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

[The Deputy Speaker, Bruce Stanton]

The hon. member for Brandon—Souris will have five minutes remaining in his time for questions and comments when the House next returns to business on this particular question.

It being 5:42 p.m., the House will now proceed to the consideration of private members' business as listed on today's Order Paper.

The House resumed from October 25 consideration of the motion that Bill C-26, An Act to amend the Canada Pension Plan, the Canada Pension Plan Investment Board Act and the Income Tax Act, be read the second time and referred to a committee, and of the amendment.

[Bob Nault, Liberal, Kenora, ON]

Mr. Speaker, before I start my remarks on this very important subject matter, I want to take this opportunity to pay tribute to the men and women who have served our country with bravery, dignity, and honour and to those who have paid the ultimate sacrifice at home and abroad to protect our freedoms and the way of life that Canadians enjoy.

On Remembrance Day, I will be home in my riding, as I am guessing most members here will be, to pay my respects to all the veterans who have served this country well. The people of the Kenora riding will never forget their sacrifices, nor will I. Sometimes, as wars get further and further away, it is easy to forget, but I think it is important for all of us to play a role in making sure that this does not happen.

I am pleased to rise in the House today as the representative for the Kenora riding to speak to the enhanced Canada pension plan. Over a year ago, we committed to helping Canadians secure financial stability in retirement, and we are now making that promise a reality.

For the first time in a generation, we are making changes to the Canada pension plan, which will greater reward those who have worked hard throughout their lives. I am very proud of how we have worked to fulfill this promise, because those of us who were completing the last campaign will know that it was a very important part of our discussion during the election campaign.

The Minister of Finance and his provincial counterparts have worked diligently and collaboratively to see this project through. They should be enthusiastically commended for their work.

Sometimes we forget the importance of pension plans, because we get busy in this place, and we assume that Canadians are wealthy. It is one of the wealthiest countries on earth, quite frankly, with a great quality of life and a great standard of living. However, we forget that this was from the previous generation's work. This generation has to continue to focus its attention on the importance of making sure that when people retire in their old age, they have the quality of life and security this country values so much.

I will give examples of why this is important economically, because people tend to see this, at least on the other side of the House, on occasion, as an attack. They expect that it has an impact on Canada's economy.

Here is an example from a study by the Boston Consulting Group. It is a little dated, it was done in 2012, but it is a good example.

The study found that on average, 14¢ of every dollar of income in Ontario and in Ontario's communities comes from pensions. It found that in northern communities, in places like Elliot Lake, pension benefits are 37% of the economy. In Ontario, 7% of all income in our towns and cities, or $27 billion, is derived from defined benefit pensions.

This is just an example of why this is such an important debate. Not only is it security for seniors, it is also a very large part of our economy. We forget sometimes that in places like the city of Kenora, the city of Dryden, and the community of Sioux Lookout, there is a large economy that is generated by the pensions that people in the previous generation receive.

We are making great strides. In early October, we saw British Columbia sign on, making a total of nine provinces in this agreement. From coast to coast to coast, the provinces are realizing what an asset this will be for the over 11 million Canadians who currently do not have a workplace pension plan.

I want to speak today about pensions, because I am concerned about the looming crisis that is going to occur in this country if we continue to let the private sector erode pension plans in the private sector to the point that the next generation may have virtually no pension except for CPP. In the previous generation, it seemed that they understood the importance of that process in the private sector. Now it is moving away from it.

Everyone talks about defined benefits in a certain way and about reducing the risk for business, but nobody seems to talk about the effects on that man or that woman who is a blue collar worker who expects that at the end of a lifetime of work, he or she will have the opportunity to live a good quality of life.

We need to broaden the discussion not just about the role of the Government of Canada but about the role of the private sector.

I come from a region where pulp mills, paper mills, sawmills, railroads, and mining companies all had decent pensions for their retiring workforce. We are now starting to see that erode. I am concerned about what that may look like 20 or 30 years down the road. We have to think about the long-term future of our young people and what that would mean for Canadian society.

When people have instability, risk, and concerns not just about where the next job will come from but about the ability to live out their retirement years, they tend to be a lot more aggressive about how their government should react. They tend to swing far to the right or far to the left. We have been successful as a nation because we have given that kind of security to men and women right across this country. I want people to think about that as we work through this as the government and other governments right across the country.

I am very pleased that the Government of Canada, through the Minister of Finance, and the provincial governments see the importance of enhancing the Canada pension plan. There is a lot more to it than that. Dignity is about security. We have to keep in mind that this is what this is all about.

In my riding of Kenora, I have heard from many of my constituents, both young and old, who fear that they may not have enough savings to retire in dignity. I think this debate is going to continue election after election until we deal with this issue in a comprehensive way.

