This bill was last introduced in the 42nd Parliament, 1st Session, which ended in September 2019.
Bill Morneau Liberal
This bill has received Royal Assent and is now law.
This is from the published bill.
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.
All sorts of information on this bill is available at LEGISinfo, an excellent resource from the Library of Parliament. You can also read the full text of the bill.
Bill Morneau LiberalMinister of Finance
moved 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 third time and passed.
François-Philippe Champagne LiberalParliamentary Secretary to the Minister of Finance
Mr. Speaker, I am very pleased to talk today about enhancing the Canada pension plan. I hope colleagues will stay to listen to this very important speech today. They might learn something they do not know.
The Government of Canada understands that a strong economy starts with a strong middle class. With the pace of change accelerating in Canada, we need to make smart decisions and sound investments today to ensure that Canadians have access to the good, well-paying jobs of tomorrow.
As my colleague Minister Morneau recently alluded to in the fall economic statement—
The Speaker Geoff Regan
Order. The hon. member knows, I think, that we do not refer to members here by their names but by their titles. I think he meant to refer to the Minister of Finance.
The hon. Parliamentary Secretary to the Minister of Finance.
François-Philippe Champagne Liberal Saint-Maurice—Champlain, QC
Mr. Speaker, I apologize. It is because of the emotion about the good work my colleague, the Minister of Finance, is doing.
As the minister recently highlighted in the fall economic statement, this government is putting the middle class first. For example, we are investing an additional $81 billion in public transit, green and social infrastructure, and transportation infrastructure that supports trade and rural and northern communities to bring Canadians good jobs, a cleaner environment, and thriving communities for years to come.
We are doing this because we believe that Canadians have what it takes to succeed, and our government is willing and able to act to create a better future for our children and grandchildren. That is exactly what we are doing by enhancing the Canada pension plan.
We know that middle-class Canadians are working harder than ever, and many of them are worried that they will not be able to save enough money for their retirement. Here is the big question: how widespread is this problem and how can we help Canadians to do better?
The Department of Finance has examined whether families nearing retirement are adequately prepared for retirement. About one in four families approaching retirement, which is 1.1 million families in our country, are at risk of not saving enough to maintain their standard of living in retirement. The risk is highest for middle-income families. Families without workplace pension plans are at an even greater risk of under-saving for retirement. A third of these families are at risk.
Economic conditions since the global recession of 2008 pose particular difficulty for younger Canadians. They are facing the challenge of securing adequate retirement savings at a time when fewer can expect to work in jobs that will include a workplace pension plan.
An extended period of low interest rates could mean that young workers will have to deal with a lower return on their retirement savings. That means that they may need to save even more money than previous generations to have the same standard of living when they retire. In addition, because younger generations are more likely to be in debt than previous generations, they are more exposed to a wide range of risks, from financial market volatility to fluctuations in housing prices. Given these factors, younger generations will have to rely more heavily on their personal retirement savings. Furthermore, increased life expectancy increases the risk that members of younger generations will exhaust what money they managed to save for retirement before the end of their lives.
Given these circumstances, we have a simple yet critical responsibility. We need to act now if we want Canadians to have a secure and dignified retirement.
This is why we are proposing to enhance the Canada pension plan, or as we commonly refer to it, the CPP.
On June 20, Canada's finance ministers reached a historic agreement to make meaningful changes to the CPP that would put more money in the pockets of Canadians after they retire. The CPP enhancement would increase the retirement benefits people will receive. Enhanced benefits would accumulate gradually over time as individuals paid into the enhanced CPP.
Young Canadians just entering the workforce would see the largest increase in benefits. The real question, therefore, is what that means for today's young people and for future generations.
As my fellow members know, the CPP is currently designed to replace one-quarter of income, up to the average industrial wage in retirement. The changes we are proposing would increase that percentage to one-third. This means that a person making $50,000 a year over a 40-year career would receive about $16,000 per year in retirement instead of $12,000. That is $4,000 more each year right into the people's pockets. Even a more modest earner, one averaging $35,000 a year, would receive almost $3,000 a year above the $8,500 provided by the current CPP. In addition, the enhancement would increase the maximum level of earnings that are replaced by the CPP by about 14%. This would further increase the CPP benefits for those who earn above the average wage at any point in their working years.
To fund these enhanced benefits, annual CPP contributions would increase modestly over seven years, starting in 2019. Right now, for example, people earning about $50,000 a year contribute around $2,300 to the CPP per year, or $190 a month. With the enhancement, those people would contribute an additional $70 per year, or $6 a month, starting in 2019. By the end of the seven-year phase-in period in 2025, their contributions would amount to an additional $475 per year, or $40 per month. As members can see, those are modest increases for very significant enhanced benefits.
Helping people achieve a secure retirement with adequate income is among the key elements of long-term economic and social sustainability.
That is what Canada has been doing for a long time. Our retirement income system is widely recognized as being among the best in the world. It offers a combination of public pension plans and voluntary private savings mechanisms enabling people to save for retirement.
The Canada pension plan is one of the cornerstones of the system, and the 28th actuarial report on the Canada pension plan, prepared by the chief actuary, confirms that the CPP will be viable in the long term.
Our system also includes the old age security program, which offers significant income support to Canadian seniors. We recently restored the age of eligibility for old age security to 65 to improve the lives of seniors, particularly vulnerable, low-income individuals, many of whom are single retired women. According to our calculations, if we had not rolled back the policy, 100,000 Canadians aged 65 or 66 would have slipped into poverty, thereby increasing the poverty rate among seniors from 6% to 17%.
In addition to restoring the age of eligibility for old age security, we increased the guaranteed income supplement, which provides additional support to vulnerable, low-income seniors. This measure will significantly improve the financial security of about 900,000 seniors and will lift 13,000 of them out of poverty.
In addition to these income sources, Canadians can save through voluntary tax-assisted private savings plans, whether it is registered pension plans, pooled registered pension plans, registered retirement savings plans, or tax-free savings accounts.
While so far we have been discussing retirement benefits, it is important to note that the CPP also provides supplementary benefits, including the disability pension and the survivor's pension, which would also increase as a result of this enhancement.
