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

[Brigitte Sansoucy, NDP, Saint-Hyacinthe—Bagot, QC]

Madam Speaker, indeed, the whole issue of women is very important.

Throughout women's careers, there is one thing on top of another that all have an impact on their retirement. First of all, underpinning everything, women's wages are lower. In addition, when they choose to have children, and more often than not, it is not a choice, they have to stop working for long periods of time. All these things affect their retirement.

That is why, as my colleague emphasized, when we are making decisions regarding the Canada pension plan, it is important to consider the situation facing women and correct the inequalities that hurt them when they retire.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Madam Speaker, I am rising once again 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, at third reading. I feel strongly that this will be one of the largest tax increases in Canada's history and it will disproportionately impact middle-class Canadians.

During the second reading debate, I was asked a question by the member for Avalon concerning my comments made at that time, that this CPP increase was a tax hike given that if contributors to the program died before they were eligible to claim CPP benefits, the entirety of these accrued benefits would not flow to their partners or their dependents.

The member for Avalon pointed out that because he, a sitting member of parliament, was receiving CPP survivor benefits, this major CPP contribution rate hike was not a tax.

I would like to make a couple of observations regarding the member's assertion.

Only persons who are not collecting CPP pensions are eligible for the survivor benefit. These individuals can qualify for up to 60% of the contributor's retirement pension if the surviving spouse or common-law partner is not receiving other CPP benefits.

Even under the most generous of circumstances, the spouse or common-law partner of someone who had paid into the CPP his or her entire working life would only be able to collect a maximum of 60% of his or her pension, and this would not be done as a lump sum payment but rather in instalments.

If a family experienced a tragedy where both the contributor and his or her spouse or common-law partner were unable to collect CPP benefits, these full benefits would not be passed on to the children or grandchildren.

On the other hand, if that same person had consistently contributed to a registered retirement savings plan, the entire value of those contributions would be passed on to his or her next of kin, regardless of whether that person had his or her own CPP pension.

As the member knows, RRSPs invest in securities that hold similar risk profiles to investments made by the CPP Investment Board, so the risk of losses are comparable to the CPP.

I would assert, once more, that this is a tax hike. There is really no way around that.

For greater clarity, let us look at the dictionary definition of the word “tax”, which is “A compulsory contribution to state revenue, levied by the government on workers' income and business profits”.

The CPP contributions are compulsory. They are being levied by the government on income, and they are going to be used by the federal government to provide for pensions. Therefore, it is a tax.

Also, the Liberals are not being forthcoming with the actual size of the increase in CPP premiums they would be imposing on contributors. The Liberals should call a spade a spade and admit that it is a tax hike and tell folks making more than $54,000 just how much more they will have to pay out of each paycheque.

Today, Canadians are contributing 10% of their income between the basic exemption, which is $3,500, and the maximum pensionable earnings amount, which is $54,900, into the CPP. When the bill is fully implemented, contributions on income between the minimum threshold and $54,000 will increase from 10% to 12%. CPP contributions on income between $54,000 and $82,000 will increase from zero to 12%. CPP contributions on incomes of $82,000 and above would increase from zero to 8%. That is hardly a gentle push to save more.

This would one of the largest single-year increases in taxes for middle-class Canadians in Canada's history, and it would be middle-class Canadians who would be bearing the largest increase in premiums relative to their income.

Every Canadian making more than $54,000 would see the percentage of each paycheque that would go to the CPP increase by significantly more than 2%.

Many will see their contribution rates rise by up to eight percentage points. That is 8% more of each paycheque they will not take home. Anybody who claims that increasing CPP contributions by eight percentage points will not have an impact on a family's bottom line is just wrong.

In a country like Canada where credit is fairly easily available, people can replace the income they will lose from the increase in mandatory contributions through greater borrowing. There are a number of Canadians who will not be able to reduce their overall household expenditures by 8% to maintain a balanced budget and may be put in the position where they have to borrow in order to continue to afford their mortgage or car payments, for example. While it is unwise to borrow money to offset any decrease in income by an increase in CPP premiums, it probably will happen.

For folks making above $54,000 per year looking to pay off their mortgage as quickly as possible, or individuals who may be looking to pay off their student loans earlier, the reduction in take-home pay will have a real impact on how quickly they can pay off their debt. Are people really better off if they are putting aside more money for retirement instead of paying off their mortgage or their debts more quickly?