I want to commend the minister and the government . I also want to encourage the government to send the message to the private sector that it has a role to play. We signalled, by taxing the rich, as we put it in the last election, that they could give more. The people we are speaking about are those who have major corporations and major businesses and are doing quite well in society. They have to give back. Part of that is a pension plan Canadians can rely on. Having a decent pension at the end of our careers is something we should guarantee not just in the public sector but in the private sector as well.

Canadians are compassionate, but at the same time as we are watching the discussions internationally about trade deals, we are not thinking about what that may mean eventually in Canada if the benefits of trade deals do not move through the system to the blue collar worker and the average Canadian.

I want to remind the federal government and other governments that Canada has always led the way in making sure that Canadians have a good quality of life.

There is overwhelming support for public pensions. It is about 75%. When we think about that, Canadians are ahead of us in their views on what exactly should be done compared to what we hear sometimes from others. The effects of these enhancements will not only be felt by seniors and families but by young Canadians who are and will in the future be entering the workforce.

In closing, simply put, I believe that after a lifetime of hard work, all Canadians deserve a secure and dignified retirement. It is because of these types of programs, developed throughout our history, and our continuing commitment to social fairness, that we have helped to make Canada what it is today, one of the best places to live in the world. I hope we can keep it that way.

[Gérard Deltell, Conservative, Louis-Saint-Laurent, QC]

Mr. Speaker, I thank my colleague for his speech.

Our take on the Canada pension plan is very simple. We want to give Canadians the tools they need to make choices that work for them, tools such as the TFSA.

Can the member help us understand how the measures in the bill, which boil down to taking another $1,000 from people's pockets, $1,000 per worker, per company, will help Canada's economy? That is less money for businesses and more money for government. Can he help us understand that in light of an internal Department of Finance memo stating that this measure will have a negative impact on jobs for the next 20 years?

[Bob Nault, Liberal, Kenora, ON]

Mr. Speaker, I go back to my opening comments about the differences in this place. I understand the Conservative Party's view that somehow, if we just give every Canadian the opportunity to save for themselves, it will get done. However, we know that most Canadians live paycheque to paycheque and do not have the savings being promoted on the other side. Every day, they manage to get their kids off to school and pay for some of the things the kids do. They do not get anywhere near where they think they need to go.

The reality is that there has to be a way to help Canadians save for retirement. That is why private pension plans have always been useful at work, because it comes off a person's paycheque. People know it is going to come off, and that is the way it works. It is the same with the Canada pension plan. It is a way of saving for retirement.

Does it have an impact on the economy? As I mentioned earlier, it has a positive impact on the economy. If $27 billion a year, at the very least, goes into Ontario's economy through a pension plan, and that goes to people to have dollars to spend, to go to the grocery store, and to buy things from small businesses, that is a positive thing. No one in this place can tell us otherwise. I see it as a win-win for all of Canada.

If we keep going down the road the member and his party suggest, we will have difficulty in Canada, because people will not be secure in their pension style and their quality of life, and they will demand that we change that.

I suspect that the member of Parliament is saying to us that somehow we should leave people to their own devices and they will figure it all out. I do not believe that is possible.

[Arnold Viersen, Conservative, Peace River—Westlock, AB]

Mr. Speaker, one of the things that underlies the entire CPP system is the fact that someone has a job and is earning an income. If people are not making any income, they cannot even contribute to the CPP. When they retire, there will be no CPP for them.

In this time, when it is difficult to get a job, the increase in the CPP is making it even more difficult for people to hire people. Why would the government bring this forward at this time?

[Bob Nault, Liberal, Kenora, ON]

Mr. Speaker, that is a line the Conservative Party uses almost every time we want to improve social programs for Canadians. I have heard so many times that this is not the right time that it is like a broken record. It means that they are not totally opposed to it, but we cannot do it today, because the economy is not doing very well. I heard that in the 1980s under Brian Mulroney. I heard it under Mr. Harper, and it continues to be the broken record the Conservatives use.

The reality is that good policy should not wait until the economy is where some Conservative thinks it should be. In fact, difficult times are the times to invest in infrastructure and the development of our economy. Those are the times to bring more security to Canadians so they can prosper and grow.

I do not buy the argument that somehow we are always in a difficult financial situation or that our economy is struggling. Now, the economy does struggle when the Conservatives are in power. That is true. I have seen it over the last 30 years. However, I can assure members that it will change when the Liberal Party has some time to fix some of the problems these guys have put in place.

The last time I was here, in 1988, and we came into power in 1993, it took three years for our party and the Chrétien government to sort out the mess, get rid of all the debt and issues, and build an economy that was at 3.5% to 3.8% every year. Therefore, it is going to take a little while.

