Bill C-26 (Historical)

An Act to amend the Canada Pension Plan, the Canada Pension Plan Investment Board Act and the Income Tax Act

Part 1 of this enactment amends the Canada Pension Plan to, among other things,
(a) increase the amount of the retirement pension, as well as the survivor’s and disability pensions and the post-retirement benefit, subject to the amount of additional contributions made and the number of years over which those contributions are made;
(b) increase the maximum level of pensionable earnings by 14% as of 2025;
(c) provide for the making of additional contributions, beginning in 2019;
(d) provide for the creation of the Additional Canada Pension Plan Account and the accounting of funds in relation to it; and
(e) include the additional contributions and increased benefits in the financial review provisions of the Act and authorize the Governor in Council to make regulations in relation to those provisions.
This Part also amends the Canada Pension Plan Investment Board Act to provide for the transfer of funds between the Investment Board and the Additional Canada Pension Plan Account and to provide for the preparation of financial statements in relation to amounts managed by the Investment Board in relation to the additional contributions and increased benefits.
Part 2 makes related amendments to the Income Tax Act to increase the Working Income Tax Benefit and to provide a deduction for additional employee contributions.

Canada Pension Plan

[Darrell Samson, Liberal, Sackville—Preston—Chezzetcook, NS]

Madam Speaker, that is a very good question. It is a gang: the CPP is coming in, the guaranteed supplement is coming in as well, and the age to receive OAS has been moved back to 65. Then we are stimulating the economy through infrastructure investment. We are ensuring that investment for young families will help with the cost of living to educate and allow their kids to—

[The Assistant Deputy Speaker, Carol Hughes]

Resuming debate, the hon. member for Sarnia—Lambton.

[Marilyn Gladu, Conservative, Sarnia—Lambton, ON]

Madam Speaker, it is my pleasure to rise today in this House to address Bill C-26, an act to amend the Canada Pension Plan, the Canada Pension Plan Investment Board Act, and the Income Tax Act.

When introducing legislation, it is important to consider what problem we are trying to solve. One might think, from the rhetoric spouted by the government, that we are in a retirement crisis, but I am fact and evidence based—as the government claims to be but is not—and I can say that, according to a study by McKinsey & Company, 83%, of Canadians are on track to maintain their current living standards in retirement.

Fred Vettese, the finance minister's co-author, says that Canadians are not facing a retirement crisis, nor is such a crisis likely to arise. Finance Canada says that, overall, Canada's retirement income system is performing well.

Canadian retirees achieve relatively high income in retirement and compare well to retirees in other organizations. With support from all three pillars of the retirement income system, the median Canadian senior earns 91% as much as median Canadians. Internationally, Canada has one of the best income rates for seniors.

Statistics Canada has stated that the number of seniors living on low income has dropped to 3.7%, among the lowest in the world. If our retirement system is doing so well, why is the government taking time and money away from other issues in an attempt to change it?

The Canada pension plan is internationally recognized as one of the strongest and most reliable retirement systems, yet here we are about to make detrimental changes.

What problem are we trying to solve? It must be the fact that 17% of Canadians are not on track to maintain their lifestyle when they retire. We therefore need to ask ourselves whether we really should impose a tax hike on all Canadians, including small businesses that are already struggling, in order to help that 17%. Is there a better approach? What impact will this increase in the CPP have on individuals and small businesses?

The Department of Finance Canada, the minister's own department, said that Bill C-26 would reduce employment in Canada and cost 1,040 jobs every year for the next 10 years. That will result in a drop in the GDP, a drop in corporate investments, a drop in Canadians' disposable income, and a 7% drop in private savings in the long term.

It will have a very negative impact on small business. The CEO of the Federation of Independent Businesses says that two-thirds of small firms say they will have to freeze or cut salaries, and over a third say they will have to reduce hours or jobs in response to a CPP-QPP tax hike.

The senior director at the Canadian Chamber of Commerce warns:

This comes at the worst possible time—an economy reeling from weak commodity prices and slower consumer spending will be lucky to eke out growth of 1.5% next year. It’s difficult to stimulate the economy while pulling money out of the pockets of Canadians.

Small business creates more than 80% of the jobs in Canada. These businesses are already struggling, especially in Ontario and in my riding, where sky-high electricity costs imposed by the Ontario Liberals and uncertainty about the federal carbon tax and increasing bureaucratic burden have driven many of these businesses to the brink, where this final CPP increase will cause them to exit.

These changes would force industries to leave Canada in favour of lower taxes and contributions south of the border. This would not grow our economy and would only put more strain on Canadian families.