This legislation would not increase take-home pay. It would not create new money. Therefore, an increase in payments in one area of household expenditures necessitates a decrease in another. Unfortunately, with the recklessness that the Liberals are entering Canada into long-term structural deficits, they do not seem to realize that families have to stick to a budget and make ends meet. The buck stops there.

Folks in my riding have also pointed out that higher payroll taxes negatively impact the competitiveness of businesses. One area it will really hurt is self-employed individuals who will have to pay both the employer and employee portion of the CPP. Therefore, they will have less capital to put back into their businesses.

A financial planner from Martensville made the following point to me, which I hope the finance minister will take seriously. He said that he encouraged those young people who came to him for financial advice to start saving even just a small amount for their retirement while they were young. However, he said now these same young people would be forced to divert that small amount to the CPP rather than their own savings and retirement plans.

With this CPP tax hike, the Liberal government is actually 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. If we want Canadians to save for their future, why would we take away their choice on how to do just that?

I am hopeful that all those new nominally independent senators will undertake due diligence and not simply rubber stamp what is clearly ruinous legislation to middle-class Canadians. The CPP is a contribution program. An increase in benefits is only made possible by a corresponding increase in contributions. Depending on their circumstances, Canadians may or may not get back what they put into the program, as I mentioned earlier in my comments. Every household will have to adjust to the reality that the government does not trust it enough to save for its retirement and can only begin to worry about what the Liberals plan to do next to make Canadians, who knows, eat more vegetables, exercise more regularly, and the list goes on and on.

[Pierre Nantel, NDP, Longueuil—Saint-Hubert, QC]

Madam Speaker, I thank my colleague for her speech.

While I understand the Conservative position that we should ask less of the government, I cannot help but ask my colleague the following question.

All of us in the House today, perhaps the Conservatives less than the rest of the members of Parliament, can see how there will be benefits in 50 years. However, everyone agrees that there is nothing for an urgent situation, now. The fact remains that the Conservative approach did not seem to work in 10 years, since so many seniors are heading to a system where there will be great insecurity.

What does my hon. colleague have to say about that?

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Madam Speaker, I want to point out something I have said time and time again, that Conservatives do believe in reasonable evidence-based policies to help Canadians retire with dignity.

I know I mentioned these statistics in earlier speeches, but according to Statistics Canada, the percentage of low-income seniors was 29% in 1970, and today it is 3.7%, so clearly this is a significant improvement.

The best way to prevent poverty in old age is to give people the tools they need to save money and to let them make their own choices, based on their own needs and means. They know how to manage their money, not the government, especially not this government that wants to take money out of their pockets.

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

Madam Speaker, the Conservatives have made it very clear that they will not support this bill. I can appreciate that. If it were up to the Conservative Party, the bill would never see the light of day. We saw some of that with their moving some 60 amendments to the bill.

Is there a time or situation in the future when the Conservative Party would support the enhancement? We understand that today, the Conservatives want to kill the bill and will debate it endlessly, but the issue is, will there ever be a time that the member could see the Conservative Party supporting an enhancement to the Canada pension plan?

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Madam Speaker, one of the things I learned early on when I became a member of Parliament is never to speculate. Therefore, I do not want to speculate on whether or not there would ever be such a time.

What I can say today about the CPP is that from 1966 to 1986 the contribution rate was 3.6%. These original contributions were far lower than what is being contemplated today at 11.9%. At 11.9%, the government is replacing private sector retirement plans, which was not the intent of the original legislation.

[Robert Gordon Kitchen, Conservative, Souris—Moose Mountain, SK]

Madam Speaker, I thank the member for Carlton Trail—Eagle Creek for her wise words. Being from Saskatchewan, I know she understands what the Liberal government has done to the coal industry. It has created the potential for huge job losses in a town called Coronach, where there is a mining company and a power generation company. Could she expand a little more on how jobs will be affected by the CPP changes and how they will accommodate that?

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Madam Speaker, this is a payroll tax. When I was in my riding during our break week in November, I heard this over and over again. It is a payroll tax that will increase the cost of doing business for everyone, and it will have an impact on their bottom line. The facilities in the member's riding will be no exception.

I found it very interesting to hear one of the members on the government side basically shrug off these concerns and say that some businesses would have to increase the prices of what they are producing, or their services, or they might need to close their doors. I would say that Canadians will be—

[The Assistant Deputy Speaker, Carol Hughes]

Order, please. Unfortunately, the time is up.

