Madam Speaker, I am pleased to participate in this debate on the amendment to Bill C-26.
I had the opportunity to speak on Bill C-26 at second reading and will readily admit that my position on this ill-conceived bill has not changed. In fact, after spending a week in my riding, I am more convinced than ever that the bill needs to be scrapped.
I had the privilege of meeting with many constituents and holding a series of round tables with members from the chambers of commerce from the communities of Rosetown, Martensville, Warman, and Humboldt, just to name a few. Without fail, everyone spoke to what the impact of the CPP premiums increase would be on their businesses. Their responses were unanimous: this tax hike would hurt their businesses both indirectly and directly. Every single attendee said that they will have to consider this payroll increase when they budget for staffing next year, and that overall employee compensation will be affected.
Since the bill was introduced, I have been hearing a lot of conceptually wrong statements and value judgements from the members on the other side.
For starters, Bill C-26 would not create new money for today's retirees or for low-income Canadians nearing retirement. The bill would increase CPP premiums from 9.9% to 12% and would increase the benefits that people receive once they retire by the amount of the increase.
The increases in benefits are only made possible due to the increased contributions that workers and their employers are being forced to make today. The CPP is a contribution program. The benefits received once a contributor retires are equal to what they contributed to the program plus whatever investment returns the CPP investment fund realized.
The CPP is not an income redistribution program. It was never designed to be. It does not support low-income seniors. Quite simply, what one puts in is what one hopefully will get out plus interest. This is why retired Canadians or folks who are nearing retirement will see no change to the benefits they can expect to receive.
The Liberals claim they are raising the CPP premium because my children's generation is not saving enough for their retirement. Undoubtedly, there are some Canadians who are not saving enough, but this is not a universal problem. This CPP increase would end up costing an individual more than if the Liberals increased the sales tax from 5% to 7%, which, given the fact that Canada is in the midst of the largest year-over-year peacetime increase in federal government spending, is becoming more and more likely.
When the CPP was first created in 1965, the contribution rate was set at 3.6%. Over time, governments have increased this rate by three and a half times to the 12% being proposed by the current government.
Because CPP contributions are made as a percentage of income up to a maximum each year, there is no need to increase contribution levels to account for inflation. The CPP Investment Board returns are sufficient to ensure that the fund grows at a faster rate than inflation. The chief actuary reviews the solvency of the CPP fund every three years, and the last report indicated that the program was fully funded for the next 75 years. Therefore, this increase in the contribution rate is not being done to ensure the fiscal health of the plan.
Of course, Canadians deserve to retire with the peace of mind that their retirement is fully funded, but that does not give the government free rein to collect a growing part of every Canadian's income. The CPP was never designed to be the only pillar of retirement. It was designed to be one of many.
Also, young Canadians are faced with many expenses, like their first home, first car, and starting a family. Should retirement income be considered more important than having 2% more of one's after-tax income to pay for today's necessities? It is absolutely reasonable for many young families to want to keep more of their income at a time when their living expenses are at their highest.
With this proposed CPP tax hike, the current Liberal government actually would be discouraging young people from saving by taking the small amount that they might have been able to put into a TFSA or an RRSP and taxing it away. We have heard the Liberals say that because of the child care benefit, they now have carte blanche to increase the taxes of families. However, it makes no sense to give some money back to families and then tax it again. All that ends up happening is the government forcefully becoming more involved in the day-to-day lives of Canadians.
I believe the CPP is important, but how much further can the contribution rate really be increased? What if, according to the government, in the future Canadians are still not putting enough aside to maintain their standard of living? How much more should contribution rates be increased? Will we see an increase to 14%, to 16%, or maybe even to 18%? What is the limit? I am confident that Lester B. Pearson never envisioned that the combined contribution rates for the CPP would grow to 12% and that government would seek to take over retirement planning for Canadians, but that is the road the Prime Minister and his finance minister are taking Canadians down.
Beyond the basic problem that this would be a tax hike when businesses and employees can least afford it, it would also contribute to an endless feedback loop. The more that government gets involved in managing retirements, the less people will feel the need to save for their own retirement; and then government will once again feel the need to get involved in forcing Canadians to save more, and on it goes.
For my colleagues on the other side, here is another reason to consider this as a tax hike. If contributors die before they are eligible to claim CPP benefits, the benefits that were accrued would not flow to their partner or their dependants. Unlike other retirement-saving options, CPP contributions are not money that contributors or their beneficiaries will necessarily get back.
In conclusion, on this side of the House we trust Canadians with the money they have earned. We believe they should keep their hard-earned money and make the decisions on how to save and invest for their future, not the government. That is why I will be voting in support of this amendment.
