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

[David Sweet, Conservative, Flamborough—Glanbrook, ON]

Madam Speaker, I would ask for unanimous consent to split my time with the member from Brandon—Souris.

[The Assistant Deputy Speaker, Carol Hughes]

Does the member have unanimous consent to split his time?

[Some hon. members]

Agreed.

[David Sweet, Conservative, Flamborough—Glanbrook, ON]

Madam Speaker, it is always a pleasure to rise in this House to represent my constituents in Flamborough—Glanbrook, all Canadians, and all taxpayers in this country, particularly on this bill.

Today, we begin and end a third reading debate on Bill C-26, an act to amend the Canada pension plan, legislation that I must oppose most vigorously for a number of reasons.

I must express that it is truly unfortunate the government has chosen to shut down debate to less than 90 minutes through its use of closure. This heavy-handed draconian approach is wrong-headed, which are pretty much direct quotes from my Liberals colleagues from the past Parliament, as members on this side of the House have a wide range of legitimate concerns that have gone unaddressed through the committee stage. These concerns should not be just read into the record but should actually provide pause to the government.

Unfortunately, the government is determined to ram this legislation through this chamber without any consideration for the consequences to so many responsible Canadians and small business owners. Bill C-26 expands the Canadian pension plan over the next 40 years in an effort to alleviate the financial burden of retired seniors, particularly those facing poverty.

I believe working toward the improvement of the lives of seniors is always a worthy endeavour. After all, they are the ones who built this country and made it great. However, where we profoundly differ from the members opposite is in how this is to be accomplished. In my view, these changes should have been more sufficiently studied and debated so that we do not trade one problem for another.

The bill mandates an increase in CPP premiums, a cost shared between employers and employees, to the tune of up to $2,200 per year. For families who already have to stretch their dollars in order to balance their household budget, these proposed measures will limit their ability to put money aside to save for their child's education, to purchase a new minivan, or to plan a much-needed vacation.

As an aside, neither the Minister of Finance nor the Prime Minister, both sons of millionaires, which in and of itself is not an issue, have had to make sacrifices to balance their household budgets, yet these are the masterminds behind Bill C-26, which will quite literally take money from the paycheque of every hard-working Canadians.

What is also very concerning is that the introduction of this bill, and its corresponding tax increase, comes at the same time that the government is imposing a carbon tax, which will drive up the price of everything. Under the carbon pricing scheme, residents in my constituency of Flamborough—Glanbrook will face higher fuel prices to make their morning commutes to work, and at the same time the price of everything from local produce to the costs of flights out of the Hamilton airport will go up. Perhaps most concerning is that the carbon tax will also increase the price of home heating. For my constituents, that is hard to fathom. Families young and old in my community are already tapped out. They can ill afford the increased costs that are coming under the Prime Minister's carbon tax.

If the timing of two taxes is not bad enough, I must remind the House that Bill C-26 also comes at a time of massive deficit spending. As members know, deficits are simply the taxes of tomorrow. The government is borrowing billions of dollars and has not articulated a plan that would see the budget return to balance. This reality creates further uncertainty and concern for Canadians, because they know that in order to bring the budget into balance the government will either have to slash programs, raise taxes, or both. All of these initiatives come at a time when in my home province of Ontario energy prices are going through the roof. The experience of living under the Ontario Liberal government of Kathleen Wynne has taught my constituents to be skeptical of flashy new proposals that would see the long arm of government reach further into their pocket and take even more of their hard-earned money.

However, the concerns about Bill C-26, this CPP tax hike, go further than just bad timing. There is also significant concern that the bill effectively hinders the choice of Canadians as to how they save for their retirement. As a result, Canadians who are proactively saving for their future will be forced to invest more into CPP and less into the savings vehicle of their choice. Thanks to our previous Conservative government, Canadians now have an unprecedented number of savings options. Let us take, for example, the tax-free savings account that was implemented and then expanded. These accounts allow Canadians to save for large expenditures or for retirement with no strings attached. The money is available when it is needed, and the interest is accumulated tax-free. I would point out that, by far and away, it is middle-income Canadians who are making the greatest use of TFSAs. Plus, there are other ways to build up a nest egg. Some folks invest in the housing market, others store money away in RRSPs, while others contribute to a workplace pension plan or a pooled registered pension plan, which is yet another savings vehicle brought in by the previous Conservative government.