The disability pension is a monthly benefit provided to people who have made sufficient CPP contributions and whose disability prevents them from working at any job on a regular basis. By increasing the amount of this benefit, the enhancement would provide greater security for working-age Canadians.
The survivor's pension is a monthly benefit provided to the surviving spouse of a deceased CPP contributor. By increasing the amount of the survivor's pension, the enhancement would provide more financial security to widows and widowers and further strengthen our retirement income system.
It is also important to note that CPP benefits are funded by the contributions of workers and employers and investments, rather than through tax revenues.
Employees contribute 4.95% of their earnings, up to $54,900. This dollar figure approximates the average industrial wage, and increases a little each year to reflect changes in wages.
Employers also contribute at the rate of 4.95%. Self-employed workers pay both halves of the contribution, or 9.9% of pensionable earnings.
However, to put the issue of affordability into perspective, our contribution rates in Canada are much lower than those in other countries with contributory public pension plans.
In fact, the CPP contribution rate is about half the average rate among 25 countries of the OECD, otherwise known as the Organisation for Economic Co-operation and Development, which have such plans.
This applies to employers here in Canada. The Canadian employer portion is less than half the average OECD employer rate, which was 11.2%, in 2012.
Employees in Canada also pay lower CPP contribution rates. The average employee rate is 8.4% in comparable OECD countries. Even on the world stage, our contributions are very much lower than what other people are paying in comparable countries with such plans.
I understand some people might be worried an enhanced CPP would change that. However, let me reassure Canadians who are watching at home, our contribution rates will still be much lower than the average.
In fact, even with the enhancement, CPP contribution rates would rank the fourth lowest among 25 OECD countries with contributory pension plans based on their 2012 contribution rates.
An enhanced CPP would still be one of the most affordable plans in the world. More importantly, it would further help Canadians achieve a safe and secure retirement.
I know some are concerned about the increased contributions, and what it would mean to their bottom line, to their paycheque. I am sure people at home watching us are concerned about that, so let me answer that.
We thought about this and designed a phased-in approach so that the modest increase in contributions would occur gradually over a seven-year implementation period.
We also thought about employers in designing the enhanced CPP. The slow phase-in of the CPP contribution increases was designed with the express purpose of minimizing their impact, and giving employers across our nation, as well as employees, time to adjust to these changes.
Let me talk about the working income tax benefit.
As I mentioned, the improvements we are proposing include a modest increase in contributions. We know that despite the long-term benefits of enhancing the Canada pension plan, some low-income workers might have a hard time making room in their budget for higher CPP contributions.
Our government is focused on developing policies and implementing programs based on fairness and on helping those less fortunate in our society. Enhancing the Canada pension plan aligns with that perspective and our government's approach.
To ensure that eligible low-income workers are not financially burdened as a result of the extra contributions, the Government of Canada will enhance the working income tax benefit, or WITB. The WITB is a refundable tax credit that supplements the earnings of low-income workers.
The proposed enhancement to the WITB is designed to provide additional benefits to eligible low-income workers in order to more or less offset their incremental CPP contributions.
Clearly, we are standing up for Canadians who need a little extra support.
Let me turn to the economic benefits.
Our analysis shows there are economic benefits flowing from this enhancement. Over the long-term, employment levels will be permanently higher, between 0.03% and 0.06%, in our country.
This is good news for everyone.
Most people do not know that the CPP fund is ranked as one of the 10 largest retirement funds in the world. Because of this and its long investment horizon, the Canada Pension Plan Investment Board is able to undertake investments, and form partnerships that are beyond the scope of other investment managers.
It has achieved an enviable record of strong returns on behalf of the contributors and beneficiaries of the CPP. Over the long-term, greater CPP benefits will boost demand and increase overall savings in our country. This will in turn boost our economic output, and make more money available for investment.
We are estimating that Canada's gross domestic product will increase between 0.05% to 0.09% over the long-term as a result of the CPP enhancement. The enhancement will not only provide retirement security for more Canadians, it will create jobs and have a positive, long-term impact on the Canadian economy.
Let me turn to sustainability.
We are helping Canadians save more for a secure retirement by relying more on the Canada pension plan, which is a solid and viable financial vehicle. We are ensuring that the CPP increases will be entirely dedicated to increasing the benefits Canadians will receive.
As hon. members will recall, last month, the current chief actuary of Canada said in his latest report that at the current contribution rate the Canada pension plan is on a sustainable financial footing for at least the next 75 years. Canadians can rest assured that the financial foundation of the Canada pension plan expansion will be as solid as a rock.
As we know, the Canada Pension Plan Investment Board, or CPPIB, always invests in public and private assets for the long term, for people who will be retiring over the coming decades.
On June 30, 2016, the Canada pension plan fund stood at more than $287 billion, which is quite something. Obviously, this is a very solid foundation for the future.
In closing, the expanded Canada pension plan is a good tool used at the right time to improve the retirement income security of today's workers, especially our young workers. Improving the retirement income security of Canadians through the Canada pension plan presents various other benefits in addition to the economic ones I pointed out. The CPP provides secure and predictable benefits for life, which means that Canadians can worry less about exhausting their savings or having their savings affected by the vagaries of the market. Canada pension plan benefits are fully indexed to inflation, which reduces the risk of price hikes gradually eroding the purchasing power of retirement savings. The expansion also includes increased benefits for the families of Canadian workers in the event of death or disability.
The CPP is a good fit for Canada's changing job market.
I would like members to remember this is good for Canada. This is good for younger generations. This is good for all people who are going to retire 40 years from now and in the years to come.
All members in this House will talk to their children and grandchildren, and be proud of this day.
Scott Duvall NDP Hamilton Mountain, ON
Madam Speaker, my colleague has stated how good the plan is, and we agree with him that these increases have to go forward to help our future.
However, he has failed to say there is some critical language missing, particularly the dropout times for people who are child-rearing, and for people with disabilities as it is in the existing CPP.
We have heard many times in this House, when we have raised that, that they will fix it and they have not. We have been assured that the Minister of Finance will bring this up at the next ministers' meeting, the triennial meeting, in December.
