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

[Pierre Paul-Hus, Conservative, Charlesbourg—Haute-Saint-Charles, QC]

Madam Speaker, I am pleased to speak to this bill, and I am especially happy to have this opportunity to rise in the House knowing that many members will not have a chance to express themselves because of the government's decision to once again limit the time for debate.

Apparently we will have to do like Chinese billionaires and shell out $1,500 to buy time with Liberal ministers to get them to listen to our concerns. That is really too bad, but that is what it has come to.

I would like to start with something we know to be true. People often say that Canadians are not financially prepared for retirement and could end up living in misery because they do not have enough money. They do not have enough cash in the kitty to fund the retirement they want, a retirement they can really enjoy that does not include frequenting soup kitchens.

This is a serious problem, one we need to tackle at its source. If Canadians are not investing enough for their retirement, perhaps it is because they do not have the means to do so. Although salaries have gone up over the past few decades and interest rates are currently very low, the situation is not perfect for Canadians. That is because such a large portion of their income is taken away by the various levels of government in the form of sales tax, premiums, permits, licences, and income tax. There is no shortage of words to describe how the government picks the pockets of the middle class.

If we want Canadians to be able to plan for their retirement, we need to give them the means to do so. I know this is hard for the members over there to understand. This means giving Canadians greater flexibility so they do not have to hand so much over to all levels of government, until they have almost nothing left to plan for their golden years.

The government loves being generous with other people's money. I would remind members that it is generous with taxpayers' money, including corporate taxpayers. Despite the Liberals' shameful $25-billion deficit, which has not created any wealth, they are not putting any tax dollars into this plan.

However, this will come at a cost to the Canadian economy. This is a glorified tax on businesses and Canadians. The Liberal government unilaterally decided what Canadians will do with an even bigger part of their salary. Our deficit experts are introducing yet another payroll tax.

Instead of working to create wealth, they are undermining it. In many cases, these costs mean the difference between profitability and hardship. Every business, big or small, will be affected by this measure.

I know what I am talking about. I am a businessman and have been a business owner for 21 years. I know all about costs and obstacles to hiring. The more governments drive up the costs, the less appetite there is for hiring. It is as simple as that.

That amount can be significant for large companies with several hundred employees. Production costs for the same output will go up by $100,000, $200,000, $300,000 or more overnight, and we haven't even talked about the carbon tax the Liberals are going to tack on. The future is not bright for our businesses. It is going to take a lot more than a Care Bear stare to grow our economy.

The finance minister's officials confirm our fears about the changes in Bill C-26: the proposed increased contributions will have an adverse effect on job creation. For a government that said it would base its decisions on science, facts, and sound advice from the public service, it is sad to see the Liberals act in this way. They are listening more to Kathleen Wynne that to experts on this. It seems that the Butts and Telfords of this world have more pull than finance department experts.

I have some examples. According to officials at the Department of Finance, the measures proposed in Bill C-26 will have an adverse effect on job creation.

Over 10 years, the drop in job creation will be between 0.04% and 0.07%. These are jobs lost, not created. There will also be a drop in GDP of between 0.03% and 0.06%. A drop in GDP is not synonymous with job creation. There may also be a drop in corporate investment of between 0.03% and 0.06%. When companies invest less, there are fewer jobs for Canadians. There will also be a decrease in disposable income of between 0.03% and 0.06%. Canadians with less money in their pockets means less money to keep our economy going. There will be a 7% drop in long-term private savings. Once again, this measure is supposed to encourage saving for one's old age. However, it will accomplish the exact opposite. People will have less money.

The government is gambling that by increasing taxes it can solve everything. The Liberal government is reverting to its old habits: it thinks that it should not let Canadians manage their own money because they will buy beer and chips instead of investing in their future.

On this side of the House, we believe that Canadians are smart enough to invest in their retirement if we give them the means to do so by cutting taxes. If they do not invest, it is because they do not have the means. If we give them the means, they will invest.

The Fraser Institute reports that a one percentage point increase in the CPP contribution rate reduces private savings by 0.9%. The Liberals' measures only shift the problem rather than resolving it. It is worrisome that 70% of small business owners do not agree that the proposed increase is a modest one and that it will have a limited impact on their businesses. SMEs are Canada's main employers. Could the government listen to them?

The decision to increase contributions was made without consulting Canadians. It would be interesting to consult those who are going to pay for this decision: the public and the employers.

In short, to resolve the problem, the government is proposing to take money away from Canadians who already do not have enough to make ends meet.

