You don't have a number three?
Evidence of meeting #11 for Finance in the 40th Parliament, 3rd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was benefits.
A recording is available from Parliament.
Evidence of meeting #11 for Finance in the 40th Parliament, 3rd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was benefits.
A recording is available from Parliament.
4:25 p.m.
Professor and Chair in Insurance and Risk Management, Haskayne School of Business, University of Calgary, As an Individual
You don't have a number three?
4:25 p.m.
Conservative
Mike Wallace Conservative Burlington, ON
I have a number three, but it's says “Yuri somebody”. I will give you a copy of mine. If you could resubmit the corrected version, I'd like to see what that other.... I know you spoke to it, but we didn't have it in front of us. I'd appreciate that.
4:25 p.m.
Professor and Chair in Insurance and Risk Management, Haskayne School of Business, University of Calgary, As an Individual
Certainly. I'll give you this one.
4:25 p.m.
Conservative
April 22nd, 2010 / 4:25 p.m.
NDP
Wayne Marston NDP Hamilton East—Stoney Creek, ON
Thank you, Mr. Chair.
I just want to say to Mr. McCallum that when he talks about 1963 and those headlines, it was Stanley Knowles who proposed CPP. With the Liberal government of the day, we were able to proceed with that. Things can be done together when we want to work together.
I'm concerned here, lately, because the government's speaking points on pensions seem to be changing. We've had conversations with them. Mr. Menzies and I have had very positive conversations. But it makes me nervous. Something that helps me feel somewhat better is that the government was saying roughly the same thing before the economic downturn. They said that there wasn't one, and then all of a sudden they were prepared to backstop the corporations, which I have no problem with them doing, by the way. I'm not pointing a finger. I'm giving them some credit here.
On the other side of that, I think we have to look at the situation so many Canadians find themselves in today. Mr. Cadieux, I want to commend your organization and others in the labour movement, who have defined benefit pensions and have protection now, for proposing changes to CPP because they see the value not only to their members but to people across the country who have problems.
On the proposal the NDP put forward, we talked in an opposition day motion last June, and prior to that, of doubling the CPP. The rates are 4.5%, and you indicated less than 6%. We were talking about 5%. The total is 13.9% to do that.
We had a presentation last week from a young lady from a firm--I think it was Manulife, if I'm remembering correctly--who said that their administration fees are 2.5%. That's a ballpark figure.
The area of contention is that the Liberal Party, for instance, and some of the provinces are talking about a supplemental CPP, with new administration costs and costs for setting up all these things. We believe that introducing that should go directly to the core assets of CPP. You don't have the new administration--none of the set-up fees. But I would agree with you on the critical point of mandatory versus voluntary. Canadians, we've also heard in testimony here, are moving more debt forward into retirement than at any other time in history.
To some extent, we have to change the dialogue we hear. I heard that in your presentation. Stop calling these things payroll taxes, and start understanding that they're deferred wages. They're not the assets of the company; they're the deferred wages of the employees. That brings us right back to the Nortel situation.
I'm leaving this kind of open for anybody who wishes to respond. I'm trying to lay some track, as we used to say where I worked.
Ms. Nielson, nobody's asked you a question. Here is one very simple one. You mentioned people managing pension plans going forward rather than buying annuities right now, if I understood your presentation. One of the proposals we've talked about is that if you have a company winding up the pension plan, instead of buying annuities for the younger people, you move the plan forward by having it managed by the CPPIB. That's something you can think in terms of.
4:30 p.m.
Professor and Chair in Insurance and Risk Management, Haskayne School of Business, University of Calgary, As an Individual
The CPPIB has had a very good track record over the past ten years or so. Managing separate plans and potentially keeping track of individual participants is not what they do now. It would be a very different infrastructure.
4:30 p.m.
NDP
Wayne Marston NDP Hamilton East—Stoney Creek, ON
I'm sure that there would have to be some changes made to accomplish that.
One of the things that strikes me has not been part of the conversation. This morning at 11 o'clock I was with the Bloc member, Mrs. Carole Freeman, talking about the need for increased old age security and GIS immediately. We've talked about that before. The ground between us and the Conservatives I don't think is all that far, in that we're saying that we have to do something for old age security immediately. I have Bill C-501, which addresses bankruptcy insolvency. We have in the Senate what the Liberals have done. Those are priorities that must move forward.