There is a wide spectrum of savings options available to Canadians who wish to supplement their retirement income and yet the CPP tax hike found in Bill C-26would limit the ability of Canadians who take the initiative to save on their own.

Take for example a single-income family with a couple of kids. One of the parents goes to work to bring home the proverbial bacon while the other parent stays at home to tend to the needs of the children. They pay to put a roof over their heads, food on the table, and clothes on their backs. They put gas in the tank, heat their home, put their kids into sports, and give to charity. If the money is there, they may splurge on a date night and enjoy a nice meal in a restaurant. And of course they pay their taxes. Once all the bills are paid the bit that is left over could be put into a savings vehicle, but under Bill C-26 that bit left over does not make it into a TFSA but rather is taken off their paycheque and is forced to be invested into the CPP. Rather than having that money available to them for their car or for the car repairs, the family will have to take on more debt, making it even tougher to cover their cost of living by the time the next month's bills arrive. At the very least, Bill C-26 limits choice. At the worst, it may contribute to a cycle of debt by skimming too much off the top.

Bill C-26 would not just impact modest-income families. It would also take the choice away from Canadians who save for their retirement and wish to leave their accumulated wealth behind for loved ones after they pass away.

I have served in this place for more than a decade now and over the course of my tenure as a member of Parliament many seniors have discussed their priorities with me. I have heard many seniors say two things as they plan for the end of their life: first, they hope not to be a financial burden to their family and second, if possible they would like to leave some of their savings behind for their loved ones. In Canada we have a retirement system that allows them to accomplish these goals.

Our retirement system is the envy of the world. Retired seniors have access to old age security, the CPP, and a raft of savings options that I mentioned earlier. After those sources of income, if seniors are still facing financial difficulty, the guaranteed income supplement is there to top up their income. Thanks to the Conservative government in the last session of Parliament, they could even make a good sum of money without it being clawed back.

Further, those who want to look at the data or parse the numbers should consider the following. Eighty-three per cent of households are on track to maintain their current living standards in retirement, according to a study done by McKinsey & Company. Statistics Canada shows us that the share of Canadian seniors living on low income has dropped from 29% in 1970 to 3.7% today. These facts demonstrate that the vast majority of Canada's seniors are able to save enough to have a dignified retirement and cover their end-of-life costs and are able to meet their goal of passing on some of their earnings when their time comes.

One of my core critiques of the CPP is that the money invested by an individual contributor cannot be accessed by a surviving family member. By forcing Canadians to increase their contributions to the CPP, they will have less money to put into savings vehicles that give them the choice to will their savings to their loved ones. It is no surprise then that fewer than 20% of Canadians surveyed by the Canadian Federation of Independent Business said that they would opt to put more of their savings into the CPP.

Back in the 1960s when the Liberal government of the day introduced CPP, minister Judy LaMarsh, who was responsible for establishing the program, had this to say about the intent of CPP, that it “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.”

Canadians who work hard for their money should be able to save in the way they choose and should be trusted to plan for their futures. Not only is Bill C-26 ill-timed and strips responsible Canadians of choice of their savings, it also negatively impacts small business.

As a former small business owner I have first-hand knowledge and experience of what it takes to battle the red tape and the cost of living to make sure that costs stay low in business. For small businesses it is going to be a choice of whether they continue to hire or invest in their business, having to deal with this expanded CPP tax. Two-thirds of all small firms say they will have to freeze or cut salaries and over one-third say they will have to reduce hours or jobs in their business in response to the CPP hike.

[Judy Foote, Liberal, Bonavista—Burin—Trinity, NL]

Madam Speaker, I rise on a point of order. I am tabling the government's responses to Questions Nos. 537 to 542.

