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

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

Mr. Speaker, I have two questions for the hon. member.

First, I would like to know why he does not think we should instead empower people to save for their own retirement by enhancing savings vehicles, things from which the government has pulled back.

Second, this may seem like a fine point, but the government's talking points continually refer to this issue of dignity. We are talking about a quarter to a third here. I am just curious about what the word “dignity” means in this context. Maybe we could think about a secure retirement or a financially stable retirement, and we would disagree about how to get there. However, I have concerns about the use of this word, just because I see human dignity as immutable, not something that is sort of an issue of the difference between 25% and 33%. I would be curious to hear the member's thoughts on what he means by that word in that context.

[Kyle Peterson, Liberal, Newmarket—Aurora, ON]

Mr. Speaker, the questions from my friend from Sherwood Park—Fort Saskatchewan are normally informed questions, and this is no exception, and he really wants answers to these questions. I do appreciate it.

The first part involved how we can empower Canadians to perhaps privately invest into their retirement. There is nothing in this bill that would take away from Canadians' ability to invest in other instruments and in other retirement plans. I encourage all Canadians, who have the wherewithal, to diversify their portfolios and to make sure they are in portfolios whose risk they can tolerate.

This is why I think the CPP is different from some private investment strategies; it is because the risk is zero. The CPP, of course, is fully funded and fully backed by the Canadian government. There is no risk to Canadians who invest in the CPP, whereas even a GIC carries a small amount of risk. That is why I think the CPP is so important. On the other hand, there are Canadians who cannot afford things such as TFSAs and RRSPs, so CPP is a way of making sure they are saving for their retirement.

[Scott Duvall, NDP, Hamilton Mountain, ON]

Mr. Speaker, I certainly agree with my colleague that the CPP does need to be changed. It has gone on too long. We are caught in this little retirement problem because no changes were made to it previously, so it is good news to hear. However, it does not go far enough. It would not do anything for people now, but it would do something for people in the future. It might help my daughters, or it could help my grandchildren, for sure.

The problem is the child-rearing dropouts and the disability dropouts, which are provisions that we have now in the existing CPP. They are still there. However, the enhancements that the Liberals are so proud are going to help people would be omitted in the enhancements part. That would penalize women and people on disability.

I keep asking this every day, and nobody is answering me. I need an answer, and so do Canadians. On that mistake, are the Liberals going to put it back in and make sure people are not penalized? That way we can all go on, married happily ever after, and say we got a good deal on the CPP.

[Kyle Peterson, Liberal, Newmarket—Aurora, ON]

Mr. Speaker, the hon. member's question is a good one. I also want to let the member know that obviously I cannot speak for the government, as he is fully aware. I also cannot guarantee that he will stay happily married if the CPP changes come into force.

I want to make sure the CPP is fair, that it is there for everybody, and that everyone who is entitled to the payouts gets them. I hope that, if any errors were made, they are corrected. I of course cannot speak for the government, but we want to make sure that the CPP is fair, as we do with all of our legislation, and we want to make sure that any changes we make are fair to all Canadians. I do share my hon. colleague's concern about that.

[Dan Ruimy, Liberal, Pitt Meadows—Maple Ridge, BC]

Mr. Speaker, it is a pleasure to rise today to share my enthusiasm for Bill C-26 and the updates being proposed for the Canada pension plan. The ability to have a safe and secure retirement is something that is incredibly important not just to Canadians broadly but to the folks in my riding of Pitt Meadows—Maple Ridge and to me. They are rightly concerned about what retirement will look like for the young people in our communities. This is an issue I hear about from constituents, and there is a wide Canadian consensus that this is a very real issue for millions of Canadians. By taking action now, we are securing a future Canadians can count on.

When the CPP was introduced in 1965 by then Prime Minister Pearson, it took both courage and fortitude to introduce a program that had a long-term, not just a short-term, vision for this nation and its workers. Millions of Canadians today benefit from the Liberal government's bold action at that time. Today we are witnessing the same courage and commitment to the long-term economic prosperity of Canadians by the Minister of Finance, the Prime Minister, and all those in this House who are thinking about Canadians not three or four years from now but in 50 years. I know that the generations to come will look upon this Parliament for its strength and willingness to do the right thing.

Families and workers across this nation have had an overwhelming desire to look to the federal government for national leadership on this issue. For far too long, this leadership has been lacking, and I am proud to stand in this chamber and be part of a government that is listening and responding, not just to the short-term needs of Canadians but for the long-term success of our nation.

Canadians today are working harder than ever to keep up with the financial demands of today's economy and to save for the future. The enhancements to the CPP are part of a comprehensive and multi-dimensional approach our government is taking to invest in Canadians today and for the future. The improvements to the CPP in Bill C-26 will be an investment economically. Perhaps more importantly, when it comes time for Canadians to retire, they can do so with dignity.

