Finance Committee on Nov. 6th, 2012

[Mark Adler, Conservative, York Centre, ON]

Okay.

Now, Bill C-45 brings in some changes to the public sector pension plan system, bringing it more in line with the private sector. In advance of budget 2012, the CFIB said:

...start bringing federal public sector wages and benefits more in line with the private sector. ...federal public sector employees should increase their pension contributions from the current approximate 36% of their pension to 50% over time, which is the norm for most provincial public sector employees.

What is your reaction to the change taking place specifically in Bill C-45?

[Corinne Pohlmann]

We support the increase to 50-50. As I said, it's the norm in most other levels of government. It's appropriate for public sector pension employees to be paying 50% of the bill. We also support the increase of the retirement age to age 65 for all new employees.

[Mark Adler, Conservative, York Centre, ON]

Yes. This would, of course, promote fairness among all workers.

How would these changes lead to greater sustainability for the public sector?

[Corinne Pohlmann]

I think increasing the age of retirement to 65 would, hopefully, help cut some of the costs. Putting more of the public sector employees' contributions higher would also help sustain the cost to the system. However, these are small measures at this point. They're a great step in the right direction, but we think more needs to be done in order to deal with some of the sustainability issues coming at us down the road.

[Mark Adler, Conservative, York Centre, ON]

The extension of the small business hiring tax credit is estimated to save businesses about $200 million in the course of the year. In your estimation, what would businesses do with this extra cash? Would they invest in job creation? Would they expand their businesses? Could you comment?

[Corinne Pohlmann]

Yes. We've asked about what they would do. Generally, it's exactly that. They invest it back into their business. Sometimes they add extra employees, Sometimes they buy new equipment. Sometimes they pay down debt, to be fair. Right? These are things that are real for small business owners.

[The Chair, Conservative, James Rajotte]

You have one minute.

[Mark Adler, Conservative, York Centre, ON]

One minute? Okay.

We hear a lot about this $500 billion in cash out there that businesses are sitting on. Are any of your members sitting on large hoards of cash?

[Corinne Pohlmann]

No. I can most assuredly tell you there isn't some big pot of gold sitting in the closet of the small business owners that we represent.

[Mark Adler, Conservative, York Centre, ON]

Again, how many members do you have?

[Corinne Pohlmann]

A hundred and nine thousand.

[Mark Adler, Conservative, York Centre, ON]

A hundred and nine thousand.

Okay, that does it. Thank you.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Adler.

We'll go to Ms. Nash, please.

[Peggy Nash, NDP, Parkdale—High Park, ON]

Thank you to all the witnesses for being here today. I have a couple of questions about employment insurance.

EI is a benefit that most people hope they will never have to claim because it's designed to help transition someone when they face the catastrophe of job loss. Sadly, we are in a situation today when only about 40% of Canadians who are in the situation of unemployment are able to get these benefits.

I heard the first three witnesses today, Ms. Pohlmann, Ms. MacEwen, and Mr. Thomas, talk about the money that was shifted from EI premiums that were paid by individuals and employers to government use for general revenue. We had a bit of a discussion about this yesterday. Officials from the government said that this was just an accounting change and it did not mean this money was actually taken out of the EI fund.

I wonder if any of you would like to comment on that. I had a different perspective on it, but that's what the government officials told us.

[The Chair, Conservative, James Rajotte]

Just before we do, the bells are ringing. Can I get unanimous consent? I would like to get as many members in as possible to question witnesses. I see I have consent.

Ms. Pohlmann, would you like to start with that?

[Corinne Pohlmann]

I find that's an interesting comment to be made. Since employment insurance is an insurance, you are paying a premium. It's supposed to be there for those people who are paying the premium. Hence, that's why we have always called it a tax, because essentially what happened was those premiums were then taken away and used for other government priorities, making it essentially a tax. As much as people don't like to hear that, it's what it is. It's funny to me when they say that it's just an accounting change when, in fact, that money, from our perspective, came from employers and employees, and it includes some interest on top of that.

Fundamentally, most employers to this day still feel very strongly that the money was taken out of the system and away from them.

[Peggy Nash, NDP, Parkdale—High Park, ON]

Then there's the fact that subsequently there was a premium increase because, of course, we were in a period of high unemployment when, over the economic cycle, normally the surplus would cover the increase in demand for a period of unemployment, and instead there has been a premium increase.

Any other comments?

[Angella MacEwen]

Absolutely. When I hear Ms. Pohlmann talking about the small business hiring credit, I think it would have been a far better policy to reinstate some of that so that the EI operating account didn't go into deficit and premiums didn't have to rise during a very weak recovery when small businesses are still struggling to get through. We would suggest either freezing premiums or even lowering them through the recession. That would have given a bigger break to employers and a bigger incentive to hire.

[Peggy Nash, NDP, Parkdale—High Park, ON]

Sometimes people feel that they don't want taxes to go up, but when there is a premium—or a tax, if you will—that is a dedicated fund, I think people feel okay to support it. In this case, it was intended to be a dedicated fund, which ended up in general revenue. As I said yesterday, there are multiple governments that have done that.

I don't know, Mr. Thomas, if you have any comments on it. I guess what I am interested in is if any of you want to express more fully what measures and protections we should have in place so that this funding that employers and employees pay is directed for its stated goal.

[The Chair, Conservative, James Rajotte]

There are about 45 seconds.

Mr. Thomas, we'll start with you.

[Gregory Thomas]

Working Canadians and their employers were gouged to the tune of $57 billion to create a fund for a storm like the one we experienced, and the money wasn't there just when we needed lower payroll taxes to stimulate the economy and get people back to work. Because the money had been taken, all of a sudden we have higher and higher payroll taxes. The credit is a very worthy stopgap. The fact is, if the money hadn't been taken by previous governments, then it wouldn't be necessary.

The Canada pension plan has the confidence of Canadians because there are assets behind it. The money hasn't been taken by government for other purposes. Anyone can go online and see what their entitlement is because those funds, the funds of theirs and their employers, are put into an account in their name.

The amount of over $4,000 a year for a working couple is being siphoned out of their net worth and then shipped to pay for these EI programs. You could do a lot to rebuild the balance sheets of Canadians and deal with the personal debt problem by putting EI into a CPP-style rainy day fund.

[The Chair, Conservative, James Rajotte]

Thank you. Unfortunately, we are out of time on that round.

We will go to Mr. Van Kesteren, please.

[Dave Van Kesteren]

Thank you, Chair.

Ms. Pohlmann, I too am a big fan of your organization. I was a member from 1985 when I first got into business myself. I understand a lot of the things. I filled out all those surveys as well. As Mr. Jean said, I experienced a lot of the frustrations that a lot of business people feel today.

Mr. De Luca, your organization is the third largest in the world. You must do some work for governments. Without asking you to give state secrets, have your actuaries looked at some of the pension plans, possibly not the Canada pension plan, but some in the U.S.A. and other countries to see how viable they are? Is there a running tally on some of these?

[Albert De Luca]

Unfortunately, it's not in my area of expertise. I can't really comment on that, unfortunately.

[Dave Van Kesteren]

Do you have a personal opinion? They are wonderful ideas. I don't think anybody would disagree that we shouldn't have pensions for everyone and the money should always be there. I guess my question to you would be that in order for those things to happen, the funds have to be there. How are pension plans looking to date as far as viability?