[Kelly McCauley, Conservative, Edmonton West, AB]

Mr. Speaker, I am happy to rise in the House today to speak to Bill C-26.

I want to first acknowledge that yesterday the Prime Minister held another news conference to celebrate his first year in office. While I am sure Canadians are getting a bit tired of the Prime Minister's endless PR stunts, it is even more frustrating that he is celebrating a record that is hurting Canadians.

Let us talk about that record: widespread job losses, massive tax hikes, more debt, higher deficits, no plan. It is not a rosy picture, which is why I, along with my colleagues on this side of the House, am a little surprised that the Liberal solution to higher taxes is yet another tax hike, but it is okay, they will call this one a CPP expansion, hide the details, and maybe Canadians will let it go.

The government seems to be selling us a line from the hit Dire Straits song Money For Nothing, but there is no money for nothing. This tax hike will cost jobs, wage growth, and GDP growth.

The Canadian Federation of Independent Business projects that by 2020 total employment in Canada will have dropped roughly 110,000 jobs because of the CPP expansion and higher tax. Two-thirds of small businesses surveyed indicated they would cut hours and wages to offset this tax hike. One out of every three are looking at lay-offs to offset it. The hike is also forecast to move wages lower by 0.8%.

Every time the Minister of Finance stands in the House he talks of the low-growth economy. He forgets to mention his own finance department says the CPP tax expansion will shrink the economy.

We stand opposed to all wasteful tax hikes designed to fund the Liberal government's continued expansion, and this CPP tax hike is no exception. In fact, it is worse, and let me tell members why.

There are several problems with the CPP tax hike besides killing jobs and stifling growth. First, quite ironically, it cancels out the Prime Minister's much beloved middle-class tax relief. Remember the 1.5% Canadians were supposed to see back? Shockingly, the government decided that maybe it likes having more money to take limos, have expensive meals, and take pretty pictures in exotic locales, so it designed a tax hike that will take away that tax relief. One thing the government never seems to realize is that government cannot give what they have not already taken from us.

Let us consider Martha and Henry. They are both middle-class wage earners who work hard and pay their taxes. Tired of being slammed with the new Liberal taxes and a slow-growth economy, Martha and Henry diligently save part of their paycheque every month. They cannot take another hit. However, because the government has priorities that are out of touch with Canadians, Martha and Henry can now see up to $2,200 more deducted every year, wiping out the meagre 1.5% saved with the much vaunted middle-class tax cut. Keep in mind that neither Martha nor Henry will see any of this money back for an extra 40 years.

The government will tell us that it is okay, because at least Martha and Henry will have something to show at the end. The problem is that the government assumes Canadians have no idea how to manage their extra money.

Where could the extra money have gone? Let me tell hon. members because it leads directly to the next problem with the CPP tax hike. The CPP as an investment vehicle is weak. According to the Fraser Institute, the average return, long term, on investment for Canada bonds is 3.5%. The return on investment for Martha and Henry's CPP investment on the new expansion is 2.5%. That is right, 2.5%, barely enough to cover inflation. This is not exactly ideal, because the CPP will need to cover far more than just inflation as more Canadians move into retirement over the next several years, or what is more likely is that the government will simply come back, hat in hand in the future, and demand more money from Canadians to cover the shortfall.

Why does CPP have such mediocre returns? Among a host of reasons, primary ones are high fees for asset management. Andrew Coyne of the National Post comments on a gathering momentum of more staff, higher pay, and rising operational expenses, and he concludes, all for no appreciable payoff for Canadians.

More worrying is that because finance ministers looking for cash have a strong tendency to lean on pension funds as a source of investment for infrastructure projects, the CPP would earn even lower returns. This tendency was confirmed by the Minister of Finance's own economic advisory council, which stated repeatedly that pension funds should be looked at as a source of untapped potential for infrastructure by government.

This approach undermines the independence necessary for a fund to be truly profitable and provide meaningful returns. Without that independence and with constant interference from the Minister of Finance to fund whatever project his government sees fit on a given day, the ability for pension funds to garner higher returns is undermined; hence 2.5%

It is fairly clear the government wants more cash and this CPP tax hike is the way it is going to get it.

I know what members are thinking, Martha makes a decent wage, could she not just move a little more of her income into a fantastic and well-received investment vehicle such as a TFSA? Sure, she could, but the same Fraser Institute, those pesky policy wonks, studied hard and found for every dollar increase in CPP contribution, private savings are reduced by 90¢, fully 90%. This is not a winning formula and misleads Canadians on the benefits of CPP.

Speaking of misleading, the next problem with this hike is that Canadians are rapidly finding out the finance minister is selling them a bill of goods. The finance minister wants to help the vulnerable and this is a good goal, a worthy goal. This goal will not be accomplished by a CPP hike and here is why.