The hon. government House leader has a point of order?

Bill C-26—Notice of Time Allocation Motion

[Bardish Chagger, Liberal, Leader of the Government in the House of Commons and Minister of Small Business and Tourism]

Madam Speaker, I would like to advise that agreements could not be reached under the provisions of Standing Orders 78(1) or 78(2) with respect to the report stage and third reading stage of Bill C-26, An Act to amend the Canada Pension Plan, the Canada Pension Plan Investment Board Act and the Income Tax Act.

Under the provisions of Standing Order 78(3), I give notice that a minister of the crown will propose at the next sitting a motion to allot a specific number of days or hours for the consideration and disposal of proceedings at those stages.

[Some hon. members]

Shame.

The House resumed from consideration of Bill C-26, An Act to amend the Canada Pension Plan, the Canada Pension Plan Investment Board Act and the Income Tax Act, as reported (without amendment) from the committee, and of the motions in Group No. 1.

Report Stage

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

Madam Speaker, obviously there is quite a bit of surprise and disgust in the House at what we have just seen take place from the government side. This is the second time that we have had the invocation of closure on the same bill. The Liberals did not want to let every member who was interested speak to it at second reading, and they do not want to let every member interested in speaking now speak to it at report stage. It is critical that we have a full airing and discussion of the bill.

Perhaps not every bill before the House requires the same amount of debate and discussion, but this is one of critical importance. This is a piece of legislation that will kill jobs, that will kill businesses, that will make it harder for families to make ends meet. This is a bill that very much ignores what ordinary people and business leaders are telling us in the House we need to do. Rather than giving it a proper airing, rather than having a full discussion, again we have a notice of closure motion, and I know we will be discussing this further tomorrow.

As I reflect on the points that I wanted to make, I appreciate that unlike many members on this side of the House, I will actually have an opportunity to speak to this. When I think about this, as I think about many of the other bills that we discuss, I think about my children. My daughter Gianna is three and a half, and my son Judah is just over one, and I think about what the bill will mean for them in the long term, as they move eventually into adulthood, as they try to live well economically and in other respects, and as they move toward retirement. What can I do, as a legislator, that will pass on the best possible country to my children?

That means having a strong society, a strong culture, but what can we do when it comes to the economic sphere that will position my children well? I think we can do what we know builds to a strong economy. We can encourage the kind of economy that is growing, that is creating jobs and opportunities. That does not mean an economy in which the government controls everything. That means an economy in which we have a robust private sector that is creating jobs and opportunity for my children and for other people, now and into the future.

The fundamental mistake of the bill is that if we care about people's well-being, about people's economic situation, and we care about their retirement, the natural conclusion of caring is control. If the government cares about people's retirement, it has to control it. It has to take more of their money and put it aside for them. Our view, as the Conservative Party, is unique within the House, in that we believe that caring does not require control. We can care about the economy and yet recognize that a strong economy requires a strong, and, to some extent, regulated, but not an overly controlled private marketplace, because that is where wealth and opportunity are generated. That is where the creative ideas that spur economic growth come from. That is the source of the innovation that will allow my children to have a better standard of living than I do. It is a strong private sector that creates those long-term opportunities.

Repeatedly, we are accused by other members of the House of not caring about retirement, of not being interested in a stronger retirement situation for our seniors. However, the difference is not one of caring; it is one of control. We understand that just because we care does not mean we need to control. In fact, the best expression of care for people's well-being in the context of the economic realities we experience, is giving people control over their own retirement, but at the same time giving them the tools that allow them to succeed and do well. That can mean, as we did when we were in government, strengthening tools like the OAS. It can mean providing significant tax cuts for seniors, bringing in income splitting for seniors. As we committed to in the last election campaign, it was having a single seniors tax credit. We significantly increased the age exemption, for example. We brought in a full host of tax reductions for seniors that allowed seniors to live in a stronger economic position.

However, caring does not mean controlling. We cared, and we handed control over to individual seniors in terms of their own retirement. That was our own unique approach, but other parties believe that if we care, we have to then advocate for more government involvement.