I would like to read a quote by Hendrik Brakel, the senior director of economic, financial, and tax policy at the Canadian Chamber of Commerce. On May 31, 2016, he said:

Here at the Canadian Chamber of Commerce, we’re worried a big tax increase is headed for the middle class like an elbow to the chest...

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.

These people need the government to give them a break, not foist another tax on them.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

Madam Speaker, I thank my colleague for his speech.

I have a question for him about the usefulness of public pension plans.

According to most of what the Conservatives say, they seem to neither appreciate nor promote a robust public pension plan. I would like my colleague to acknowledge the fact that there may be consequences when there is no public pension plan, as the Conservatives seem to be proposing, or when the plan is weak.

In fact, with a weak public pension plan, not everyone saves or puts money aside for retirement. Who will look after those seniors living in poverty? The government.

Poverty greatly affects the health care system. Again, the government is the one that supports people living in poverty at the end of their lives.

Can my colleague acknowledge that, in any case, if there is no public pension plan, it is the government that will see to the quality of life of our seniors? Consequently, it is better to put money into a robust public pension plan that will make retirement possible, without the government interfering too much in the lives of pensioners.

[Pierre Paul-Hus, Conservative, Charlesbourg—Haute-Saint-Charles, QC]

Madam Speaker, I appreciate the question from my colleague, the youngest member of the House of Commons, who will have the opportunity to benefit from the money that will be invested in the program today. In 40 years, he will still be young. We, however, will be very old.

The question concerns the philosophy of the Conservatives compared with that of the NDP or the Liberal government. It is a fact that we do not have the same philosophy or the same way of seeing things. Listen, we have introduced programs, such as the TFSA, for example, and ways for people to save. Our philosophy is this: leave the money in taxpayers' pockets so they can invest it themselves.

My response to my colleague is that we prefer to allow people to manage their own investments. We want to give them the means to make investments; we do not want to tax citizens and businesses thousands of dollars for 40 years, in addition to slowing the economy and job growth. It all comes down to mathematics. As we see it, Liberal mathematics do not work.

[The Assistant Deputy Speaker, Carol Hughes]

I remind the hon. member that all questions and responses must be directed through the Chair.

The hon. member for Laurentides—Labelle has the floor.

[David Graham, Liberal, Laurentides—Labelle, QC]

Madam Speaker, I thank the hon. member for Charlesbourg—Haute-Saint-Charles, but I would like to follow up on a question from my colleague from Sherbrooke.

I would simply like to know if the member for Charlesbourg—Haute-Saint-Charles believes that the CPP, like all government programs, has to exist, or if he would rather they were abolished entirely.

[Pierre Paul-Hus, Conservative, Charlesbourg—Haute-Saint-Charles, QC]

Madam Speaker, I thank the member for his question.

As a Conservative, I am not necessarily in favour of doing away with all of the existing programs. Some of the programs that are in place are effective. They are good programs. We even increased the guaranteed income supplement for seniors at the time, before the government changed.

That is not the issue. The issue is that there has to be a balance. The problem right now is that there is no balance. The Liberals are imposing an additional tax on employees and employers for a program that will not produce results for 40 years. It is a matter of balance. What is more, the government needs to know what investments to make and when.

[Sheila Malcolmson, NDP, Nanaimo—Ladysmith, BC]

Madam Speaker, my observation is that, during the 10 years that the Conservative Party was in power, income disparity grew and the pension gap really rose, so there were a couple of mechanisms that the Conservatives brought forward: the tax-free savings account, and the pooled retirement pension plans.

I would be interested to know the member's observations on how successful those were, because what I have heard is that they were mostly taken up by middle- and high-income people and not the low-income Canadians we are trying to protect.

[Pierre Paul-Hus, Conservative, Charlesbourg—Haute-Saint-Charles, QC]

Madam Speaker, as Conservatives, we were fortunate to form the government for 10 years. Maybe one day the NDP will form the government, but the Conservatives and the Liberals are the ones who have been in office until now. That is what is happening now, and that is what will happen in the future.

The Conservative government's measures were effective. We balanced the budget, and we left as much money as possible in Canadians' pockets. That is the most important thing for us.

[Shannon Stubbs, Conservative, Lakeland, AB]

Madam Speaker, I am pleased to speak to Bill C-26, which would have consequences for all people and communities across Canada with very real costs that would not deliver the promised benefits, and at a time when job losses are escalating with not one single net new full-time job created in Canada during the past year under the Liberals. Government must work with entrepreneurs, job creators, and employers and not against them.

The Liberals often claim to be committed to public consultations, so their failure to listen to Canadians about this bad plan is rich. The Canadian Federation of Independent Business recently confirmed that 83% of employed Canadians do not support this payroll tax hike, and more than 80% agree that they want the government to consult them on it. However, the Liberals are pushing it through, banking on Canadians believing the Liberal spin and misinformation.