That is not a commitment. Raising the issue is saying we will talk about it. We need a commitment from the Minister of Finance that when he goes there, he is going to propose that an oversight and a mistake was made, and that language will be included in the enhancement.
I would like to hear the member's comments. Will we have a commitment from the Minister of Finance that he will be proposing this type of language be put in?
François-Philippe Champagne Liberal Saint-Maurice—Champlain, QC
Madam Speaker, let us look back. In June, we achieved a historic agreement with provincial leaders, the finance ministers of the provinces, on an enhancement to the CPP. We are cognizant of the issue that he mentioned, the dropout provision, but this enhancement will benefit all Canadians. The Minister of Finance has taken his comments into consideration, as members well know.
We have an agreement with the provinces, but in the spirit of understanding the benefits for people with disabilities and women, we will raise this issue again at the finance ministers' meeting. As the member well knows, we will have a triennial review. The next meeting is in December. The minister has stated publicly he will raise the issue, and it will be on the agenda. We want to make sure that this enhancement will benefit all Canadians.
We will always be listening to members in the House and Canadians to look at ways we can make further improvements, but let us remember that this is the right thing, right now, for Canadians.
Luc Berthold Conservative Mégantic—L'Érable, QC
Madam Speaker, my colleague spoke about the Liberal government's eagerness to hear what all Canadians have to say about the enhancements. However, once again today, the government has denied the opposition an opportunity to express its views. These are actually the views of the people who elected us to send a message to the government concerning its intentions with respect to Bill C-26.
This is the ninth time that the Liberal government has used time allocation since the beginning of this Parliament, and since it adopted its sunny ways. It was supposedly going to do things differently. However, it is now obvious that the Liberals do not like to listen to other points of view when they differ from their own and oppose the measures they want to adopt.
Does my colleague approve of the rather brutal way in which the government is muzzling members of the House in order to pass its bill?
François-Philippe Champagne Liberal Saint-Maurice—Champlain, QC
Madam Speaker, I appreciate my colleague's comments. However, he knows very well that I conducted budget consultations from Moncton to Yellowknife last week. The week before that we were in Ontario. I was in Saint-Constant, Quebec, in Mauricie, and then in Quebec City. We consulted Canadians and we will continue to do so because it is the right thing to do.
What is unfortunate, and the people watching at home will remember it, is that the Conservative Party voted against all the measures we introduced since we formed the government. The Conservatives voted against tax cuts for the middle class, they voted against the Canada child benefit, and they are preparing to vote against the enhancement of the CPP.
Essentially, these are good measures for Canadians, and we will continue to develop our agenda to help the middle class.
Cheryl Hardcastle NDP Windsor—Tecumseh, ON
Madam Speaker, we know the government has rejected the attempts by the NDP to fix this legislation, particularly for the people who will receive the CPP with the dropout clause included.
Will the government provide the chamber with an analysis of the financial impact on those who have been excluded from this legislation. I understand the government will be talking to the provinces about this, but the real question is, why was such an analysis not undertaken and provided to the chamber?
François-Philippe Champagne Liberal Saint-Maurice—Champlain, QC
Madam Speaker, I welcome the question from my colleague because it allows me to repeat what I said about the dropout provision.
First, we reached a historic agreement with the provinces. The member heard in my speech and will concur with me that this is a good thing for Canadians. The Canadians she and I represent in our ridings will benefit from that, especially the younger generation.
We have to look at the broader things we have done for people in retirement. We reduced the age of retirement from 67 to 65, and we increased the GIS top-up. Yes, we heard from the NDP and Canadians, and that is why the Minister of Finance has committed to put this issue on the agenda of the finance ministers' meeting, which I will attend, in the next few weeks. And yes, we will talk about that.
However, let us not forget what we are doing for Canadians. We are enhancing the CPP that would benefit all Canadians when they retire. That is what members are going to vote on today, and I am sure that Canadians and their children watching at home will remember the historic vote today.
Elizabeth May Green Saanich—Gulf Islands, BC
Madam Speaker, I want to pursue the question of my hon. friend from Windsor—Tecumseh to the hon. parliamentary secretary. I bemoan the fact that as we are now using time allocation for Bill C-26, one thorny point has not been adequately explained in this place.
I am looking for evidence that would tell me what happens with the drop-off provisions and how they will affect women, lower-income women, the ability to save for retirement, and taking time off for child rearing or illness.
Overall, Bill C-26 is a big step forward in expanding the Canada pension plan, but would the hon. member help me to see why the government has refused to accept what appeared to me to be reasonable amendments?
François-Philippe Champagne Liberal Saint-Maurice—Champlain, QC
Madam Speaker, I welcome the question from my hon. colleague. She knows I have enormous respect for her and the work she does in this chamber, providing a voice to a number of concerns. I must say that we have listened to these concerns.
This is a great step for Canada. We are taking a great step for Canadians. The member is asking if we can do more, could we improve, and we said yes. Our Prime Minister always said better is always possible.
Yes, we will bring that to the table with the Minister of Finance. This was a historic agreement that was reached in June. I would say that the member has been heard and we will put it on the agenda, because that is what people expect a responsible government to do, one that is always looking at ways to improve.
Let us not forget that what we are doing today is historic for Canadians. Decades from now we will remember the vote as being historic for the vast majority of Canadians in our country.
Larry Bagnell Liberal Yukon, YT
Madam Speaker, I thank the member for his fine speech.
We are doing other things to help seniors. I would like the member to tell us what they are.
François-Philippe Champagne Liberal Saint-Maurice—Champlain, QC
Madam Speaker, I thank my colleague who does an extraordinary job and who also listens to his constituents.
As he said, the announcement we just made is just one of the measures that we presented in budget 2016. The enhancement of the CPP is an important and historic step for Canada.
We have also implemented other measures. For example, as I was saying in an earlier answer, we changed the age of retirement from 67 back to 65. This is a very good measure for hundreds of thousands of Canadians, particularly Canadian women. As members know, women who are living alone in retirement are more vulnerable. We did the right thing for Canadians by bringing the age of retirement back to 65.
We also enhanced the Canada pension plan. Coming from a region that has known economic hardship, I can say that what we have done for seniors will have a direct impact on them today and in the future.
