercise less due diligence with respect to prudential goals, knowing that benefits are backstopped to some degree by the government.

The fact that pension plan sponsors would not be required to contribute anything whatsoever to cover the cost of this refundable credit would exacerbate this effect.

Moreover, this proposal would place on the federal government's shoulders the responsibility for providing compensation in respect of all pension plans that reduce pension benefits. It is important to note that the federal government is only responsible for pension benefit standards for plans sponsored by federally regulated employers. Indeed, nearly 10% of all pension plan members participate in federally regulated plans.

Since provinces are responsible for the protection of pension benefits for plans sponsored by provincially regulated employers, the onus placed on the federal government for such compensation would be unjustified.

Furthermore, 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, which 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, would be extremely costly for taxpayers. It also raises issues of fairness, since the costs would be borne by all taxpayers while the benefits would accrue only to a minority of those participating in pension plans.

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 be an improper use of the tax system. It would also be costly and unfair.

Therefore, I strongly urge members not to support this proposal as drafted.

[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.

Private Members' Business

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

Mr. Speaker, on June 2, you read a statement concerning certain bills which would infringe on the financial prerogative of the Crown and might therefore require royal recommendation. At that time, you specifically referred to my bill, Bill C-290, which is why I wanted to speak briefly. I am responding to your invitation to make representations to you on the matter.

I know that the Parliamentary Secretary to the Leader of the Government in the House of Commons spoke to this matter this morning, stating that my bill did require royal recommendation. You will not be surprised to learn that I do not share that opinion. I totally disagree and, I repeat, I will be brief in stating my point of view.

Hon. members need to understand that my bill amends the Income Tax Act to provide a refundable tax credit to an individual whose employer, and certain employees of that employer, failed to make the contributions required to be made to a registered pension plan. The bill seeks to help retired workers whose retirement income is reduced by the closure or bankruptcy of their company.

I am sure I will be able to convince you with my arguments. According to a ruling by the Chair on October 16, 1995, relating to Bill S-9, reducing income tax does not contravene Standing Orders 79 and 80. The Speaker at that time made the following ruling:

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.

Thus, it seems to have the same tax effect given that we are reducing the state's tax revenue with our bill, as allowed by the Standing Orders. The Speaker should consider the fact that this measure does not seek to create a specific program to help workers who may have lost their retirement funds but rather to allow citizens who have paid taxes all their lives to benefit from tax credits.

This tax measure will reduce the tax burden of individuals who have lost their retirement income because their retirement fund was inadequate at the time the company they worked for ceased operations.

Take, for example, the 1,200 retired employees of Jeffrey Mine in Asbestos, which is in my riding. Since February 2003, they have lost no less than $55 million in retirement funds and $30 million in benefits. A retired worker who normally would have been entitled to $30,000 now only receives $22,000. Once the bill in question, Bill C-290, goes into force, that worker will receive 22% of the lost $8,000, or the non-taxable amount of $1,760.

In closing, passage of this bill will mean that all retired employees who find themselves in this type of situation can recover a portion of amounts lost through tax credits. It is important that we mention this fact. This would only result in a reduction in the government's revenue and not in a new social program.

I will conclude by saying that I am convinced this explanation will allow you, Mr. Speaker, to reconsider the need for obtaining a royal recommendation for Bill C-290.

Royal Recommendation--Bill C-290

[Tom Lukiwski, Conservative, Parliamentary Secretary to the Leader of the Government in the House of Commons]

Mr. Speaker, I rise on a point of order.

On June 9, 2009 you made a statement with respect to the management of private members' business and noted the spending provision in three private members' bills appeared to infringe on the financial prerogative of the crown. At that time you invited members to make arguments on whether these bills required a royal recommendation.

One of the bills is Bill C-290, An Act to amend the Income Tax Act (tax credit for loss of retirement income), which will be debated later today. Notwithstanding the possible merits of Bill C-290, the bill would create a new refundable tax credit for the loss of retirement income, and I believe it would require a royal recommendation.

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, also known as the CRF. As a result, any legislative proposal to create a refundable tax credit requires a royal recommendation.

Two recent rulings in the House of Commons and the Senate concluded that creating or increasing a refundable tax credit would require a royal recommendation.

On June 4, 2007 the Speaker of the House ruled that a proposed amendment to Bill C-52, An Act to implement certain provisions of the budget tabled in Parliament on March 19, 2007, to create a refundable tax credit could not be selected at report stage because the amendment required a royal recommendation.

On May 11, 2006 the Speaker of the Senate ruled that private member's Bill S-212, an Act to Amend the Income Tax Act (Tax Relief) 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 CRF; they are expenditures of public money.

Since Bill C-290 would create a new refundable tax credit, it must be accompanied by a royal recommendation.

Private Members' Business

[The Speaker, Liberal, Peter Milliken]

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

As members know, after the order of precedence is replenished, the Chair reviews the new items so as to alert the House to bills which at first glance appear to impinge on the financial prerogative of the Crown. This allows members the opportunity to intervene in a timely fashion to present their views about the need for those bills to be accompanied by a royal recommendation.

Accordingly, following the May 27 replenishment of the order of precedence with 15 new items, I wish to inform the House that 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; Bill C-308, An Act to amend the Employment Insurance Act (improvement of the employment insurance system) standing in the name of the member for Chambly—Borduas and Bill C-395, An Act to amend the Employment Insurance Act (labour dispute) standing in the name of the member for Berthier—Maskinongé give the Chair some concern as to the spending provisions they contemplate.

Hon. members who wish to present their views regarding the need for a royal recommendation to accompany these bills, or any of the other bills now on the order of precedence, are encouraged to do so at an early opportunity.

I thank the House for its attention.

Income Tax Act

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

moved for leave to introduce Bill C-290, An Act to amend the Income Tax Act (tax credit for loss of retirement income).

Mr. Speaker, I am pleased to be back here once again introducing a bill to create a refundable tax credit of 22% for loss of retirement income.

Retired employees of the Jeffrey mine in Asbestos in my riding and of Atlas Steels in Sorel-Tracy, in the riding of the member seconding this bill, my colleague from Bas-Richelieu—Nicolet—Bécancour, saw their retirement income drastically reduced after their former employer went bankrupt. We are trying to help these people with this bill, which I will remind everyone, passed second reading in the last Parliament. I would like to thank my Liberal and NDP colleagues, who have agreed to support this bill in order to refer it to committee. We had made significant progress. Unfortunately, an election was called, which forces us to start over with this bill. We are going to keep at it. The Conservative Party, the government, is the only one that has refused to support our bill. We will try, in good faith and with open minds, to convince them to support these people who were shortchanged when these businesses shut down. They deserve justice and dignity. That is why we are fighting for them.

Obviously, I would like to thank the hon. members for Bas-Richelieu—Nicolet—Bécancour and Chambly—Borduas who have worked hard with me and with the retired employees in order to develop this bill which is so important for them.

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