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

[Kelly McCauley, Conservative, Edmonton West, AB]

Mr. Speaker, it is a worrying issue. We have great faith in small business and the representative for small business in Canada, the Canadian Federation of Independent Business, has been very clear that it is very worried. Its members say they are going to cut staff, cut hours, and cut wages. The finance department's own internal report shows there are going to be devastating losses of over 100,000 jobs. This is not the right way to fix any perceived pension problem.

[Ken Hardie, Liberal, Fleetwood—Port Kells, BC]

Mr. Speaker, our economy and job market have been headed downhill and gaining steam for 10 years. There have been 400,000 manufacturing jobs lost. The Canadian Imperial Bank of Commerce notes that the jobs that were created were, for the most part, part time and low quality. Turning that around is not going to be easy. A change in momentum is going to take work, which this government is committed to.

What does the member say to the fact that 60% of people who work in the private sector right now have no company pension plans and no money to be putting into the elite-finance TFSAs? What should they do? Should they simply hold off and let some government in the future deal with the fact that there are Canadians who are badly prepared for retirement, which should be the golden years of their lives?

[Kelly McCauley, Conservative, Edmonton West, AB]

Mr. Speaker, I will point out a couple of things.

We have heard time and time again that Canadians have no extra money to put aside for savings, so the government is going to step in and take more from the non-existent savings they have. There are a couple of things about this so-called pension crisis.

Again, Conservatives have great faith in Canadians and one thing the bill does not address is that for every $1 of the trillions of dollars in RRSPs or pensions, there are $3, that means $9.5 trillion, in other assets outside of pensions, so we need to take the holistic picture before deciding to punish small businesses and low-income workers with this added tax. That is one issue.

The other part is that, again, Canadians have been very successful saving their own money. Saying that they do not have any money now so the government is going to take it away does not help. We are making people more reliant on government when that is not the answer.

I found a great quote by pension expert Paul Williams. Thinking about making people more reliant on government, he stated, “Think of our gang of politicians—Dalton McGuinty...Rob Ford. Think of other government projects—gas plants—”

[The Assistant Deputy Speaker, Anthony Rota]

Before we go to resuming debate, I would like to point out to the hon. members, if they do not mind while they are giving their speeches, just look up once in a while. I will give them a signal if they have some time left. I hate to cut anybody off, but once it goes over a little bit, it gets beyond the point. That is just some housekeeping for this morning.

Resuming debate, the hon. member for Edmonton Strathcona.

[Linda Duncan, NDP, Edmonton Strathcona, AB]

Mr. Speaker, I would like to start out, as many of the members have this week, by giving recognition to the veterans in my city, particularly in Edmonton Strathcona. I will be joining many at Holy Trinity Anglican Church in my riding, with the Light Horse regiment, where we will have a service and then march to the cenotaph. I look forward to joining Edmontonians in thanking our veterans for their service and remembering those who did not come home.

I am also pleased to rise to speak to the reforms proposed in Bill C-26. The pension reforms are a welcome response to the growing pension crisis in Canada. Contrary to what some members in the House allege, people are not able to save, and we are in a crisis. We need to support those who move to retirement.

My colleagues and I have been calling for these reforms for a considerable amount of time, as have many unions, provincial governments, and seniors organizations, including CARP.

While better was possible, and the full benefit will not be felt for five decades, the proposed benefit enhancements are a good first step. Challenges will remain for those currently retired or approaching the age of retirement.

Today's seniors will not personally benefit from these changes, but as Wade Poziomka, CARP's director for policy, has explained:

CPP enhancement is important to CARP's membership because they recognize the challenges that young people face today when it comes to savings.... With less access to workplace pension plans, a CPP that meets the needs of Canadians today is so crucial.

The federal and provincial governments are to be commended for having reached the agreement that led to this bill. I am pleased that the Government of Alberta was among the first to support this critical step forward, contrary to the case with previous governments of our province.

As has been pointed out by previous speakers on the bill, fewer and fewer Canadians are being provided access to workplace pension plans. Where pension plans are provided, they are in many instances offering reduced retirement security.