According to the same CFIB study, 40% of Canadians think the government pays for part of the CPP, and 70% of Canadians believe current seniors would benefit, which is how the Liberals are selling it; but of course, both notions are completely false.

It is galling that the Liberals are exploiting the anxieties of young Canadians about their futures, the urgency of people nearing retirement who are worried about financial security in the next stage of their lives, and the challenges faced by retirees who are struggling now to make ends meet on fixed incomes, by selling this punitive increase as the responsible and shared value of helping people save for retirement and implying that it would help retirees now, while pretending there will be no negative or damaging consequences.

Both employees and employers would bear the cost of this hike that would take more away from job creators, harming their ability to grow their businesses and invest in their employees. As it would force small businesses to reduce staff or pay, in order to stay afloat, or increase prices for their products or services if they can, it is employees and customers, all of us, who truly pay for it.

The Liberals should walk their talk on fact-based decision-making. Many experts and extensive studies conclude that expanding the forced retirement pension plans on small business owners would likely result in a decrease in private sector investment, a decrease of labour force, and an increase in inflation. These are important warnings that government should heed, because in Canada small businesses comprise 97.9% of all privately owned businesses and employ 70% of Canadians working in the private sector.

In Lakeland, the people and businesses are struggling. Job losses are escalating, even though entrepreneurs are doing their best to keep going. The damage from the downturn and bad government policies is rippling through all sectors and across Alberta. This payroll tax hike would just make things worse and add costs for employers at an already enormously challenging time.

Small business owners across Lakeland oppose this expansion, because it is yet another tax hike. Whether it is an increase in employment insurance premiums, a carbon tax, or the proposed CPP hike, families and businesses in Lakeland cannot afford the Liberals' agenda.

The owner of a Vegreville window and glass company explained to me that not only would this be bad for the employee and the employer, but it would reduce our economy. Businesses cannot raise prices; the only way is to lower input costs, which is limited to the employee. Tough choices would have to be made, as every input cost is increasing: electricity, insurance, base product costs, which cannot be decreased. It would lead to fewer workers and fewer hours. Negative effects on our economy would be far reaching, as raising prices does not and will not work. Government would harm businesses and workers with this move.

It is clear that this plan would lead to wage freezes, reduced benefits, or even layoffs. Job creators in Lakeland are cautioning exactly what others all across Canada are telling the Liberals. This hike would hurt their ability to invest in and to expand their businesses, to hire and to compensate their employees, and to start new ventures. These consequences would ricochet through the whole economy.

A co-op grocery store in Vegreville might have to increase membership fees. A bookstore owner in Lloydminster might have to lay off a hard-working employee, and a student in Edmonton might not get that pay raise at work, needed to pay for school.

Each one of these situations has profoundly different impacts on communities. That membership fee increase at the co-op might be the last straw for a single mother, forcing her to choose between necessities for her family. That former bookstore employee, who volunteered with the Girl Guides of Canada, teaching kids important life skills and values, would have to participate less in order to look for more work. The student in Edmonton might have to take a second job, taking more time away from her studies, hampering her academic performance, and limiting her potential. This combined with a job-killing and price-hiking carbon tax would devastate communities even more.

What does this mean for average Canadian families and why should they be concerned? Studies show that some households will pay up to $2,200 more per year as a result of this hike. That is enough to take a course and upgrade credentials for work on the rigs, or to transition into something else, a season of minor hockey, or a once-in-a-lifetime bucket list vacation for two. All for what?

The consequences for businesses will not help seniors now, contrary to what the Liberals have been telling everyone. It will take 40 years for the CPP expansion to even provide marginal benefits, if the program even still exists. Businesses and families will be paying the price for this made-in-Ottawa disaster the whole time. I would understand of course if it helped seniors today but that simply is not the case. Canada's demographic transition is under way and the timing of this change will hurt both businesses now at the very worst time and will not even benefit baby boomers.

Reducing red tape and cutting taxes would help those who create the majority of Canada's middle-class jobs. If Canada is to maintain its competitive edge, increase productivity, and spur innovation, legislators must constantly strive to improve the conditions for doing business, not make them worse. This means understanding how government policies affect everything job creators, contractors, and entrepreneurs do. Increasing Canada's international competitiveness is also vital to the success of small businesses and their hard-working employees.

Our philosophy as Conservatives is that Canadians' money belongs to them and not to the government. Reducing and lowering taxes equals more jobs because the more than one million small businesses from across the country are unable to continue to expand, invest, and employ.