What about Canadians who are self-employed? This would cost them about $2,200 more per year. What about those who are already struggling with incomes below $40,000 per year? The Liberal government has done nothing for them in tax relief. The carbon tax would increase the price of everyday purchases for this group, and the proposed CPP changes would take more money out of their pockets. This has to stop. Struggling families will only fall further into debt, and our economy will stagnate.

Who will benefit from this measure? No one will benefit for 40 years. Meanwhile, this government will have access to that tax revenue for 40 years and we are just supposed to trust that it will not spend that money on anything else. I apologize for being skeptical, but the Liberals have already added $40 billion to their spending spree this year and I do not believe that giving this government more money is a good idea.

Therefore, 40 years from now, let us talk about those people on the plan then.

This plan would increase the income replacement rate from 25% to 33%. That is 8%. The problem is that the basic economic rule of the time value of money tells us that at the current interest rate costs double every 20 years. In 40 years, costs would have quadrupled and yet this benefit would only increase 8%. This measure means people will be even poorer with the proposed CPP changes. These proposed changes will have a negative impact on this generation and will not help future generations.

Let us say we took the current maximum CPP rate and applied the consumer price index rate of inflation of 2.5%. In 40 years, the current value would need to be at minimum 100%, actually 240% greater, not 8% greater.

This proposed CPP change will not help small business. It will not help those who are self-employed. It will not help seniors. It will not help the young generation that will be needing retirement options in 40 years.

Simply put, the proposed changes will do nothing but provide the government with more money to spend. Canadians will not profit from these changes and in reality many will suffer. The immediate and long-term loss of jobs, business opportunities, and disposable incomes will only further shrink our economy and limit the futures of Canadians.

However, I am always one to come with solutions. Here are several possibilities.

I would like to suggest a further increase to the guaranteed income supplement to help seniors who are currently struggling. Sixty dollars a month is not very much compared to Kathleen Wynne's $130-a-month increase in electricity fees. If the government wants to help seniors who are trying to live on less than $40,000 a year, it could use the existing guaranteed income supplement, without incurring any additional administrative costs, and increase the amount given to seniors by at least 3% per year to keep up with inflation. It would be even better if the government increased the GIS by 10% once the carbon tax takes effect in 2018.

I believe access to significant TFSAs and voluntary CPP contributions will give Canadians control and flexibility to invest in their retirement when and how they feel comfortable.

Changes such as the ones presented in the bill will slow our economy. It is simple. The less money Canadians have, the less they are able to save. The TFSA should be increased and savings promoted, instead of taking more money from Canadians families.

The financial instability of these proposed changes will create a significant effect on all Canadians, especially those with lower incomes.

I have an idea for young people who need good retirement options in 40 years. How about creating well-paying jobs with good pension options?

I can create 3,000 well-paying jobs, with full pensions, for young people in my riding with $12 million of infrastructure money if the infrastructure minister is serious about creating jobs.

For small businesses, how about implementing the tax decrease to 9% that the government promised?

Any or all of these solutions would be better than what is proposed in Bill C-26.

As such, I will not support the bill, but I move:

That the motion be amended by deleting all the words after the word "That" and substituting the following:

“the House decline to give second reading to Bill C-26, An Act to amend the Canada Pension Plan, the Canada Pension Plan Investment Board Act and the Income Tax Act, because it will: (a) take more money from hardworking Canadians; (b) put thousands of jobs at risk; and (c) do nothing to help seniors in need.”

[The Assistant Deputy Speaker, Carol Hughes]

The amendment is in order.

Questions and comments, the Hon. member for Dufferin—Caledon.

[David Tilson, Conservative, Dufferin—Caledon, ON]

Madam Speaker, normally when we pass a bill in this place, it is to benefit something; it is to improve our way of life, to solve a problem. This bill would not take effect completely for at least 40 years.

Knowing that fact, will this bill benefit anyone right now? Will it benefit any individuals who are in their 20s, 30s, 40s, 50s, 60s, or 70s? Will it benefit anybody in those age groups?

[Marilyn Gladu, Conservative, Sarnia—Lambton, ON]

Madam Speaker, this will not help anybody. Finance Canada has said this will reduce employment, the GDP, business investment, disposable income, and private savings. I spoke about how even the people who would receive the benefit 40 years from now would be worse off because of the time value of money and the purchasing power they would have at that point.

[Bill Casey, Liberal, Cumberland—Colchester, NS]

Madam Speaker, it has been interesting to listen to the debate. The other day a member said that there was a high proportion of seniors in the riding. I too have a high proportion of seniors in my riding. If it were not for the Canada pension, I do not know what those seniors would do. Also Canada pension provides disability.