Then, when we advocate for this balance between the existing CPP as well as stronger savings vehicles and tax cuts for seniors, they say that we must oppose the CPP in its entirety, as if there is this inescapable binary between the big expansion the Liberals have proposed and complete abolition on the other. No, we think that we have a system that is working fairly well, not perfectly, but that the enhancements can come in really identifying those who need the help the most and providing them with core supports and tax reductions, but always leave our seniors in control of their retirement and do not put in the process undue burden on our businesses. This is the connection. In trying to control people's retirement, the government is raising taxes on small business. It is introducing new higher payroll taxes for our small businesses. This will hurt economic growth. It will kill jobs, kills businesses, and reduce opportunity. It will reduce the opportunities that are available for my children and everyone else's.

I want to make another specific point about the contradiction in the logic that we are seeing from the government. On the one hand, the Liberals are introducing a carbon tax. They say that a carbon tax is necessary to reduce carbon. They say that if we do not like something, we should tax it in order to reduce it. That is their argument. On the other hand, today we are debating a bill where they would increase the tax on employment. Therefore, if their view is that a tax is a disincentive, then surely that applies as much in this case as it applies in the case of their arguments with respect to a carbon tax. They cannot have it both ways. If a carbon tax is their strategy for reducing carbon, then what is a tax on employment but a transparent measure that will certainly, perhaps not intentionally, be a measure that will have the effect of reducing employment?

On this side of the House, we oppose increasing taxes on Canadians. We strongly oppose this new tax on employment. We think we can more effectively support people by giving them the resources themselves. We also oppose the carbon tax. It will reduce production and hurt the economy, and it will not actually increase the efficiency of production. It will simply chase those emissions across borders. It will not have the impact that the Liberals desire. However, the Liberals really have to reconcile in terms of their own economic logic whether or not they think a tax is a disincentive. If they think a tax is a disincentive in the case of carbon, then the same principle exactly applies when it comes to employment.

Finally, I want to underline that we have a choice here. We have advocated strengthening private savings vehicles and providing tax reductions as an alternative that helps current and future seniors, but does not hurt our economy. One of the major advantages of private savings is that it actually allows people to use those savings in a more flexible way throughout their lives.

Most people I know save for different major projects throughout their lives, which then helps them economically in the future. People might save up for post-secondary education. That post-secondary education allows them to have a greater earning potential. Then they save up to buy a home, and they might save up for a small business, or for some kinds of personal investments, which then build up to that savings for retirement. They can realize the value of that education throughout their life, with that home if they choose to sell it, or perhaps if they choose to sell that small business.

Therefore, private savings give individuals greater flexibility whereas a government-controlled savings mechanism, like the Liberals are talking about with higher taxes and then future disbursements, means that the government is taking money away from people, and they do not have the opportunity to use those savings throughout their life. They do not have the opportunity to make those investments, get an education, a home, or a business, which are things that help them and generate a stronger economy.

As I think about my children, Gianna and Judah, and what this bill means for them, I am going to strongly oppose the bill knowing that we are better off caring but not controlling.

[Colin Fraser, Liberal, West Nova, NS]

Madam Speaker, the hon. member raised an interesting point that I had not heard raised before with regard to comparing the carbon tax and what the Conservatives, in this instance, say is a payroll tax.

The member mentions that that would be a good example to show that we are not being consistent. However, in fact, on this side of the House, we do not believe that the Canada pension plan imposes a payroll tax. It is the Conservatives who are saying it is a payroll tax.

Therefore, I would like the member to understand that if it is payroll tax and that is going to mean that job creators are not hiring people, then that obviously means that it does affect behaviour. Taxes affect behaviour. Conservatives are the ones who think it is a payroll tax. Therefore, the carbon tax would affect behaviour and consumption.

I would like to turn the member's argument on its head. The Conservatives are the ones who are saying it is payroll tax, when on this side of the House we say see it as an investment in Canadians' future.

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

Madam Speaker, when it comes to the carbon tax, I believe it will affect behaviour but the effect will be to send industry over the border. It might affect Canadian emissions, but it will not affect global emissions. It will not actually address the problem.

I will just say this. The Liberals do not want to call this a tax. Whether or not we call it a tax, the fact is a tax by any other name smells just as bad. The economic impact of this is that it acts like a tax, even if the Liberals want to call it something else. If the government charges an extra fee, a deduction, a new made-up word, a levy, or something or other on top of something else, that creates a disincentive for it.

Most economists would use the word “tax”. I am agnostic on the word, but fundamentally, the Canadian Federation of Independent Business and other experts tell us very clearly what the impact will be. It will kill jobs. It will kill businesses. It will hurt wages.

We know that that is the impact, again, regardless of the language the government wants to use.