Additionally, with younger workers increasingly likely to change their jobs many times over their lifetime, and with many, as my colleague, the member for Churchill—Keewatinook Aski, has pointed out in this place, facing precarious work, the need for secure and adequate public pensions is becoming increasingly important. Only about a third of those who are eligible to do so actually contribute to RRSPs. It is clear that Canadians need support in saving for retirement. This is not because they are profligate or irresponsible. Young families have to prioritize paying for rent or, if fortunate, a mortgage, paying down substantial and growing student debt, and simply putting food on the table. Later in life, they may be faced with helping to cover significant and growing education costs for their children, and retirements needs for their own parents.

The Canada pension plan has proved to be a reliable and safe way to save for retirement. Why would we not use it as a mechanism to ensure retirement with dignity for future generations?

Concerns have been raised by some about the additional costs to employees and employers of increased contributions to CPP. However, with respect to the costs to small business, we are still awaiting the promised—the long promised, frankly, by both the Conservatives and Liberals—reduced taxes to small business.

The economy has taken a hit recently, particularly in my own province. Therefore, the contribution of seniors to the economy remains essential to all of our communities, in particular to small and medium-sized independent businesses, of which my own riding of Edmonton Strathcona has so many. We need future retirees to be sufficiently economically secure to ensure economic health in the future. The most cost-effective way to do that is to enhance CPP and QPP.

CARP has been among those who have pointed out that the proposals in Bill C-26 only go part way toward a full solution of the problems we face in ensuring retirement with dignity for all Canadians.

It is estimated that we need about 70% of our income at retirement to maintain our standard of living. Currently, CPP and OAS together bring us to about 40% of that. The changes in Bill C-26 would increase that to only 50%, meaning that Canadians will still need to have some kind of workplace or private pension plan to stay ahead, or ability to save.

According to a recent Statistics Canada report, currently about 12%, or 600,000 seniors in Canada, live in poverty. This includes more than one in four seniors, most of whom are women.

In my constituency office, we hear from many facing the challenges of insufficient income to pay for the basics of life. This is especially true for those relying solely on OAS and GIS. Many of those who are eligible for those benefits are not accessing them because they are either unaware of those benefits or they do not know how to apply.

The question I wish to put to the government is this. Why should seniors have to apply for these payments? Why not issue them automatically to those in need, as is the case with GST credits?

We are also discovering, while checking on applications for constituents, that the processing times for OAS and GIS have exploded. It is now six to eight months, whether they applied before they turned 65 or after. In some cases, they wait a year. In the meantime, the applicants are relying on nothing at all, bare cupboards. It is important to recognize that few seniors are actually receiving the maximum CPP benefits, as meagre as they are.

If they have some RRSPs and decide to cash them in to get by while waiting for OAS or GIS to kick in, they may be penalized in the following year by having the GIS clawed back. We need to end this GIS clawback.

Among the reasons that our offices hear from so many seniors is that it is almost impossible for them to contact a government department employee to discuss their issues. While it may be efficient to have everything online, it does not suit everyone or every situation. Even at Service Canada offices, it is difficult for people to find someone who has access to the files. It is pitiful that seniors cannot call and talk to a real person over the phone about their pensions.

We have waited a long time for the reforms contained in Bill C-26. Let us make sure we take this important step towards ensuring retirement security for the people we represent. Let it not be the last time we look at the issue of pensions or support for seniors in this place. It is time to ensure greater availability of affordable senior housing and care, including home care, palliative care, and pharmacare. Canadian seniors should not live in poverty. It is our responsibility to make sure they do not.

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

Mr. Speaker, the hon. member gave a very good speech. The NDP is always very good at bringing forward interesting ideas, and I like hearing about them.

However, I know that the Liberals have reached a good balance when the Conservatives say we have gone way too far and the NDP say we are not going far enough. It is the perfect happy medium, yet again.

Would the member like to comment on that?

[Linda Duncan, NDP, Edmonton Strathcona, AB]

Mr. Speaker, that is simply astounding.

I am sorry, but when it comes to Canadian seniors, a happy medium is just not good enough. Every senior should have the right to retire in dignity. All we are saying is that we appreciate a little increase in CPP. However, let us take these actions that we are recommending on making GIS and OAS readily available, and let us finally act on palliative care, home care, and retiring in dignity.

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

Mr. Speaker, one of the things the member mentioned right off the top was that young people today are not able to save.