So far the Liberal philosophy of borrow, tax, and spend is failing. Earlier this month Canadians received the shocking news that during October, 23,000 jobs were lost. That is one job every two minutes. Canadians expect and deserve more from the government. The previous low-tax plan was stimulating growth, jobs, and savings, and not on the backs of future generations.

There are other measures the Liberals could have taken to help Canadians save for their retirement. They could increase RRSP contribution limits. RRSPs have been successful at allowing Canadians to save for retirement and prove that when we work with the private sector instead of against it, goals like secure retirements can be achieved.

The second is the tax-free savings account. If the government wants to encourage Canadians to save, why on earth would the Liberals reduce the amount they can contribute to the most versatile savings and investment tool? The flexibility of a TFSA recognizes that Canadians have different savings needs and can plan for their futures. We are not a one-size-fits-all country and a one-size-fits-all solution will not work.

The “Ottawa knows best” approach is failing. Despite what the Liberals think, Canadians are smart enough to make their own decisions when it comes to retirement savings and what solutions work best for them.

[David Graham, Liberal, Laurentides—Labelle, QC]

Madam Speaker, after listening to the speech by my colleague from Lakeland there is a question that I feel I need to ask. In my opinion, the government has an obligation toward its citizens, toward the short term and for the long term to ensure the well-being of the population going forward.

I am wondering if the member for Lakeland believes the government has an obligation directly to its citizens and if so, what exactly that obligation is.

[Shannon Stubbs, Conservative, Lakeland, AB]

Madam Speaker, so far the government is making things worse for the people who create jobs, who start businesses, and who allow Canadians to support themselves and their families. At the very least when the government is making a change like this, it should consult Canadians and it should consult the people who would be impacted the most.

What is alarming about the government pushing through this change is that even Finance Canada's own analysis shows that higher CPP premiums would hurt the economy. My colleague went through some of this earlier. Studies show that this would reduce employment, with more than 10,000 fewer jobs per year for 10 years. It would reduce GDP, reduce business investment, reduce disposable income, and reduce private savings. Experts and institutes from all over the country are coming out against this reform.

The member can talk about the government's responsibility to its citizens but on this change, it is clear that the government is failing.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

Madam Speaker, I would like to follow up on the question from my colleague from Laurentides—Labelle.

The Conservatives’ philosophy seems to be to have no public pension plan. Very well, we accept that vision insofar as it is their choice to give Canadians every voluntary opportunity to save money for their future and their retirement.

That being said, it is a fact that in many cases people find themselves in a situation of extreme poverty when they retire. The government then has to step in, unless my colleague thinks, on the contrary, that the government should not step in to meet the needs of Canadian citizens and instead should leave them on the street. That may be her position, to leave them out on the street and do nothing to help them.

However, if she thinks that we have to help our fellow citizens who are living in poverty, does she believe that, in any case, it is the ultimately the government that will have to pay for certain poverty-related expenses in our country?

[Shannon Stubbs, Conservative, Lakeland, AB]

Madam Speaker, here is what Charles Lammam and Hugh MacIntyre said:

Instead of expending political energy on debating CPP expansion in the misguided belief that many middle- and upper-income Canadians are not saving enough for retirement, the focus of public debate should be on how best to help financially vulnerable seniors.

That is what the focus of this debate should be. However, today we are debating the CPP hike that the Liberal government is ramming through; it is stifling debate, and has not consulted on it with Canadians.

All of us in the House should actually listen to Canadians and what they have to say about it.

We already talked earlier about the fact that Canadians want to know more about this program and that the Liberals are banking on their misinformation and their spin to sell this bad plan to Canadians. Seventy per cent of employed Canadians oppose a CPP expansion if it means a wage freeze. Over one-third of employed Canadians say the proposed increases are unaffordable. Fewer than 20% of Canadians say they would opt to put more of their savings into the CPP.

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

Madam Speaker, I would just point out that in the retirement savings universe there are many choices. There are RRSPs, tax-free savings accounts, and so on, so we preserve choice at all times.

Would the hon. member not agree that the middle-class tax cut and the child benefit free up money for families to invest in RRSPs if they would like, or other vehicles?

[Shannon Stubbs, Conservative, Lakeland, AB]

Madam Speaker, on this side of the House, we believe in maximizing the choices and opportunities for Canadians to save and to provide for themselves, their families, their futures, and their communities. What is clear is over the last year under the Liberals' failed plan is that the roadblocks and the policies of the Liberal government are crushing the middle class and dismantling the economy. We know that in fact because not one new full-time job has been created in Canada, and that is the worst possible situation for Canadians who want to provide for themselves and their futures.