The Assistant Deputy Speaker Carol Hughes
It is my duty, pursuant to Standing Order 38, to inform the House that the questions to be raised tonight at the time of adjournment are as follows: the hon. member for Vancouver East, Immigration, Refugees and Citizenship; the hon. member for Nanaimo—Ladysmith, The Environment; the hon. member for Hochelaga, Housing.
David Sweet Conservative Flamborough—Glanbrook, ON
Madam Speaker, I would ask for unanimous consent to split my time with the member from Brandon—Souris.
Some hon. members
Agreed.
David Sweet Conservative Flamborough—Glanbrook, ON
Madam Speaker, it is always a pleasure to rise in this House to represent my constituents in Flamborough—Glanbrook, all Canadians, and all taxpayers in this country, particularly on this bill.
Today, we begin and end a third reading debate on Bill C-26, an act to amend the Canada pension plan, legislation that I must oppose most vigorously for a number of reasons.
I must express that it is truly unfortunate the government has chosen to shut down debate to less than 90 minutes through its use of closure. This heavy-handed draconian approach is wrong-headed, which are pretty much direct quotes from my Liberals colleagues from the past Parliament, as members on this side of the House have a wide range of legitimate concerns that have gone unaddressed through the committee stage. These concerns should not be just read into the record but should actually provide pause to the government.
Unfortunately, the government is determined to ram this legislation through this chamber without any consideration for the consequences to so many responsible Canadians and small business owners. Bill C-26 expands the Canadian pension plan over the next 40 years in an effort to alleviate the financial burden of retired seniors, particularly those facing poverty.
I believe working toward the improvement of the lives of seniors is always a worthy endeavour. After all, they are the ones who built this country and made it great. However, where we profoundly differ from the members opposite is in how this is to be accomplished. In my view, these changes should have been more sufficiently studied and debated so that we do not trade one problem for another.
The bill mandates an increase in CPP premiums, a cost shared between employers and employees, to the tune of up to $2,200 per year. For families who already have to stretch their dollars in order to balance their household budget, these proposed measures will limit their ability to put money aside to save for their child's education, to purchase a new minivan, or to plan a much-needed vacation.
As an aside, neither the Minister of Finance nor the Prime Minister, both sons of millionaires, which in and of itself is not an issue, have had to make sacrifices to balance their household budgets, yet these are the masterminds behind Bill C-26, which will quite literally take money from the paycheque of every hard-working Canadians.
What is also very concerning is that the introduction of this bill, and its corresponding tax increase, comes at the same time that the government is imposing a carbon tax, which will drive up the price of everything. Under the carbon pricing scheme, residents in my constituency of Flamborough—Glanbrook will face higher fuel prices to make their morning commutes to work, and at the same time the price of everything from local produce to the costs of flights out of the Hamilton airport will go up. Perhaps most concerning is that the carbon tax will also increase the price of home heating. For my constituents, that is hard to fathom. Families young and old in my community are already tapped out. They can ill afford the increased costs that are coming under the Prime Minister's carbon tax.
If the timing of two taxes is not bad enough, I must remind the House that Bill C-26 also comes at a time of massive deficit spending. As members know, deficits are simply the taxes of tomorrow. The government is borrowing billions of dollars and has not articulated a plan that would see the budget return to balance. This reality creates further uncertainty and concern for Canadians, because they know that in order to bring the budget into balance the government will either have to slash programs, raise taxes, or both. All of these initiatives come at a time when in my home province of Ontario energy prices are going through the roof. The experience of living under the Ontario Liberal government of Kathleen Wynne has taught my constituents to be skeptical of flashy new proposals that would see the long arm of government reach further into their pocket and take even more of their hard-earned money.
However, the concerns about Bill C-26, this CPP tax hike, go further than just bad timing. There is also significant concern that the bill effectively hinders the choice of Canadians as to how they save for their retirement. As a result, Canadians who are proactively saving for their future will be forced to invest more into CPP and less into the savings vehicle of their choice. Thanks to our previous Conservative government, Canadians now have an unprecedented number of savings options. Let us take, for example, the tax-free savings account that was implemented and then expanded. These accounts allow Canadians to save for large expenditures or for retirement with no strings attached. The money is available when it is needed, and the interest is accumulated tax-free. I would point out that, by far and away, it is middle-income Canadians who are making the greatest use of TFSAs. Plus, there are other ways to build up a nest egg. Some folks invest in the housing market, others store money away in RRSPs, while others contribute to a workplace pension plan or a pooled registered pension plan, which is yet another savings vehicle brought in by the previous Conservative government.
There is a wide spectrum of savings options available to Canadians who wish to supplement their retirement income and yet the CPP tax hike found in Bill C-26would limit the ability of Canadians who take the initiative to save on their own.
Take for example a single-income family with a couple of kids. One of the parents goes to work to bring home the proverbial bacon while the other parent stays at home to tend to the needs of the children. They pay to put a roof over their heads, food on the table, and clothes on their backs. They put gas in the tank, heat their home, put their kids into sports, and give to charity. If the money is there, they may splurge on a date night and enjoy a nice meal in a restaurant. And of course they pay their taxes. Once all the bills are paid the bit that is left over could be put into a savings vehicle, but under Bill C-26 that bit left over does not make it into a TFSA but rather is taken off their paycheque and is forced to be invested into the CPP. Rather than having that money available to them for their car or for the car repairs, the family will have to take on more debt, making it even tougher to cover their cost of living by the time the next month's bills arrive. At the very least, Bill C-26 limits choice. At the worst, it may contribute to a cycle of debt by skimming too much off the top.
Bill C-26 would not just impact modest-income families. It would also take the choice away from Canadians who save for their retirement and wish to leave their accumulated wealth behind for loved ones after they pass away.
I have served in this place for more than a decade now and over the course of my tenure as a member of Parliament many seniors have discussed their priorities with me. I have heard many seniors say two things as they plan for the end of their life: first, they hope not to be a financial burden to their family and second, if possible they would like to leave some of their savings behind for their loved ones. In Canada we have a retirement system that allows them to accomplish these goals.
