Thank you very much, Mr. Chair, and thanks to everyone for being here and for your presentations today.
My comments and my subsequent question will be for CFIB.
We've repeatedly heard proposals that would double or greatly expand CPP benefits. I hadn't heard a lot about the cost it would impose on small to medium-sized businesses until your presentation today. I note you have spoken before about some of the dangers, as well as national backstops, of public insurance funds for pensions. I'd like your views on this.
However, before we go there I would like to share the following exchange that occurred at the status of women committee between my colleague Mr. McCallum and Dr. Edward Whitehouse of the OECD. I quote Mr. McCallum:
My last question is on pension insurance. I think it was Ontario, the U.K., and the U.S. that we heard were in deficit, and it's a problem. Many people argue that there's a moral hazard issue with pension insurance. First, do you agree with that? Second, are there examples of pension insurance operating successfully among OECD countries?
Mr. Whitehouse, who is the head of pension policy analysis and social policy division for the Organization for Economic Co-operation and Development, responded with the following:
The United States set up the Pension Benefit Guaranty Corporation in the mid-1970s. Many distinguished economists have written about the PBGC, and as far as I can see, this insurance fund was essentially in very large deficit from day one when it opened. It really acted as a very large subsidy to airlines, steelmakers, and carmakers over the ensuing years
He went on to say:
The pension protection fund in the United Kingdom tried to learn some of the lessons of what went wrong with PBGC in the U.S. I'm afraid that I don't think there is a good international example of one of these types of insurance funds. In theory--I'm not referring to any of them in practice, but in theory--they have the danger of becoming like a black hole. They can suck in a lot of money very quickly.
I note that in a December 16th letter to the federal, provincial, and territorial finance ministers, you recommended the following:
CFIB members overwhelmingly reject the notion that governments should backstop them. Guaranteeing pension plans exposes them to future financial risks and creates a disincentive for the plans to be cost-effectively managed. It also sets a dangerous precedent by giving other troubled pension plans reason to ask for this type of lifeline. Bailing out certain pension plans “on the fly” will certainly have a long-term detrimental effect on public finances.
I'd like you to expand on that comment, if you would.