Members have said that people will leave Canada because of this and that it will cost employers because of this. I would like to set the clock back and ask the hon. member this. If there were no Canada pension, all these same arguments that the opposition has given would apply. Would the member still be against Canada pension, because obviously all the same arguments would apply? Would the member vote against establishing Canada pension?

[Marilyn Gladu, Conservative, Sarnia—Lambton, ON]

Madam Speaker, the government needs to quit dreaming about what might happen or what if we turned the lock back and start focusing on trying to create jobs and introducing programs that are going to do something for somebody. This will do nothing but hurt small business. It will hurt all the people who are already struggling. It will not help the people in the future.

[Jenny Kwan, NDP, Vancouver East, BC]

Madam Speaker, while I agree that the plan we are talking about today would take a very long time to kick into effect, in the interim there are a whole lot of people who are not getting the support they need.

The most recent figures available show that some 30% of single elderly women live in poverty. In fact, that number has tripled over the last 20 years. Could the member offer some suggestions as to what could be done now to effectively lift vulnerable elderly women out of poverty?

[Marilyn Gladu, Conservative, Sarnia—Lambton, ON]

Madam Speaker, I certainly talked about some solutions in my speech, and I love the targeted program that the member has suggested. We look at what the problem is and if we see that elderly single women are having a struggle, we decide we will give them specifically an increase. Those are the kinds of solutions I would like to see.

[David Tilson, Conservative, Dufferin—Caledon, ON]

Madam Speaker, I have had constituents in my riding who are employers in small business. They have said that if they have to pay an additional $1,000 per employee, they will have to lay people off. Has my colleague had that experience in her riding?

[Marilyn Gladu, Conservative, Sarnia—Lambton, ON]

Madam Speaker, small businesses in my riding are already starting to go out of business. We have huge electricity prices that the Ontario Liberals brought in. The federal threat of the carbon tax is going to be horrible in my riding because we have petrochemicals and oil and gas. All of these have options to go to the states and take their carbon footprint with them. This would just be an added burden to small businesses. When we think about 10 employees, we are talking about more than $10,000 or $15,000 a year.

[Judy Sgro, Liberal, Humber River—Black Creek, ON]

Madam Speaker, I am pleased to stand today to talk about Bill C-26. It has been a long time coming for this side of the House.

I have listened to my colleagues in the opposition and they clearly have an ideological slant, which is very different to how we think on this side of the House. Therefore, I am pleased to see that Bill C-26 has been presented.

At one point, I was the Liberal critic for seniors and pensions, and so we have had a lot of to and fro. I am glad to see that today's debate and discussion is being done in a respectful way. However, as the former critic, I think back to the dozens of times that I had asked the previous Conservative government to make changes to the CPP, and I am reminded of its constant foot-dragging and excuses for inaction.

The Conservatives' ideology is very different than that on this side of the House. They said that pension reform was something best left to the provinces. They also said that pension reform had no business on the floor of the House. I am very proud to say that we are going to prove them wrong again, as we did many years ago when we introduced CPP.

Seniors, like those living in my riding at 7/11 Arleta, helped to build our country. They deserve better than to be relegated to the shadows of the Conservative economic inaction plan. For nearly a decade, Canadian seniors were told that better was impossible, and that Canadians needed to tighten their belts and do more with less. This argument might have resonated with the core Conservative supporters, but missed the mark with seniors with a background in physical work, which was work that paid less but demanded more.

Seniors with low incomes, failing health, and challenging circumstances know too well the heartbreak of deciding between groceries and hydro, between rent and a grandchild's Christmas gift, or any number of other impossible choices demanded because of a pension that just did not keep pace with increasing costs. Today, because of this government and our commitment to do the right thing for seniors, that shameful history of taking seniors for granted will finally be behind us.

Today, for the first time in far too long, Canadian seniors, like Paterra Catania, whom I spoke to just yesterday on this issue, have a reason to smile and have hope. Real change is taking root within their homes and bank accounts but, most important, for the future of their children and their grandchildren.

In the last election, the Liberals promised to protect income splitting for seniors, which we did; to restore the old age security and GIS eligibility age to 65, which we did; to increase the annual GIS payments; and to enhance the CPP, which is exactly what we are doing now.

We have protected the income splitting, restored the age to 65; allocated $670 million per year to double up the GIS for the lowest-income seniors; and now we have Bill C-26, which will be to enhance the Canada pension plan. These are not small changes, but this is real help for real people in the future.

In just one year, this government has started to reverse years of contempt and neglect at the hands of the Stephen Harper government and his ideologically driven Conservatives. Of course, it is important to note that to amend the CPP, the following was required, which we were told was next to impossible for the last five years: agreement from two-thirds of the provinces representing 50% of the population, which is a good achievement for our folks on this side of the House; a fully costed strategy; and an agreement from the federal government, which was something the previous government refused to give for eight years.