Our retirement system is the envy of the world. Retired seniors have access to old age security, the CPP, and a raft of savings options that I mentioned earlier. After those sources of income, if seniors are still facing financial difficulty, the guaranteed income supplement is there to top up their income. Thanks to the Conservative government in the last session of Parliament, they could even make a good sum of money without it being clawed back.
Further, those who want to look at the data or parse the numbers should consider the following. Eighty-three per cent of households are on track to maintain their current living standards in retirement, according to a study done by McKinsey & Company. Statistics Canada shows us that the share of Canadian seniors living on low income has dropped from 29% in 1970 to 3.7% today. These facts demonstrate that the vast majority of Canada's seniors are able to save enough to have a dignified retirement and cover their end-of-life costs and are able to meet their goal of passing on some of their earnings when their time comes.
One of my core critiques of the CPP is that the money invested by an individual contributor cannot be accessed by a surviving family member. By forcing Canadians to increase their contributions to the CPP, they will have less money to put into savings vehicles that give them the choice to will their savings to their loved ones. It is no surprise then that fewer than 20% of Canadians surveyed by the Canadian Federation of Independent Business said that they would opt to put more of their savings into the CPP.
Back in the 1960s when the Liberal government of the day introduced CPP, minister Judy LaMarsh, who was responsible for establishing the program, had this to say about the intent of CPP, that it “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.”
Canadians who work hard for their money should be able to save in the way they choose and should be trusted to plan for their futures. Not only is Bill C-26 ill-timed and strips responsible Canadians of choice of their savings, it also negatively impacts small business.
As a former small business owner I have first-hand knowledge and experience of what it takes to battle the red tape and the cost of living to make sure that costs stay low in business. For small businesses it is going to be a choice of whether they continue to hire or invest in their business, having to deal with this expanded CPP tax. Two-thirds of all small firms say they will have to freeze or cut salaries and over one-third say they will have to reduce hours or jobs in their business in response to the CPP hike.
Judy Foote Liberal Bonavista—Burin—Trinity, NL
Madam Speaker, I rise on a point of order. I am tabling the government's responses to Questions Nos. 537 to 542.
David Graham Liberal Laurentides—Labelle, QC
Madam Speaker, the member for Flamborough—Glanbrook talks a lot about the negative aspects in the bill as he sees it. I see this is as a very positive investment in the future. Minister LaMarsh actually funded for the future, and we have to do the same thing again. We have done a lot of things for seniors in the last year with the reduction of the retirement age back to 65 and the increase in the GIS. However, if the member does not want to improve the CPP for the future, would he rather get rid of the CPP altogether? Which is it? Do you think it is sustainable, or do we improve it for the future? Why does he want to keep it at all?
The Assistant Deputy Speaker Carol Hughes
I must remind the hon. member for Laurentides—Labelle to address his remarks to the Chair.
If member does not use the word “you”, it is even better.
The hon. member for Flamborough—Glanbrook.
David Sweet Conservative Flamborough—Glanbrook, ON
Madam Speaker, my colleague missed the point. The CPP is one of the tools in the toolbox to help individual Canadians retire. Forcing people to invest more in it, limits their capability of choice of other tools. It also puts a huge burden on small business at a time when small businesses do not need it, at a time when the Liberal government actually reneged on its promise and did not reduce taxes to small business.
Let me share a quote:
Overall, Canada's retirement income system is performing well. Canadian retirees achieve relatively high levels of income in retirement, and compare well to retirees in other Organization for Economic Co-operation and Development countries. With support from all three pillars of the retirement income system, the median Canadian senior earns about 91 per cent as much as the median Canadian – well above the Organization for Economic Co-operation and Development average of 84 per cent.
Who said that? Finance Canada.
Canada Pension PlanGovernment Orders
November 30th, 2016 / 4:45 p.m.
Winnipeg North Manitoba
Liberal
Kevin Lamoureux LiberalParliamentary Secretary to the Leader of the Government in the House of Commons
Madam Speaker, why are the Conservatives out of touch with what Canadians want? Different provinces of all political stripes have recognized what Canadians want. We have seen strong national leadership coming from Ottawa, from the Minister of Finance, where we actually have an agreement. This bill is all about an agreement that was achieved by provinces and Ottawa, with territorial input. It seems that everyone wants to see an enhancement. It is about workers today for tomorrow's retirement.
Why does the member believe the Conservative Party is so out of touch with what everyone else seems to want?
David Sweet Conservative Flamborough—Glanbrook, ON
Madam Speaker, it is actually the member opposite who is really out of touch. He is obviously not listening to small business operators. He is not listening to Canadians who want choice. He is certainly not listening to the partner of his own finance minister who said that whatever the reasons might be to expand the CPP, it was not to eliminate poverty. The poverty rate among seniors is now as close to zero as we can get.
Yes, a little over 5% of seniors today still have incomes below the poverty line, but CPP is not the mechanism in order to do that. Taxing everybody across the country is not the mechanism to do that. There are other tools we can use that are not as punitive, that do not punish small business, and actually are more effective. Some of those we used in the last Parliament were expanding the age exemption, the personal exemption, increasing the GIS, allowing some seniors who could work to go to work without it being clawed back. There are all kinds of options that the Liberals do not want to consider. They want a payroll tax instead.
Dianne Lynn Watts Conservative South Surrey—White Rock, BC
Madam Speaker, in my riding, the Liberals are totally out of touch. Seniors in my riding were upset about the clawback and cutting the tax-free savings account in half. Could the hon. member speak to that issue when it comes to supporting seniors? Certainly they were really affected by that in my riding.
David Sweet Conservative Flamborough—Glanbrook, ON
Madam Speaker, the biggest reality check is going to be when seniors begin to pay these big sums off of their paycheques and realize it going to be 40 years before any substantive benefits. The seniors of today are not going to be receiving this. Therefore, there will be a lot paid in before anything ever comes back. That is going to be a big wake-up call for today's seniors.
Larry Maguire Conservative Brandon—Souris, MB
Madam Speaker, I want to thank the member for Flamborough—Glanbrook for the opportunity to share his time today, allowing me to make some remarks on Bill C-26.
I rise today to add my voice to the many others who have grave concerns about Bill C-26, and the Liberal plan to further erode the disposable income of hard-working Canadians and its negative impact on job creators.