I heard again in Mr. Cadieux's presentation the call for a national summit on pensions. There are two stages. If we do those things that are urgent, if we look at the doubling of CPP and all the implications, we do it over a reasonable period of time. Nobody's talking about rushing into it.
Mr. Wacheski, in your presentation I heard some concerns, I'll call them, about the process you were in. I'd like to know what those concerns are, if you want to elaborate on them and if you want to make any suggestions. Principally, I guess it's about the agreement that was put in place
4:30 p.m.
As an Individual
Bankruptcy is definitely like a very big, messy divorce, and there are hundreds and hundreds of people participating in it. Whoever has the most leverage and resources will win. I think it's the responsibility of the government to create a level playing field so everybody has an equal opportunity.
As we're seeing now in these cases, the only way we're going to have a level playing field is if the employees are protected by the law. So the law has to give past employees priority; there's no other way I can see. I think we can do that right now. As you said, this is something that's urgent and can be done now.
As for the process, the lawyers are in place and....
4:30 p.m.
NDP
Wayne Marston NDP Hamilton East—Stoney Creek, ON
There is an important point here, and it particularly affects the Nortel workers. I raised it the other day. I think I heard it in one of your commentaries just now. It's that many of the assets of Nortel in particular have been transferred to U.S. estates. We do have a provision in NAFTA that calls for equal treatment. Has anybody tried to address that?
4:30 p.m.
As an Individual
The process is so long and complicated, and the lawyers are restricted in how much money they spend per month, because that money comes out of the estate. The lawyers have already charged $300 million, I think. As you said, the severance is $162 million. There have been allegations of actual fraud with respect to the health and welfare trust.
On Tuesday our representation said it was going to take too long and be too hard to actually pursue litigation on these allegations. So this is a possible crime that will go unchecked because of the way the bankruptcy process is going.
4:35 p.m.
NDP
Wayne Marston NDP Hamilton East—Stoney Creek, ON
You're saying that the application of NAFTA in this would require--
4:35 p.m.
NDP
4:35 p.m.
Conservative
4:35 p.m.
Liberal
Massimo Pacetti Liberal Saint-Léonard—Saint-Michel, QC
Thank you, Mr. Chair.
I want to thank the witness for appearing today.
Mr. Cadieux, we do not have a copy of your brief, but if I understood you correctly, your third point had to do with pension insurance. What exactly do you have in mind?
4:35 p.m.
National President, Canadian Office and Professional Employees Union
We are talking about insurance for defined benefit plans. The idea is to avoid a situation where workers and retirees end up with a much smaller pension when a company goes bankrupt. One example would be the people working for AbitibiBowater. That company has placed itself under the protection of the Companies' Creditors Arrangements Act. The capitalization of the pension plan is between 65% and 70%. If the company fails, the retirees and employees who contributed will no longer have a pension plan. They will be entitled to 65% of the value of their vested pension benefits.
4:35 p.m.
Liberal
Massimo Pacetti Liberal Saint-Léonard—Saint-Michel, QC
Who will pay for that insurance? Who will manage it? How would that work? I am trying to understand.
4:35 p.m.
National President, Canadian Office and Professional Employees Union
It would be an independent agency. This has been done elsewhere in the world.
4:35 p.m.
Liberal
Massimo Pacetti Liberal Saint-Léonard—Saint-Michel, QC
I am asking the question because, if AbitibiBowater cannot afford to pay Quebec Pension Plan deductions, I am wondering how will it be able to pay the administrative costs of this insurance?
4:35 p.m.
National President, Canadian Office and Professional Employees Union
We are proposing that part of the contribution come from members—not necessarily the company; it would come from the members' contribution—as well as a tax on stock market transactions. If memory serves me, this is something that exists in 13 other countries, like the Tobin tax on stock market transactions. In 2007 alone, a 0.1% tax on the Toronto Stock Exchange alone would have raised $7 billion. That is an attractive fund.
4:35 p.m.
Liberal
Massimo Pacetti Liberal Saint-Léonard—Saint-Michel, QC
Yes, but that is a tax somewhere else. If we decided to tax financial services, who would decide how to spend the money? It is a whole other decision as to whether to spend it in the pension system or somewhere else.
Personally, I think the expenses should be tied to the benefits. As for insurance, who will pay for insurance on those benefits? Most of the time, the problem is that the companies that fail have not paid their share. So I do not know how they would be able to pay insurance premiums. That is what I am wondering.