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

Madam Speaker, the member for Flamborough—Glanbrook talks a lot about the negative aspects in the bill as he sees it. I see this is as a very positive investment in the future. Minister LaMarsh actually funded for the future, and we have to do the same thing again. We have done a lot of things for seniors in the last year with the reduction of the retirement age back to 65 and the increase in the GIS. However, if the member does not want to improve the CPP for the future, would he rather get rid of the CPP altogether? Which is it? Do you think it is sustainable, or do we improve it for the future? Why does he want to keep it at all?

[The Assistant Deputy Speaker, Carol Hughes]

I must remind the hon. member for Laurentides—Labelle to address his remarks to the Chair.

If member does not use the word “you”, it is even better.

The hon. member for Flamborough—Glanbrook.

[David Sweet, Conservative, Flamborough—Glanbrook, ON]

Madam Speaker, my colleague missed the point. The CPP is one of the tools in the toolbox to help individual Canadians retire. Forcing people to invest more in it, limits their capability of choice of other tools. It also puts a huge burden on small business at a time when small businesses do not need it, at a time when the Liberal government actually reneged on its promise and did not reduce taxes to small business.

Let me share a quote:

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.

Who said that? Finance Canada.

[Kevin Lamoureux, Liberal, Parliamentary Secretary to the Leader of the Government in the House of Commons]

Madam Speaker, why are the Conservatives out of touch with what Canadians want? Different provinces of all political stripes have recognized what Canadians want. We have seen strong national leadership coming from Ottawa, from the Minister of Finance, where we actually have an agreement. This bill is all about an agreement that was achieved by provinces and Ottawa, with territorial input. It seems that everyone wants to see an enhancement. It is about workers today for tomorrow's retirement.

Why does the member believe the Conservative Party is so out of touch with what everyone else seems to want?

[David Sweet, Conservative, Flamborough—Glanbrook, ON]

Madam Speaker, it is actually the member opposite who is really out of touch. He is obviously not listening to small business operators. He is not listening to Canadians who want choice. He is certainly not listening to the partner of his own finance minister who said that whatever the reasons might be to expand the CPP, it was not to eliminate poverty. The poverty rate among seniors is now as close to zero as we can get.

Yes, a little over 5% of seniors today still have incomes below the poverty line, but CPP is not the mechanism in order to do that. Taxing everybody across the country is not the mechanism to do that. There are other tools we can use that are not as punitive, that do not punish small business, and actually are more effective. Some of those we used in the last Parliament were expanding the age exemption, the personal exemption, increasing the GIS, allowing some seniors who could work to go to work without it being clawed back. There are all kinds of options that the Liberals do not want to consider. They want a payroll tax instead.

[Dianne Lynn Watts, Conservative, South Surrey—White Rock, BC]

Madam Speaker, in my riding, the Liberals are totally out of touch. Seniors in my riding were upset about the clawback and cutting the tax-free savings account in half. Could the hon. member speak to that issue when it comes to supporting seniors? Certainly they were really affected by that in my riding.

[David Sweet, Conservative, Flamborough—Glanbrook, ON]

Madam Speaker, the biggest reality check is going to be when seniors begin to pay these big sums off of their paycheques and realize it going to be 40 years before any substantive benefits. The seniors of today are not going to be receiving this. Therefore, there will be a lot paid in before anything ever comes back. That is going to be a big wake-up call for today's seniors.

[Larry Maguire, Conservative, Brandon—Souris, MB]

Madam Speaker, I want to thank the member for Flamborough—Glanbrook for the opportunity to share his time today, allowing me to make some remarks on Bill C-26.

I rise today to add my voice to the many others who have grave concerns about Bill C-26, and the Liberal plan to further erode the disposable income of hard-working Canadians and its negative impact on job creators.

Every member of Parliament in the House cares about the well-being of seniors. I believe each and every one of us wants to implement policies that will improve the quality of life of Canadians, while also balancing out the costs associated with those changes.

Over the past 50 years, there have been numerous policies introduced with the aim of assisting Canadians in preparing for retirement, changes such as the introduction of the Canada pension plan, old age security, the guarantee income supplement, registered retirement savings plans, and our previous Conservative government's landmark decision to implement tax-free savings accounts.