Every member of Parliament in the House cares about the well-being of seniors. I believe each and every one of us wants to implement policies that will improve the quality of life of Canadians, while also balancing out the costs associated with those changes.
Over the past 50 years, there have been numerous policies introduced with the aim of assisting Canadians in preparing for retirement, changes such as the introduction of the Canada pension plan, old age security, the guarantee income supplement, registered retirement savings plans, and our previous Conservative government's landmark decision to implement tax-free savings accounts.
Through various governments of different political stripes, great improvements have been made, and the poverty level of seniors has dropped dramatically. According to Statistics Canada, the share of Canadian seniors living on low incomes has dropped from 29% in 1970 to 3.7% today, which is among the lowest in the world.
I believe it is vitally important we recognize that the CPP was originally introduced in 1965. When it was introduced, it was a much different world than we live in now. Many families had to get by with only one source of income, and gender inequalities were far too common. Millions of seniors lived in poverty, and many communities did not have affordable housing options for those who struggled to get by. Probably one of the most significant differences was the lack of financial literacy and the available savings vehicles that are now offered by the private sector.
In 2016, millions of Canadians have opened their own tax-free savings account, or have invested in mutual funds or the stock market through online trading brokerages. I am pleased that Canada's saving rate has climbed from 7.7% in 1990 to 14.1% today. This is a testament of how investing money and saving for retirement is at the top of people's priorities.
According to the Fraser Institute, the vast majority of Canadians are putting enough aside for retirement. In a document published by the institute, Canadians now hold $9.5 trillion in assets above and beyond CPP.
While the Liberals think they have the best of intentions, their policies to date have not grown the economy. They have put jobs at risk, and Canadians are worse off today than before the Liberals took office. Canadians cannot trust the government with their pensions. The Liberals have not been able to keep promises they made a year ago, let alone ones they are making for decades down the road.
What the legislation before us signifies is that the Liberal government does not trust Canadians with their own money. It is awfully rich to force Canadians to control their spending when the Liberals have moved past their own deficit projections to the tune of billions of dollars. I can assure the Liberal government that millions upon millions of Canadians are being responsible with their own money and do not need to take lessons from my hon. colleagues across the aisle.
A study by McKinsey & Company has found that 83% of Canadian households are on track to maintain their current living standards in retirement. Now 83% is not 100%, but it does not justify the punitive measures being proposed in Bill C-26.
Before the government moves any further with Bill C-26, it should stop assuming that Canadians are as spend happy as its own Liberal finance minister. Perhaps it is time for legislation to force the Liberal government to stop putting Canada's future generations at risk. That is legislation I could support.
I believe it is wrong to force Canadians to put more of their hard-earned dollars into a government-controlled pension plan rather than allowing them the flexibility to make their own investment decisions. We have a good balance in place, and it should be upheld until such time that evidence suggests otherwise.
If the legalization before us passes as written, it will literally take money out of the wallets and purses of hard-working Canadians and their employers. In fact, it is very possible that some households will be paying up to $2,200 more per year when the changes are fully implemented.
While the Liberals pontificate about their middle-class tax cut, most of the savings will be eaten up through this CPP tax hike alone. This does not include the carbon tax, which will be unilaterally imposed on provinces and taxpayers in the years to come.
It baffles my mind that Liberals want to force Canadians to put more money into CPP, while at the same time eroding people's investing power into investments of their own choosing. It seems like an oxymoron to me.
I can assure the government that any reputable financial adviser would be able to provide a far more significant return than the government-run pension plan. It is projected that any Canadian who was born after 1972 can expect a real rate of return from the CPP of only 2.1%. Regardless of how well the Canada Pension Plan Investment Board does, the next generation of Canadians had better not be planning on a CPP bonanza due to its rate of returns.
Moreover, Bill C-26 is just another attack on Canadians who do their own financial investments. It is an attack on those who want nothing to do with putting more money into their CPP, as they like the current system. They resent the fact that their government thinks it can do better in saving money than themselves. As we all remember, it was just last year the Liberals clawed back people's tax-free savings accounts and limited the amount of money that could be invested without paying capital gains taxes.
While it is true that some Canadians are not financially prepared for retirement, we on this side of the House do not think that a payroll tax hike is the best or sustainable approach to assist those most in need. The reason why many Canadians are not financially prepared for retirement has nothing to do with the CPP itself, but is due to the fact that they do not have employment or are underemployed. The best way for the government to help Canadians prepare for retirement is to create the right economic environment for the creation of new high-paying jobs.
One of the loudest and most vocal critics of this payroll tax hike has been the Canadian Federation of Independent Business. It has repeatedly asked for the government to apply the brakes, as 70% of small business owners disagree with the notion that this CPP increase is modest as the government suggests it is.
For many small and medium-sized businesses, this legislation would cost them thousands of dollars each and every year. It has the potential to further slow our economic growth, while doing nothing to help those most in need. As I stated, a CPP increase will not help Canadians without a job.
An analysis by the C.D. Howe Institute shows that the Liberals' CPP plan would not benefit low-income workers. While their CPP payments would go up, it would be offset by clawbacks in their GIS benefits.
This is the classic Liberal two-step: give one dollar in the left pocket and take one out from the right. This is why I am very skeptical, as are many Canadians, that the Liberal carbon tax will be revenue neutral. Looking at new innovative ways to assist Canadians to save, such as the tax-free savings account and improving financial literacy, are tangible benefits that are proven to yield results.
Far too often, the government brings out a stick when a carrot would suffice. Levelling a job-killing payroll tax hike, which would reduce employment and Canada's GDP, is quite frankly asinine in today's economic turbulence. Payroll taxes, carbon taxes, small business taxes, and burdensome red tape are hindrances to job creation, to name only a few of the Liberals' regressive acts.
It is abundantly clear the government has no plan for the economy. It is even more worrisome to see it plunge Canada back into deficit, while at the same time its deficit spending has failed to spur our economy. There is little justification that would result in such a heavy-handed approach.
There are alternative ways to assist those who need it the most, and the Liberals showed that when they copied our Conservative move and increased guaranteed income supplements. I should note also that the Liberals ran on a pledge to review the consumer price index, which is used to calculate inflation. There are many other ways to help Canadians save for retirement than forcing through a one-size-fits-all approach.
