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.

[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.