First, CPP only pays those who pay into it. If I die tomorrow, my wife would not receive my CPP pension. If I invested this money in something smart like those fantastic TFSAs I mentioned earlier, my wife and kids would have a tidy sum to walk away with. However, because CPP has punishing rules for the survivor's pension, my wife would receive 60% of the CPP at best. If she collects CPP on her own, she would receive even less.

There are fewer retired Canadians living in poverty now than at any point in our history. For Canadians on our bell curve, our bell is located above the high average. The thing with bell curves is that they all have a tail on the lower end, but the solution is to help the lower end and it is not to move the rest of bell even lower. Those struggling at the lower end of the tail need help directly. Lowering the rest of the bell to meet the tail does not help anyone.

The shame of the bill and the whole deceit of it is that this added CPP expansion will do nothing to address those seniors living in poverty. It is misleading for the finance minister to tell Canadians that this CPP expansion helps those who need help, because it does not.

It is simple. We could double or triple the CPP payouts, but if people have never paid into it, they get nothing. A huge amount of our seniors who are living in poverty are in that position because they, for whatever reason, did not contribute or contributed little to CPP during their working years.

We want to help those who need it. We want to help the widowed grandmother struggling to get by on a fixed income or the disabled grandfather trying to make ends meet. We want to help Martha and Henry ensure that they are planning for their retirement. We want them to use those TFSAs and RRSPs and invest their savings in the market because the market earns far more than 2.5%. A simple ETF invested in the Standard & Poor's 500 would yield a far greater return and allow Martha and Henry to access their savings at any time.

We want to help those who are struggling at the lower end. This is why the previous government expanded the GIS. It is why the previous government expanded the tax-free savings account to $10,000. It is why we introduced income-splitting for seniors and why we lowered the mandatory withdrawal rate for registered retirement income funds. These are evidence-based policies that benefit every senior today and we are proud of our record to help the most vulnerable.

We do not believe it is fair for the finance minister to mislead Canadians, raise taxes on workers, and leave the most vulnerable behind.

I move:

That the amendment be amended by adding after the words “seniors in need” the following: “; and (d) will impede Canadians' ability to save for the future.”

[The Assistant Deputy Speaker, Anthony Rota]

The amendment to the amendment seems to be in order.

Questions and comments, the hon. member for West Nova.

[Colin Fraser, Liberal, West Nova, NS]

Mr. Speaker, I listened with interest to my colleague's speech. Every argument in every part of his speech could be used as a rationale for cancelling entirely the Canada pension plan. Would he be logically consistent and admit that he would agree that the Canada pension plan serves no useful purpose whatsoever and should be scrapped entirely?

[Kelly McCauley, Conservative, Edmonton West, AB]

Mr. Speaker, that is a ludicrous assertion. No one on this side is suggesting that, and I am embarrassed for the member for even asking that.

I will say, though, that we on this side want to give Canadians a tool to save for themselves. We believe in Canadians. We believe they know how to raise their families and spend their own money. We believe in Canadians and suggest that side of the House start believing in Canadians as well.

[Linda Duncan, NDP, Edmonton Strathcona, AB]

Mr. Speaker, I notice that the member did not quote any youth organizations or, frankly, seniors organizations that endorse the Conservatives' position or amendment. In the alternative, all of the seniors groups that I, my colleagues, and the Liberal government have spoken to endorse improving CPP payments.

One in four seniors is living in poverty. How can he assume that they are going to have tax-free savings accounts if they are struggling already? Are we simply going to let them suffer and not contribute to the economy?

[Kelly McCauley, Conservative, Edmonton West, AB]

Mr. Speaker, I have a couple of things.

To address the first part, if we look at CARP, the Canadian Association of Retired Persons, its comment was that it would like to see a small change in CPP, but it wants poverty addressed through other means, such as a higher GIS. This would not do anything for seniors living in poverty who do not have access to CPP. That is the first thing.

Second, TFSAs were massively used by seniors. Taking away their ability to save does not help them one bit. You should be promoting seniors' ability to save more for themselves.

[The Assistant Deputy Speaker, Anthony Rota]

I would remind hon. members to speak in the third person through the Speaker and not directly to members.

The hon. member for Sarnia—Lambton.

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

Mr. Speaker, I want to thank my colleague for an excellent speech. I love how he compared what the Liberals are doing to songs like Money for Nothing. I would add to that Talk Talk, It's Only Words, and Shameless for starters.

This CPP benefit would take $1,100 out of everyone's pockets and out of small businesses' pockets, and it would not benefit anyone for the next 40 years. However, I think a lot of damage would be done in the interim. Could the member comment on that?