I will never vote for legislation that financially hurts Canadians. No matter the size of the bow wrapped around this change in policy, it still remains a tax hike. Bill C-26 would not help our most vulnerable seniors in need. It would not create new jobs or grow the economy. It is the wrong approach to take. I call upon my Liberal colleagues to stand up for what is right and oppose the legislation before its impact financially hurts their constituents.
The reason so many of my Conservative colleagues have spoken to this bill, and more would do so if closure had not been moved, is that it is necessary to try, as responsible opposition, to influence the importance of cancelling the bill to the Liberal members for the reasons I have just articulated.
Canada Pension PlanGovernment Orders
November 30th, 2016 / 4:55 p.m.
Winnipeg North Manitoba
Liberal
Kevin Lamoureux LiberalParliamentary Secretary to the Leader of the Government in the House of Commons
Madam Speaker, as the debate winds up, it is important to recap that in Bill C-26 we are debating the ability of today's generation of workers to have adequate retirement money through the CPP, one of the fundamental pillars of our social pension programs. The CPP, the OAS, and our guaranteed income supplement are things that Canadians truly believe in. The government has demonstrated very clearly over the last number of months that it supports Canadians in a very solid fashion, whether through budgetary motions, regulatory changes, or now with respect to the CPP. The changes to the CPP took a great deal of effort, working with the different stakeholders so we could arrive at this bill today.
Would the member not recognize that in order to have a holistic approach to dealing with the seniors of today and tomorrow, it is in the best interests of all Canadians that we pass this bill?
Larry Maguire Conservative Brandon—Souris, MB
Madam Speaker, of course my colleague does not get it. He did not hear the last part of my comments about killing this regressive bill that would not do what says it would do.
Two things occur when the Liberals force people, as they are doing, to put $1,000 more into their retirement funds. First, the worker may not have $1,000. Where is he going to get it? He or she is going to have to go to his or her employer and ask for a raise. That is in addition to the fact that the employer has to match those funds and also put them into the Canada pension plan. If the business has 10 employees, this would end up costing the small business $10,000.
The Liberals have said this bill is to enhance the CPP, but it is more likely to be interpreted as an entitlement. It is another example of government knowing what is best, when really, if the Liberals were to allow the opportunity for those to invest in some of the plans I have already outlined, they might be better off on their own.
Cheryl Hardcastle NDP Windsor—Tecumseh, ON
Madam Chair, I just want to give the hon. member a chance to assure Canadians that he is using certain language and words to make a point about the opposition to the CPP enhancements. In fact, does the member understand taxation law and the regulatory regime and that this is not actually a tax? A pension serves a different purpose and has a different regulatory environment. I would like the member to assure people that they do understand. Hearing it called a tax does a disservice to all Canadians, and especially to the precarious work activists right now, who are part of a generation that will depend on this.
Larry Maguire Conservative Brandon—Souris, MB
Madam Speaker, of course the member misses the point as well. It is a tax. It is a tax upon the employer. It is a tax upon the individuals. I will reiterate that individuals might not have the $1,000 the member is talking about to put into this investment fund. Even if people are forced to do so, how can they put in money they do not have? Therefore, we have tax-free savings accounts and some of the other mechanisms that are used.
I challenge the member to go back and restudy the tax laws to make sure she gets the facts. As I sat in the legislature in Manitoba for some 14 years, it does not surprise me that this is her attitude, coming from the NDP, because the New Democrats never recognized a tax that they did not want to put on businesses either.
This is certainly a situation where individuals may not even have the capabilities of doing what the government is trying to force them to do. They can only do it by doing two things. Besides going to their employer and asking for a raise, they may have to deprive their families of some things they were previously able to offer them.
Some hon. members
Agreed.
Scott Duvall NDP Hamilton Mountain, ON
Madam Speaker, I will be splitting my time with the member for Windsor—Tecumseh, and I thank my colleagues for allowing this.
I rise in the House today to speak at third reading of Bill C-26, An Act to amend the Canada Pension Plan, the Canada Pension Plan Investment Board Act and the Income Tax Act.
In my remarks on Monday, I focused on how we in the NDP have found a mistake in the bill and our attempts to fix it. I described how the government had failed to include important provisions that would protect workers whose incomes are reduced because they take time to raise their kids and those whose incomes are reduced because of a disability.
The government either forgot to include those provisions or excluded them on purpose. We are not sure which it is. There are differing opinions on this matter. I must say that the government has been completely unwilling to shed any light on this matter. Government members have intentionally spoken around the issue, using the lines that have been written for them. I think many of them really do not know the answer. Only the minister knows the answer, and he has been the most unclear in his comments of any member on the other side of the House.
I then went on to describe the attempts by the NDP to get the government to fix the bill. Members on both sides of the House know the bill is flawed and needs to be fixed. We were encouraged by members on the other side of the House to go to committee to fix the bill. We worked hard with the legislative counsel, and we developed the clauses and the language needed to put the necessary dropout provision in the bill to fix the problem.
It is an easy fix: two amendments, less than two pages of language that would protect those who take time off for child-rearing, mostly women, and those living with disabilities. What happened at committee was a real eye-opener for me. The Liberal members of the committee were whipped hard to shut down any attempts to amend and fix the legislation.
Even though we know that some of them understand that the bill is flawed and needs to be fixed, they all lined up and supported the use of procedural tricks to shut down debate, not once, but twice. They should be ashamed, and I truly think some of them are. The Liberals then had a chance to fix the flaw themselves when the bill came back to the House at report stage. However, the government made it very clear it had no intent or interest in doing that.
Here we now are at third reading of a bill that is still flawed, with the rights of women and those living with disabilities still in question. This leads me to talk about where we go from here. Once we pass this legislation into law, will the problems we have identified ever get fixed? Will provisions that protect women and the disabled ever get included in the legislation? That is unclear, and it is making our continued support of this bill very difficult.