I have heard a lot over the last few days about how 85% of Canadians are supposedly ready for retirement. I do not see that in my community. When I talk to seniors in my community, they are struggling. Even with the CPP, the GIS, and the OAS, they are struggling. It is not enough for them today.

Today we are looking to the future. We are looking to make sure that our youth are in a good position. When I knock on doors and meet people in my riding, it is no secret that hard-working families are worried that they and their children will not have enough money set aside for retirement. I have had countless conversations with a wide variety of constituents, and it is clear that this concern is present across all demographics.

Youth in my community are facing many challenges in ensuring that they are saving enough for retirement. Young people understand the reality they face today and in the future. They know that fewer of them will work in jobs that will guarantee a workplace pension, like perhaps most of their parents had. There are a lot of factors, including a shifting economy, a change in culture, and a boost in entrepreneurial spirit.

The reality is that fewer young Canadians in this era can expect to have a single employer throughout their careers, as many once did decades ago. In addition, fewer employers are providing opportunities to save. Studies have found that in 2011, only 11.1% of the workforce was covered by private workplace pension plans, which is down from 28.6% in 1982. At that time, only a quarter of Canadians who earned between $40,000 and $60,000 contributed to RRSPs.

The CPP was established in 1965. I know that members opposite like to joke about what year it is, but it is 2016, and the labour market simply is not what it once was.

The CPP needs to be enhanced to reflect the realities of today and the anticipated changes of tomorrow. It is the responsible thing to do in response to a big challenge facing Canadians today. The enhancements to the CPP are well thought out and responsible. CPP contributions will increase modestly over seven years, starting in 2019, and when fully implemented will significantly reduce the number of families at risk of not saving enough money for retirement.

In my riding, when I talk to my constituents, I ask if they are saving money. From age 20 to age 50-plus , everyone is struggling to save money. Without the CPP we have today, where would our seniors be? It is a struggle already. The enhancements will boost how much Canadians will get from their CPP by increasing the earning range covered by the plan, resulting in an increase of up to 50% in benefits. As a result, these enhancements will increase the maximum CPP benefit by about 50%. The current maximum benefit is $13,110. In 2016 terms, the enhanced CPP represents an increase of nearly $7,000, to a maximum benefit of nearly $20,000. If we look at the children this is going to affect, are they really going to be able to survive on $13,000? Is that where we want to put our children, struggling at that point? We need to do this today for the future.

Numbers aside, there is a reason there is support on both sides of the House and across the nation for enhancement. All the provinces have agreed to do this. It is because it is what Canadians have been calling for. Canadians know that a secure retirement means secure access to healthy food, an ability to afford adequate housing, and the capacity to travel to see their children and grandchildren if need be.

I would also like to emphasize that as a small-business owner myself, all politics aside, I support the enhancements to the CPP outlined in Bill C-26 because it is the right thing to do. Bill C-26 will ensure the financial security of many employees down the line. It will help those who each and every day put their hard work into the success of my business and all businesses. The enhancements to the CPP are being slowly introduced over seven years to reduce the impact on small business.

This is smart policy-making that has rightfully gained the support of many small-business owners like me. When seniors and middle-class families have money, they can spend that money in the local economy. As a small-business owner, and as a member of Parliament and a member of my community, I do not wish to see any seniors living in poverty and without the dignity they deserve. The much-needed enhancements to the CPP proposed in Bill C-26 are something I can be proud of having voted in favour of and something I know will ensure that millions of Canadians have a retirement they deserve down the line.

I want to conclude by acknowledging the leadership our government has shown in making the tough decisions that will benefit Canadians not only today but for generations to come. I think this demonstrates a sincere willingness to think beyond the next election cycle, something the previous Conservative government put before the best interests of Canadians. The enhancements to the CPP are something Canadians have been demanding for years, something the provinces and territories, organizations, think tanks, and workers' representatives have been advocating for.

The time is upon us. I welcome all members to reflect on what it would be like to work an entire lifetime, a lifetime in which every extra dollar has gone to putting healthy food on our family's table, and to wake up in retirement and have to go back to work to put food into our own mouths.

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

Mr. Speaker, we have seen pretty clearly today that the government thinks that the only way to care is to control, that if we care about people's retirement, we have to take their money away and save it for them instead of giving them the means to do so themselves.

In response to my question earlier, another member said that there is nothing here that takes away people's ability to save for themselves, but the reality is that this means more money off people's paycheques. The cost to employers will make it much harder to hire people and to raise wages. The government has also cut back on tax-free savings accounts, which we know are disproportionately used by people with relatively modest incomes simply because of their relative value a savings vehicle compared to RRSPs.

