No, he didn't.
Evidence of meeting #2 for Finance in the 40th Parliament, 3rd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was employers.
A recording is available from Parliament.
Evidence of meeting #2 for Finance in the 40th Parliament, 3rd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was employers.
A recording is available from Parliament.
4:30 p.m.
President, Canadian Labour Congress
Yes, he did, and I'd like to ask him where that 1.6 million seniors come in.
4:30 p.m.
Conservative
4:30 p.m.
Conservative
Ted Menzies Conservative Macleod, AB
Because I read it and it's not there. It's about 4%, if the truth be known.
Mr. Charbonneau, going back to the fact that we need more information, you referred to a report that talked about shared jurisdictions, I understand, and some other ideas for us. I'm hoping you can provide that to the committee, if you would.
4:30 p.m.
Member, Government Liaison Task Force on Pensions, Canadian Institute of Actuaries
The CIA is publishing a white paper today. It's been in the works for a couple of months. It's looking at the different proposals on expanding public coverage. The ABC plan out west was proposed, as well as the Canada supplementary pension plan. There was also the proposal to increase the CPP. We've looked at the different approaches. They're just proposals right now. Nothing specific is on the table.
When we tried looking at ABC, and we wondered what they really wanted, it wasn't clear. So we came out with a road map and showed where the pitfalls we want the government to avoid were: if you want to go this way, here are the pros and here are the cons, and this is how we suggest approaching the matter.
We will certainly send a copy to all the members of the committee here. I think this topic is going to be one for one of your future meetings, and we'd be happy to come and talk about it further.
4:30 p.m.
Conservative
4:30 p.m.
Conservative
4:30 p.m.
NDP
Thomas Mulcair NDP Outremont, QC
Thank you, Mr. Chairman.
I would like to begin by thanking all of our witnesses here today. Several of you said that the government will have to take a stand. In fact, legislators will have to make a decision and act accordingly. You are leading us in the right direction, which we greatly appreciate.
We also appreciate the CGAA being here, since you are on the front lines of this issue. You work with your clients on a daily basis. So your practical experience will be very useful to us.
When we travel for these consultations, we don't have much time to look at all of the issues. I wanted to congratulate you again, Mr. Georgetti. I haven't forgotten what you have done for me as far as the labour congress is concerned. Your suggestions are most promising and positive. Please forgive me for not spending much time on them, since I am familiar with this issue and we have already discussed it in the past.
There is one thing in particular I would like to raise with Mr. Charbonneau, since he took the time to knock on doors. He went to the trouble of making appointments and meeting with us.
Mr. Benoît, Mr. Charbonneau and you said something very specific. I am like Mr. Menzies, in that I like to check my facts before I say something. In your brief, Mr. Benoît, you say that extending the protection to solvency deficit payments or providing preferred creditor status to pensions and pay would materially affect—those are your words—existing credit arrangements and significantly undermine—again, a clear statement on your part—the employers' ability to raise capital at a reasonable cost.
Apart from your experience and personal opinion, how do you justify this?
4:35 p.m.
Legal Counsel, Bell Canada, Canada Post, Canadian National Railway Company, Canadian Pacific Railway Limited, MTS Alstream and Nav Canada, As an Individual
First, that statement is based on what CFOs and the companies I mentioned—
4:35 p.m.
Legal Counsel, Bell Canada, Canada Post, Canadian National Railway Company, Canadian Pacific Railway Limited, MTS Alstream and Nav Canada, As an Individual
On the one hand, I don't have any specific figures for you, but it is clear to me, based on my 40 years of experience practising law, that when credit arrangements are made, interest rates are negotiated based on current rules governing insolvency. If you give priority to a group of creditors to the detriment of another group of creditors, you are changing the creditor hierarchy. If those arrangements were made when creditor hierarchy was different, it is obvious that the group which used to be at the front of the line, and which has been bumped back, will simply ask for higher financing rates.
4:35 p.m.
NDP
Thomas Mulcair NDP Outremont, QC
I also practised corporate and commercial law for many years, and I always felt that it was easier to tell my clients they were right. That's a good starting point and I understand where you are coming from. But if you look further into the matter, and this is something I have brought to the attention of many of our fellow lawyers who have made the same argument, there are many countries where our clients do business and where the creditor hierarchy is different in case of bankruptcy. Yet that hasn't stopped those companies from getting financing in those countries.