Through various governments of different political stripes, great improvements have been made, and the poverty level of seniors has dropped dramatically. According to Statistics Canada, the share of Canadian seniors living on low incomes has dropped from 29% in 1970 to 3.7% today, which is among the lowest in the world.

I believe it is vitally important we recognize that the CPP was originally introduced in 1965. When it was introduced, it was a much different world than we live in now. Many families had to get by with only one source of income, and gender inequalities were far too common. Millions of seniors lived in poverty, and many communities did not have affordable housing options for those who struggled to get by. Probably one of the most significant differences was the lack of financial literacy and the available savings vehicles that are now offered by the private sector.

In 2016, millions of Canadians have opened their own tax-free savings account, or have invested in mutual funds or the stock market through online trading brokerages. I am pleased that Canada's saving rate has climbed from 7.7% in 1990 to 14.1% today. This is a testament of how investing money and saving for retirement is at the top of people's priorities.

According to the Fraser Institute, the vast majority of Canadians are putting enough aside for retirement. In a document published by the institute, Canadians now hold $9.5 trillion in assets above and beyond CPP.

While the Liberals think they have the best of intentions, their policies to date have not grown the economy. They have put jobs at risk, and Canadians are worse off today than before the Liberals took office. Canadians cannot trust the government with their pensions. The Liberals have not been able to keep promises they made a year ago, let alone ones they are making for decades down the road.

What the legislation before us signifies is that the Liberal government does not trust Canadians with their own money. It is awfully rich to force Canadians to control their spending when the Liberals have moved past their own deficit projections to the tune of billions of dollars. I can assure the Liberal government that millions upon millions of Canadians are being responsible with their own money and do not need to take lessons from my hon. colleagues across the aisle.

A study by McKinsey & Company has found that 83% of Canadian households are on track to maintain their current living standards in retirement. Now 83% is not 100%, but it does not justify the punitive measures being proposed in Bill C-26.

Before the government moves any further with Bill C-26, it should stop assuming that Canadians are as spend happy as its own Liberal finance minister. Perhaps it is time for legislation to force the Liberal government to stop putting Canada's future generations at risk. That is legislation I could support.

I believe it is wrong to force Canadians to put more of their hard-earned dollars into a government-controlled pension plan rather than allowing them the flexibility to make their own investment decisions. We have a good balance in place, and it should be upheld until such time that evidence suggests otherwise.

If the legalization before us passes as written, it will literally take money out of the wallets and purses of hard-working Canadians and their employers. In fact, it is very possible that some households will be paying up to $2,200 more per year when the changes are fully implemented.

While the Liberals pontificate about their middle-class tax cut, most of the savings will be eaten up through this CPP tax hike alone. This does not include the carbon tax, which will be unilaterally imposed on provinces and taxpayers in the years to come.

It baffles my mind that Liberals want to force Canadians to put more money into CPP, while at the same time eroding people's investing power into investments of their own choosing. It seems like an oxymoron to me.

I can assure the government that any reputable financial adviser would be able to provide a far more significant return than the government-run pension plan. It is projected that any Canadian who was born after 1972 can expect a real rate of return from the CPP of only 2.1%. Regardless of how well the Canada Pension Plan Investment Board does, the next generation of Canadians had better not be planning on a CPP bonanza due to its rate of returns.

Moreover, Bill C-26 is just another attack on Canadians who do their own financial investments. It is an attack on those who want nothing to do with putting more money into their CPP, as they like the current system. They resent the fact that their government thinks it can do better in saving money than themselves. As we all remember, it was just last year the Liberals clawed back people's tax-free savings accounts and limited the amount of money that could be invested without paying capital gains taxes.

While it is true that some Canadians are not financially prepared for retirement, we on this side of the House do not think that a payroll tax hike is the best or sustainable approach to assist those most in need. The reason why many Canadians are not financially prepared for retirement has nothing to do with the CPP itself, but is due to the fact that they do not have employment or are underemployed. The best way for the government to help Canadians prepare for retirement is to create the right economic environment for the creation of new high-paying jobs.