Why is the government cutting back on savings opportunities specifically for Canadians of relatively modest means? Why is it taking money away from Canadians? Why does it think the only way to help Canadians save for retirement is to take away their ability to save for retirement?

[Dan Ruimy, Liberal, Pitt Meadows—Maple Ridge, BC]

Mr. Speaker, it is interesting to hear the opposition say that we look at it only that way. If there was a better way, then our seniors right now would not be in the situation they are in. What would the member have us say when seniors get CPP, OAS, and GIS and are still struggling? This is not how it is supposed to be. If we do not act now for the future, what does that say to our young people? This does not stop the people who are in a better situation from saving money. It is the unfortunate ones. How do we help them down the line?

[Scott Duvall, NDP, Hamilton Mountain, ON]

Mr. Speaker, I am happy about the proposed changes to the CPP, because it is the right thing to do. I agree with my colleague.

However, in the existing plan, there is what is called a dropout period for people raising children and for people living with disabilities. When they are collecting their disability benefit, they are not penalized, and when they average their pension, they are not penalized for that time. That is their protection. However, in the enhancement we are talking about, it has been omitted. This will penalize women and people with disabilities even further down the road.

I have heard other members say that they are not going to speak for the government. They have been silent on this. I would like the member's comments on making sure that the dropout period is put in with the enhancement, because it is the right thing to do.

[Dan Ruimy, Liberal, Pitt Meadows—Maple Ridge, BC]

Mr. Speaker, I am going to be one of those who says I cannot speak for the government, but I can say that it takes courage to get to where we are. If, back in 1965, the government had not done this, where would our seniors be today? What kind of economy, what kind of environment, would our seniors be living in? They are struggling today. We as a government will have to figure out how we can continue to help them today. One thing we can do is move forward and make sure that our children, down the line, are taken care of, and this is a great way to make that happen.

[Mel Arnold, Conservative, North Okanagan—Shuswap, BC]

Mr. Speaker, I rise today to speak to Bill C-26, an act to amend the Canada Pension Plan, the Canada Pension Plan Investment Board Act and the Income Tax Act,

I must say that the bill proposes drastic intervention in the form of increased payroll taxes on every working Canadian in our nation. It is not just Canadian workers who would pay for the bill, but Canadian employers would likewise be required to increase their CPP contributions for each and every employee.

At a time when there are already clouds of uncertainty over our economy and employment insecurity for too many Canadian workers, the Liberal government proposes to take more cash from the pockets and books of Canadian workers and employers.

Why?

Canadian economists, Canadian business owners, and even the Department of Finance have told the Liberal government that this proposed tax hike would hurt Canadians. Analyses from Finance Canada show that this proposed tax hike would reduce employment, which is a nice way of saying it would kill jobs; reduce our national GDP; reduce business investment; reduce Canadians' disposable income; and reduce Canadians' private savings.

The Liberal government's own Department of Finance has warned the government of the harms this bill would inflict upon Canadian workers, Canadian employers, and Canada's economy. Yet, the Liberals want to steamroll this bill through Parliament.

Again, I would ask, why? What is the impetus driving this tax hike? Where is the crisis?

Finance Canada has reported that the median Canadian senior earns 91% as much as the median Canadian, which is well above the OECD average of 84%. A study by McKinsey & Company found that 83% of Canadians are on track to maintain their living standards into retirement. It seems that Canadians are saving for their retirement already. The Liberal government could take a lesson from Canadians who are saving at a rate of 14.1% of their pay, which is a marked increase from the 1990 rate of 7.7%.

Canadians understand the importance of personal responsibility, of living within one's means, and of fiscal prudence. It is too bad the Liberal government cannot achieve these same understandings.

It is my belief that the people are best served by government policy when such policy supports and provides incentives for Canadians to make sound decisions, such as saving for their future.

This is why Conservatives introduced tax-free savings accounts, TFSAs, to support and provide incentives for Canadians to save for their future. Unfortunately, the Liberal government has chosen to reduce the amount that Canadians can save in TFSAs.

This is also why our Conservatives expanded the guaranteed income supplement, or GIS, as a means of reducing the poverty rate among seniors, those who need it the most. It was a logical policy that actually worked.

I do congratulate the Liberal government for following our lead by increasing the GIS rate by a further 10% in budget 2016. I hope I can stand in this House one day and congratulate them for also restoring the contribution limits to TFSAs.

Today, the poverty rate among seniors is reported to be 3.7%, which is a significant decrease from the rate of 29%, in 1970.

As Charles Lammam and Hugh MacIntyre of the Fraser Institute wrote in the Financial Post on June 22:

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.

I say, do it today. While savings are up and the poverty rate among seniors is down, I believe that governments ought to concern themselves with the responsibility of supporting our seniors who need support today, especially the 3.7% who remain in poverty. Unfortunately, this bill would do little to support these seniors this year, next year, or the year after that.