We will vote for it at third reading because the CPP needs to be changed, as we have fought for a long time, alongside our friends in the labour movement, to have the government increase benefits for retirees. However, we are very concerned about the government's supposed commitment to fix the legislation after the fact. We have heard in the House that the government needs to get the agreement of the provinces.
Last week we heard the following from the President of the Treasury Board:
We are aware that more could be done in respect of the dropout provisions for disability and child rearing and, in fact, the Minister of Finance will raise these provisions at the next meeting of the provincial and territorial finance ministers in December in the context of a triennial review of the CPP.
Then the next day we heard this from the Parliamentary Secretary to the Minister of Finance:
Our intent is to pass the bill, as is; however, the Minister of Finance will then raise the dropout provisions at the next provincial and territorial finance ministers' meeting in December, in the context of the triennial review of the Canada pension plan.
Also last week we heard from the finance minister 's director of communications that:
We’re aware that more could be done with respect to drop-out provisions for disability and child rearing to make sure that this expansion is as inclusive as possible.... However, in order to make any changes to the plan we need agreement from the provinces.
He continued that the finance minister would bring up the omission when he meets with his provincial counterparts in December to review CPP, a routine process that occurs every three years.
Canadians need to note the lack of a clear commitment shown in these quotes. Saying the minister will raise or bring up the omissions is certainly no commitment. How hard would the minister push the provinces to fix the bill and include the missing provisions? We do not know the answer to that. I was hoping to hear a more clear-cut commitment from the minister this week. However, that commitment does not seem to be forthcoming. If anything, the most recent spin makes me think the government is spinning away from any commitment at all.
When the minister was asked yesterday by one of my colleagues if he would fix the bill, he would not even address the question. Instead, we got the shallowest spin possible. This is all the finance minister would say on the matter:
What we also recognize is that there will always be opportunities for continued improvement. Our job, in working together with the provinces, is to move forward on this agreement and then to consider other ways we can improve the Canada pension plan in the future to ensure that the retirement health of Canadians is always provisioned for.
Those are very inspiring words, but hardly a commitment to fixing the problem caused by the omission of the dropout provision in this bill.
What concerned me even more were the comments made by the member for Saanich—Gulf Islands yesterday during debate, when she said:
On the evidence we have before us, it appears that the bill will disadvantage women for no apparent reason other than an oversight. I did have a brief moment to discuss this with the Minister of Finance earlier this morning, and his position is that to do what the NDP asks now would result in a transfer of wealth from poorer women to wealthier women because of the way the calculation works. Unfortunately, I do not have the full facts on this.
We do not have the full facts on this, either. I told the minister that, when he tried to spin me with the same argument in the hallway after question period yesterday. I also told him that the argument makes no sense at all. In fact, I think the inverse is probably true, given that the elimination of the childbearing dropout for the additional benefit would presumably penalize lower and modest-income mothers, since women in higher-income households are better able to adjust.
Besides, the argument fails to take into consideration that the CPP is basically an insurance plan into which people pay benefits. Raising benefits at one level does not mean having to reduce benefits at another level. Surely, someone qualified to be the finance minister of Canada should know this.
I also have to wonder where the minister came up with the calculations he says his argument is based on. We have been told all along that no costing of the dropout provisions has ever been done. Where did the numbers come from? If the minister has numbers, will he share them with us? Will he share them with Canadians?
I fear that the finance minister's proactive spin in this argument may be our best indication yet of the government's spinning away from any commitment to fixing the dropout provision mistake.
What Canadians need is a clear-cut commitment from the finance minister. We need to know that he intends to come away from the December meeting with his provincial counterparts with an agreement in hand. The agreement must fix the problem with the legislation and include a dropout provision that would protect women and those living with disabilities.
Will the finance minister stand in the House and make that commitment?
The NDP will remain vigilant and be persistent in our demands that the government fix its mistake. The government and the minister should be aware that the NDP will not let up its pressure until they follow through on their commitment.
Canadians deserve no less.
Canada Pension PlanGovernment Orders
November 30th, 2016 / 5:10 p.m.
Winnipeg North Manitoba
Liberal
Kevin Lamoureux LiberalParliamentary Secretary to the Leader of the Government in the House of Commons
Madam Speaker, at the beginning of the debate, I was quite encouraged by the NDP's indication that it would support Bill C-26. I understand today that it will continue to vote in favour of Bill C-26.
However, I would express some disappointment, in the sense that New Democrats do not seem to realize that if we were to follow their advice on this, first, it would put into jeopardy the pension proposal, the legislation itself, for the simple reason that the Conservatives have made a commitment to kill the bill. In other words, they would indefinitely talk it out, which would in essence deny what we believe Canadians want to see.
Then with respect to my other point, maybe I would put it in the form of a question. Would the member not acknowledge that in coming up with enhancements to the CPP, we have to get the support of the provinces and territories to make the changes that we all want to see made. We have achieved that support.
In order to change the law, we have to get the provinces onside. That is the reason the Minister of Finance is going back to the table at a future meeting.
Scott Duvall NDP Hamilton Mountain, ON
Madam Speaker, why was this omitted to begin with, and why was there a deal with the provinces excluding it?
There is another dropout provision under the act called the general dropout provision. That was included in the enhancement. Why were the other two omitted? Was it a mistake, or was it on purpose? That is what New Democrats are trying to find out. We could not get any clear answer from the Liberals. They did every little dirty trick they could to avoid it.
We want the bill to be fixed, and they are refusing to do it, saying that they have to go to the provinces because they had a deal. The deal must have been that they excluded them on purpose.
The Assistant Deputy Speaker Carol Hughes
It being 5:15 p.m., pursuant to order made on Tuesday, November 29, 2016, it is my duty to interrupt the proceedings and put forthwith every question necessary to dispose of the third reading stage of the bill now before the House.
The question is on the motion. Is it the pleasure of the House to adopt the motion?
Some hon. members
Agreed.
No.
Some hon. members
Yea.
Some hon. members
Nay.
The Assistant Deputy Speaker Carol Hughes
In my opinion the nays have it.
And five or more members having risen:
Call in the members.
(The House divided on the motion, which was agreed to on the following division:)
The Speaker Geoff Regan
It being 5:55 p.m., the House will now proceed to the consideration of private members' business as listed on today's Order Paper.