One of the loudest and most vocal critics of this payroll tax hike has been the Canadian Federation of Independent Business. It has repeatedly asked for the government to apply the brakes, as 70% of small business owners disagree with the notion that this CPP increase is modest as the government suggests it is.

For many small and medium-sized businesses, this legislation would cost them thousands of dollars each and every year. It has the potential to further slow our economic growth, while doing nothing to help those most in need. As I stated, a CPP increase will not help Canadians without a job.

An analysis by the C.D. Howe Institute shows that the Liberals' CPP plan would not benefit low-income workers. While their CPP payments would go up, it would be offset by clawbacks in their GIS benefits.

This is the classic Liberal two-step: give one dollar in the left pocket and take one out from the right. This is why I am very skeptical, as are many Canadians, that the Liberal carbon tax will be revenue neutral. Looking at new innovative ways to assist Canadians to save, such as the tax-free savings account and improving financial literacy, are tangible benefits that are proven to yield results.

Far too often, the government brings out a stick when a carrot would suffice. Levelling a job-killing payroll tax hike, which would reduce employment and Canada's GDP, is quite frankly asinine in today's economic turbulence. Payroll taxes, carbon taxes, small business taxes, and burdensome red tape are hindrances to job creation, to name only a few of the Liberals' regressive acts.

It is abundantly clear the government has no plan for the economy. It is even more worrisome to see it plunge Canada back into deficit, while at the same time its deficit spending has failed to spur our economy. There is little justification that would result in such a heavy-handed approach.

There are alternative ways to assist those who need it the most, and the Liberals showed that when they copied our Conservative move and increased guaranteed income supplements. I should note also that the Liberals ran on a pledge to review the consumer price index, which is used to calculate inflation. There are many other ways to help Canadians save for retirement than forcing through a one-size-fits-all approach.

I will never vote for legislation that financially hurts Canadians. No matter the size of the bow wrapped around this change in policy, it still remains a tax hike. Bill C-26 would not help our most vulnerable seniors in need. It would not create new jobs or grow the economy. It is the wrong approach to take. I call upon my Liberal colleagues to stand up for what is right and oppose the legislation before its impact financially hurts their constituents.

The reason so many of my Conservative colleagues have spoken to this bill, and more would do so if closure had not been moved, is that it is necessary to try, as responsible opposition, to influence the importance of cancelling the bill to the Liberal members for the reasons I have just articulated.

[Kevin Lamoureux, Liberal, Parliamentary Secretary to the Leader of the Government in the House of Commons]

Madam Speaker, as the debate winds up, it is important to recap that in Bill C-26 we are debating the ability of today's generation of workers to have adequate retirement money through the CPP, one of the fundamental pillars of our social pension programs. The CPP, the OAS, and our guaranteed income supplement are things that Canadians truly believe in. The government has demonstrated very clearly over the last number of months that it supports Canadians in a very solid fashion, whether through budgetary motions, regulatory changes, or now with respect to the CPP. The changes to the CPP took a great deal of effort, working with the different stakeholders so we could arrive at this bill today.

Would the member not recognize that in order to have a holistic approach to dealing with the seniors of today and tomorrow, it is in the best interests of all Canadians that we pass this bill?

[Larry Maguire, Conservative, Brandon—Souris, MB]

Madam Speaker, of course my colleague does not get it. He did not hear the last part of my comments about killing this regressive bill that would not do what says it would do.

Two things occur when the Liberals force people, as they are doing, to put $1,000 more into their retirement funds. First, the worker may not have $1,000. Where is he going to get it? He or she is going to have to go to his or her employer and ask for a raise. That is in addition to the fact that the employer has to match those funds and also put them into the Canada pension plan. If the business has 10 employees, this would end up costing the small business $10,000.

The Liberals have said this bill is to enhance the CPP, but it is more likely to be interpreted as an entitlement. It is another example of government knowing what is best, when really, if the Liberals were to allow the opportunity for those to invest in some of the plans I have already outlined, they might be better off on their own.