This bill proposes an increase in CPP benefits and that Canadians wait and wait a little longer, and wait a little longer yet, for the next 40 years. If the prevailing trend is that Canadians are saving more and investing and doing their own planning and strategizing for their futures, why is the government not supporting those responsible decisions? Canadians are speaking with their actions when it comes to planning for their retirement, and this bill before us today would undermine Canadians' ability to plan for their future by saving. The finance department's own analysis projects a 7% reduction in private savings over the long run if higher CPP contributions are imposed upon Canadians.

In 1964, the Liberal minister who was tasked with establishing the CPP, the Hon. Judy LaMarsh, stated that the CPP “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.” Who in this House can disagree with that logic?

Allowing Canadians their individual choices seems a natural conclusion, but not for the current Liberal government. The Liberal government remains bent on steamrolling this bill through Parliament and right across every paycheque, every Canadian worker, and the bottom line of every Canadian employer. Canadians are not comfortable with the proposals in this bill. Seventy per cent of employed Canadians oppose a CPP expansion if it means a wage freeze. This begs the question of whether wage freezes could result from this tax hike. According to the Canadian Federation of Independent Business, “Two thirds of small firms say they will have to freeze or cut salaries and over a third say they will have to reduce hours or jobs in their business in response to a CPP/QPP hike”. Also, according to the CFIB, a full 70% of small-business owners disagree with the notion that the proposed CPP increase is modest and would have a limited impact on their businesses. The CFIB also found that 90% of small business owners think it is important to have public consultations before any deal is finalized.

The C.D. Howe Institute has also issued a report showing that the Liberals' CPP proposal would not benefit low-income workers. Low-income workers would see their premiums go up, but the net increase in their retirement benefits would remain low. This is because higher CPP payments would be offset by clawbacks in GIS benefits.

Surveys have shown that over one-third of employed Canadians say that the proposed tax increases are unaffordable. Canadians know that the proposed Liberal hike would hurt them. Moreover, over 80% of Canadians want the government to further consult before making its decision, according to another public survey.

Canadians deserve to be trusted. They deserve the freedom to make their own choices on where and how they will save their hard-earned money for their retirement. Canadians also deserve to be heard on this matter. The current Liberal government seems motivated to launch consultations on everything under their paper sun. Why not consult Canadians on this tax hike?

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

Mr. Speaker, in listening to my colleague's speech, I am reminded of the work that we have had to do in the past year to fix and improve the retirement system for Canadians, who were abandoned by the Conservatives over the past decade. In the first months, we had to restore the age of retirement from 67 back to 65, where it rightfully belongs; we had to increase the GIS by 10% for those who need it the most; and now we are trying to fix the CPP, which is a long-term plan. We need to fix it.

The Conservatives have opposed this with more vigour than anything else we have brought forward. What could the Conservatives have against retired people?

[Mel Arnold, Conservative, North Okanagan—Shuswap, BC]

Mr. Speaker, our Conservative government did many things to assist seniors. The number one thing we did was to create jobs that kept people working in good-paying jobs so they could afford to retire.

The Liberal government has done nothing in one year to create one solid job.

[Robert Aubin, NDP, Trois-Rivières, QC]

Mr. Speaker, when I travel through my riding and meet with my constituents, most of them simply cannot max out their RRSPs every year. As one can imagine, putting money into a TFSA becomes “mission impossible”.

What are we doing to protect those folks' pension incomes? The Conservatives' solution was the pooled registered pension plan. If I cannot contribute to my RRSP or my TFSA, that plan would be nowhere near within my reach.

Does the member not think that, for people with modest incomes, enhancing the Canada pension plan is essential?

[Mel Arnold, Conservative, North Okanagan—Shuswap, BC]

Mr. Speaker, the challenge with this bill before us today is that people today will not see any benefit from it. As I said in my speech, the proposed benefits from this will only be seen 40 years down the road, long after the people who need work, who need jobs, and who need help in their retirement have passed, unfortunately.

[Todd Doherty, Conservative, Cariboo—Prince George, BC]

Mr. Speaker, I find it laughable, listening to the debate. The members opposite in the government are asking what we have against seniors.

Under our government, we had the largest increase to the GIS in 25 years. We also introduced income-splitting for seniors. We introduced the tax-free savings account, which, I might add, 11 million Canadians participated in, mostly low to middle-income earners.

We had a minister of seniors, which we have yet to see the government even focus on. We took 380,000 seniors off the tax roll, completely.

What the government is proposing with the CPP and also with the carbon tax is going to hurt the job creators of Canada. We are already seeing a deficit in jobs. We have hundreds of thousands of Canadians out of work.

Does my hon. colleague feels the same as us, that the government is clearly out of touch, has no idea what it is doing, and is making it up as it goes along?