That statement is perceived as a truism, but I am asking you to elaborate on it. As sure as my name is Thomas, you still haven't managed to convince me.
4:35 p.m.
Legal Counsel, Bell Canada, Canada Post, Canadian National Railway Company, Canadian Pacific Railway Limited, MTS Alstream and Nav Canada, As an Individual
If you are referring to insolvency rules in other countries which govern companies that go bankrupt, then I am obviously not in a position to answer your question. However, what I can say is that if you look at the rules governing creditor hierarchy in other countries, you also have to take into account the kinds of pension arrangements which are in place and which are often very different from ours.
4:35 p.m.
NDP
Thomas Mulcair NDP Outremont, QC
The patient is on the operating table, so we will not just treat the ingrown nail, but rather the whole patient. It's all there. We can begin anew. And you are completely right. In those countries, the system has been organized so that creditors are less likely to lose out. Perhaps that is what we need to do in Canada.
I now have a question for Mr. Charbonneau. Mr. Charbonneau, you said in English "it will greatly disturb". Some adjectives are scary, and you said "it won't disturb, it will greatly disturb the financing".
Why did you say this?
4:35 p.m.
Member, Government Liaison Task Force on Pensions, Canadian Institute of Actuaries
I said that the modalities are very important, and depending on the type of modality which will be adopted, there could be a completely different impact. "Greatly disturb" would apply when all deficits come before everyone else. I am actuary, not a banker. Bankers who would be subject to this rule would come to me and say: "Mr. Charbonneau, we have a report indicating that it was $1 billion last year. Is that the only thing that would come before me? I would reply that, on the contrary, the margin of safety and the 5% or 10% do not provide total protection. I will look at the risks which underlie the $1 billion, and it could suddenly go from $1 billion to $4 billion and then $14 billion. In that case, would a banker say that "it greatly affects my financing"? I believe so. However, if you adopt a more moderate framework by saying that these are solvency payments based on the most recent actuarial evaluation, it would change the situation. In that case, if the report says $2 million a month, that would come first. If he goes bankrupt eight months later, $16 million would come first. So it would depend on how you create the rules, but there is the potential that this might have a major impact.
4:35 p.m.
NDP
Thomas Mulcair NDP Outremont, QC
You are absolutely right in saying that this is not simply an issue which is governed by the Bankruptcy and Insolvency Act. It also affects the way things unfold upstream. That much is clear.
4:40 p.m.
Member, Government Liaison Task Force on Pensions, Canadian Institute of Actuaries
Yes.
4:40 p.m.
NDP
Thomas Mulcair NDP Outremont, QC
However, I refuse to subscribe to this way of thinking. It's like the bogeyman who scares everyone.
It can be part of a series of solutions if you look at the problem from a global perspective, as the CTAs asked us to do at the start of the meeting by using the term "holistic".
4:40 p.m.
Member, Government Liaison Task Force on Pensions, Canadian Institute of Actuaries
I agree. We are proposing several standards which would improve the situation in terms of relative risk to pension plans. If they were implemented, the impact would be less severe for bankers.
4:40 p.m.
Conservative
4:40 p.m.
Liberal
John McKay Liberal Scarborough—Guildwood, ON
Thank you, Mr. Chair.
Thank you, witnesses.
A few years ago, Paul Martin took the bull by the horns and upped contribution rates in the CPP, over a huge amount of protest. I was in caucus at the time, and I know that pretty well all the other parties opposed it, but it was done. The consequence is that we now have a viable Canada Pension Plan through--the last time I looked--to 2075.
So the question I have is whether this is a time for another radical step. I'm going to direct my question to Mr. Lefebvre.
The age of entitlement was set many, many years ago when people expected to die in their seventies. Now they expect to die in their eighties, yet the age of entitlement is still 65. Is it time to visit that age of entitlement and look at some means by which that can be changed, and in an equitable manner, obviously? Those who are closest to 65 are going to be most affected, but certainly further out, the younger you are, there's an adjustment period.
Your numbers here are pretty shocking. If you ran a year change, say, through those numbers, how would these deficits look?