They are not able to save because, in some cases, they do not have a job or are not making enough money. Why does the member think we should be taking more money from them when they are not able to save rather than working to make sure the economy is flourishing?

As the member well knows, in a hot economy in Alberta, we typically make much more than the rest of the country. If we could get the economy rolling again, would the ability to save come back?

[Linda Duncan, NDP, Edmonton Strathcona, AB]

Mr. Speaker, it is not just the young people who would be contributing to a better CPP at the time of retirement. We are all going to be contributing. I am happy to contribute more so that my niece can retire in dignity in her time. The deductions are proportional to what people are earning.

Frankly, we need greater action so that not just the young people, but so many in my province and across the country, are not relying on precarious work.

[Alistair MacGregor, NDP, Cowichan—Malahat—Langford, BC]

Mr. Speaker, we in the NDP have long advocated for increases in the GIS. While we were thankful to see that 10% increase recently, there is still much more that needs to be done.

We all know that the GIS depends on tax revenues, but some of the arguments I hear from the Conservatives are that they want to increase the TFSA. That is going to have an impact on future revenues upon which the GIS depends. We are going to increase the guaranteed income supplement but take away the revenues it depends on.

I would like to hear the hon. member's comments on that inconsistent argument.

[Linda Duncan, NDP, Edmonton Strathcona, AB]

Mr. Speaker, my colleague's intelligent question answers itself. Very few Canadians can actually contribute to a tax- free savings account. Those of us who are well paid are fortunate that we can contribute. I am pleased that the government is limiting those contributions so that there are more dollars available. We can provide support to those who cannot afford to contribute, so that they too can retire in dignity.

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

Mr. Speaker, we very much appreciate the fact that the New Democrats are supporting at least some aspects of the budget in regard to the increase to the GIS. It is also important that we acknowledge that the Liberal government is also reducing the age of retirement from 67 to 65. We have three public foundational pension programs. All three of them have been dealt with in a very positive way in the last 12 months by this government.

I wonder if the member might want to comment on how important it is that Canadians recognize there has been significant movement in this last year, more so than in the previous 10 years, on three very important social programs that Canadians truly love.

[Linda Duncan, NDP, Edmonton Strathcona, AB]

Mr. Speaker, I want to congratulate the member and his party for bringing forward these changes, but I would like to see far more changes. We know we have had a lot of promises about additional changes coming forward, possibly after the next election. We welcome this change, but I ask that the Liberals please take action on the additional changes that we and that seniors have been calling for, for quite some time.

[Tom Lukiwski, Conservative, Moose Jaw—Lake Centre—Lanigan, SK]

Mr. Speaker, it might be helpful, or perhaps even instructive, if I prefaced my remarks by sharing with my colleagues the definition of a tax. A tax is defined as a “compulsory contribution to state revenue, levied by the government on workers' income and business profits, or added to the cost of some goods, services, and transactions”.

I would suggest that anyone with a reasonable outlook would know that hiking the CPP premiums is a form of taxation. It is in effect a payroll tax.

I would argue that raising taxes in times of a sluggish economy, in times of the weak economy we are experiencing here today in Canada, is absolutely the wrong thing to do. Raising taxes would have negative impacts on the Canadian economy. For example, it would restrict and reduce the ability of businesses to reinvest in their businesses. It would reduce the ability of Canadians to have more take-home pay, and it most certainly would reduce their ability to add to their savings. It would reduce the amount of money they would be able to save.

It is simply the wrong approach to take. This payroll tax is regressive. It harms employers and employees alike. Most particularly, it is harmful to small businesses.

Let me share a small story from just a few weeks ago. I happened to be in Thunder Bay on some business. Since I had never been to Thunder Bay before, I went out for dinner to a restaurant that night with a colleague. I had a lovely dinner. Following dinner, the business owner and I engaged in a conversation. Once he found out I was a member of Parliament, he wanted to talk about the proposed hike in CPP premiums. He told me his profit margin was so skinny that any increase to the CPP premiums would result in only two things. One, he would be looking at a negative profit for the year, which might result in his closing his doors; or two, he would be forced to lay off employees. Neither of those two options was particularly attractive to this young employer. He said he had a business partner in another restaurant in Edmonton who was facing exactly the same situation.