Set another way, this change was certainly not easy, but it is amazing what can be done when good people come together with a common goal rather than making excuses for inaction. Change can be hard, but change is necessary.

This brings me back to Bill C-26.

Today, middle-class Canadians are working harder than ever before. Many are worried that they will not have the savings they need to live with dignity during their retirement years. Many people were unaware of just how difficult it was if one had not saved enough money when reaching that age of 65. To make matters worse, each year fewer and fewer Canadians have workplace pensions to fall back on.

The Conservative wait-and-see strategy failed to do anything except make matters worse. It is going to take time to fully reverse the damage done by the years of neglect, but we will start by putting more money into the hands of those who need it most. Bill C-26 would increase the amount of the retirement pension, as well as the survivor's and disability pensions, and the post-retirement benefit. Once fully implemented, Bill C-26 would boost how much seniors would get from their pensions and would help by giving low- and middle-income seniors choice and flexibility in their daily lives.

To make sure these changes are affordable, we will phase them in over seven years. We are not going to bring them in overnight. We will phase them in very gradually from 2019 to 2025, so that the impact on employers is gradual and manageable, and they know that it is coming. Every Canadian deserves a secure and dignified retirement after a lifetime of hard work. Through this enhancement, we have taken a powerful step to help make that happen.

Last year, the Liberals made a commitment to Canadians to strengthen the CPP in order to help them achieve their goal of a strong, secure, and stable retirement. Bill C-26 is an important step along that path. It would increase the maximum level of pensionable earnings by 14% in 2025, provide for the making of additional contributions by 2019, and allow for the creation of the additional Canada pension plan account and the accounting of funds in relation to it. This would be a vehicle for many people who want and have the ability to put an extra few dollars away. They will be able to do that now, knowing that the money is going into a fund that is well run and will be there for them to ensure their retirement.

Many of these measures were part of a detailed pension reform white paper that I prepared in 2010, with the help of many industry experts. As we celebrate this victory today, I would like to thank people like Jean-Pierre Laporte, James Pierlot, Bernard Dussault, and many others who worked on the white paper that made possible the change that we are looking at in Bill C-26 today.

We may have toiled in darkness for many years, but now there is a government that is not afraid of change. Liberal administrations of the past clearly understood the need to protect seniors and help prepare people for those senior years. Whether we are referencing the Old Age Pensions Act, delivered by the Mackenzie King government; the Old Age Security Act, delivered by Louis St. Laurent; or the Canada pension plan and guaranteed income supplement, both delivered by the Lester Pearson government; Liberal governments have a collective legacy of valuing the long-term pension security of Canadians.

Bill C-26 is the next chapter in that story and I am glad to support the legislation on behalf of the people in the communities of Humber River—Black Creek.

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

Madam Speaker, in my colleague's remarks, she referenced the implementation of CPP in 1964. In fact, Judy LaMarsh, the Liberal minister who was responsible for establishing CPP in 1964, had this to say, “It”, referring to CPP, “is not intended to provide all the retirement income which many Canadians wish to have. This is a matter of individual choice and, in the government’s view, should properly be left to personal savings and private pension plans”.

Finance Canada, in 2015, stated:

Overall, Canada's retirement income system is performing well. Canadian retirees achieve relatively high levels of income in retirement, and compare well to retirees in other Organization for Economic Co-operation and Development countries. With support from all three pillars of the retirement income system, the median Canadian senior earns about 91 per cent as much as the median Canadian—well above the Organization for Economic Co-operation and Development average of 84 per cent.

It is 84% in OECD countries and Canada's is 91%. Therefore, internationally, Canada has one of the lowest low-income rates for seniors.

My question is this. Where is the panic? Even if there were one in terms of poverty, this is not going to be implemented fully for 40 years, so how would it help seniors?

[Judy Sgro, Liberal, Humber River—Black Creek, ON]

Madam Speaker, certainly nobody is talking about there being a panic, but what would we do if we did not have the CPP? I meet with people in my office all the time who have small amounts in their CPP because they did not contribute long enough. Many of them did not go to work until after their families were raised, and CPP is all relative. What people put in is what they get back.

They may not be in the 91%, but there are an awful lot of people out there who are struggling to make ends meet. I am aware of the good work that my colleague does and I am sure he is very much aware of the seniors today who are suffering. We are talking about wanting to make sure that our children, our grandchildren, and others do not have to figure out whether they will have macaroni and cheese once this week or twice this week because they do not have enough money to make ends meet.

That is the reality today. Seniors of today do not want their families to have to do that. Bill C-26 is moving a step forward in the direction of positive things.