I know it does not matter whether one is a small business owner in Surrey, British Columbia; Edmonton, Alberta; Winnipeg, Manitoba; Thunder Bay, Ontario; or Corner Brook, Newfoundland, because this is a problem for all small business owners.

The frustrating thing about this is there is no need to increase CPP premiums. The government's stated objective is to allow Canadians in their retirement years to retire more comfortably. However, the statistics do not indicate there is a problem today. Statistics indicate that fewer than 4% of seniors are living on a lower income, or below the poverty line. That is a great change from many decades ago. In fact, in 1970, 29% of seniors were living below the poverty line, so we have made great strides in the decades since 1970.

Additionally, statistics indicate that Canadians are saving more money today. In 1990, Canadians saved slightly more than 7.5% of their income. Today, it is almost twice that. Canadians are saving over 14% of their take-home pay, or at least their gross income, and putting it into savings vehicles like RRSPs, TFSAs, and the like.

We are making progress on that, so for the government to say it is doing this out of necessity is, frankly, disingenuous at the very least.

The government appears to be trying to create a solution for a problem that does not exist. The irony of all of this is that because of the government's reckless, out of control spending, the reality is that the government is creating a problem for which there is no solution, because of the billions of dollars of debt it is incurring and throwing upon the backs of taxpayers. It has no solution for getting out of debt. There is no plan to get back to balance.

It appears that the government's economic plan, if we want to call it that, is following very closely the path of the previous Ontario governments of McGuinty and, currently, Premier Wynne. That disastrous economic plan has resulted in the Province of Ontario, on a per capita basis, being more indebted than any jurisdiction in the world. What is even more frightening is the fact that two of the main architects of the disastrous economic policy of Ontario were Gerald Butts and Katie Telford, who are now two of the main economic advisers to the Prime Minister. I would hate to see these two do to Canada what they have done to Ontario, but that is certainly what appears to be happening.

However, I think there are alternatives to what the government is planning and proposing with Bill C-26. I have always thought it is instructive and helpful if opposition members, rather than just criticizing the government, offer alternatives or things the government could at least consider to replace flawed legislation—and Bill C-26 truly is flawed. My suggestions to the government would not cost the taxpayer a nickel.

The first suggestion I would make is this. Why does the government not work with its provincial and territorial counterparts and encourage them to add financial literacy to the K-to-12 educational curriculum? I think it would be extremely helpful for young people to learn why they need to save for retirement. It would helpful for them to learn how to save for retirement, to learn about the investment and savings vehicles that are available in Canada today, so that when they finally enter the workforce, they have a plan, or at least have charted out a course of action, to be able to work their lives and then retire with dignity. That no-cost item would, I believe, be extremely helpful.

The second thing is again a very simple concept. Of course, I believe it is totally alien to the government's thinking, but it would not cost the taxpayers a nickel, and it is simply to lower taxes. Do not raise taxes, but lower taxes. Allow Canadians to take more money home with them. Put more money in their jeans. Put more money into savings vehicles. At the same time, lowering taxes would stimulate the economy.

Our previous government had a low-tax, high-productivity agenda. It resulted in having the lowest tax regime in 50 years. What was the result? Well, we created 1.3 million net new jobs from the height of the recession until the day we left office. Why? It is because lowering taxes increases productivity. That is a concept the current government is totally unaware of. Bill C-26 is totally opposed to lowering taxes, because this bill would raise taxes.

For those reasons, and some of the others I articulated in the few moments I had for my address, my colleagues and I in Her Majesty’s loyal opposition will be vociferously opposing Bill C-26.

[Ken Hardie, Liberal, Fleetwood—Port Kells, BC]

Mr. Speaker, what we have heard is a message from the darkest heart of the Conservative core.

We have had a situation in the last 10 years in which 85 families in this country have had more wealth than 20 million Canadians. Those are the people who, yes, have been able to save. Their savings rate has gone up and, yes, it pulls up the national average. However, we have also had 10 years where we have relied on average Canadian citizens going further and further into debt to bolster the Canadian economy. Therefore, there is no money for fancy TFSAs, except at the top of the elite 1% of 1%.

The previous member did not respond to my question, and so I ask again, what about the 60% of Canadians in the private sector who, even though they have a job, do not have a company pension plan? What do we do for them?