Finance Committee on Nov. 15th, 2016

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

So 14 million, and we're talking somewhere around $1,400 per employee per year. We're talking about $24 billion to $30 billion a year. That is a huge amount of money to be collected.

Do you think Canadians are convinced this sum of money is going to be well invested and is going to come back to pay for their future retirement plan? Do we have that calculation anywhere? Have people been informed, through consulting and by going through the country? Mr. Yussuff suggests he's been throughout the country, from place to place. Has anyone asked that question?

[Chris Roberts]

Department of Finance has done extensive modelling. The whole fallacy of calling CPP contributions a tax is that it ignores the benefit side that comes from higher contributions. Benefits will increase. Incomes will increase and consumption expenditures will increase, and that has an impact on output, on employment, and the like. That's why in the medium to long run, there will be a net benefit from expanding the CPP.

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

That's an inflation, isn't it?

[Chris Roberts]

Inflation is price movements. We're talking about the real expansion of the economy.

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

No, it's not an expansion. That's a tax.

[Chris Roberts]

No, it's not a tax. That's a fundamental fallacy.

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

It is a tax.

[The Chair, Liberal, Wayne Easter]

Go ahead, Ziad.

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

Question two is on developing consultations with Canadians. How aware have you found Canadians on this issue? Are Canadians aware what this expansion, this tax, is really all about?

[Hassan Yussuff]

I think Canadians are aware that 11 million people have no workplace pension in this country. They are aware of the dire straits, if we don't fix the system, that their conditions will be in when they retire. They understand that, yes, it will cost them a little bit more to pay for their pension, but they know, at the end of the day, they will get a benefit, not a gamble that, if I put money into my RRSP, maybe the returns will be there.

One thing about the Canada pension plan is that it actually pays a benefit indexed to inflation, and workers appreciate the fact that it is low for the majority of Canadians who retire with the Canada pension benefit; it's very low. They understood that, yes, they will have to pay a little bit more, but for that little bit more, they would get a better benefit when they retire at the end of the day. Of course, it's true, your argument that it's going to cost. It's going to cost employers a bit.

What's the other side of the argument? The other side of the argument is, let's subsidize everybody who we can't allow to have a better pension because that's the only way we can do it. The Canada pension plan for the 11 million Canadians who don't have a workplace pension is the one retirement income they can say for certainty they will get when they get to retirement. If they're fortunate enough to have other assets or other savings, so be it.

I can tell you without a doubt that they recognize it will cost a bit more, and they're prepared to pay that little bit more because they know, at the end of the day, they will get a benefit. Every benefit that is promised by the Canada pension plan has been paid to Canadians throughout this country.

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

What about the businesses?

[Hassan Yussuff]

Exactly. We did a survey of small business owners in Ontario who said they would support an expanded CPP because they know, at the end of the day, they would get a better benefit as individuals who need to have an income when they also retire.

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

This is the first time I hear that business will really accept—

[Hassan Yussuff]

I would be more than happy to show you the study. I'd be more than happy to share the study with you.

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

Have you done it in Alberta? I would be happy to see it, for sure.

Have you done anything in Alberta on that?

[Hassan Yussuff]

It was a survey, a poll that was done in Ontario of small business owners recognizing that, yes of course, they would have to pay for the Canada pension plan. They recognized also they would get a benefit by paying a little more for their Canada pension.

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

That's in Ontario.

We believe in big—

[The Chair, Liberal, Wayne Easter]

Ziad, this is your last question.

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

We believe in doing things with the people. We represent the people. We see people at the door. We had people complaining to us last week. Many people, business owners, small business owners in a riding like mine, complain about this. This is a tax. This is going to add a burden on their payroll at the end of the day. With their slim margins, they'll be facing either reducing employment, shutting down some operations, or paying money that they don't have, which is also coming out of their pockets at the wrong time.

[Hassan Yussuff]

In the 1990s when we reformed the CPP, and employers and workers had to pay a little bit more, everybody said the country would be in an incredible crisis. They ended up paying a little bit more in premiums, the workers did and employers did. Guess what happened? The economy grew. The GDP grew and the country was better for it.

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

That's not a factor of CPP expansion.

[Hassan Yussuff]

It was a result of the CPP expansion.

[The Chair, Liberal, Wayne Easter]

Mr. Yussuff and Mr. Aboultaif, we'll have to cut the discussion there. That was an interesting exchange and a little difference of opinion.

Ziad, you're not far off on your numbers, though. In 2015 there were 14.6 million full-time employees, according to Stats Canada, and 3.4 million part-time employees, for the record. There is a difference of opinion on whether it's an investment or a tax.

Before I go to Mr. Grewal, there's been a fair bit of discussion both yesterday and today on the concern about the child-rearing and disability dropout provisions, which they dumped off the current services of CPP, in that they don't apply to the expanded CPP. Does anybody know what it would cost, if they were in the system? If you don't, that's fine. I don't think we asked the department yesterday what that would cost.

Maybe to you, Mr. Yussuff, in your discussions across the country with the provinces.... I haven't had this kind of discussion, and I don't think anybody on our side has, as yet. I would expect that if an amendment were made—and maybe, Mr. Champagne, you might have some information on this—or if there were a change in that clause, as a number of you have suggested.... It was complicated getting to where we are. If it was mistake, then it was mistake, but if there was a change in that clause, would it jeopardize the agreement with the provinces where we would have to go back and renegotiate? Where would we end up? Does anybody have any answers?

On the costs, Mr. Roberts, I believe you might have a point.

[Chris Roberts]

When the chief actuary assessed the cost of the initial child-rearing dropout in the CPP, the cost was found to be very modest. It was 0.1% by 2000 and 0.3% by 2025, or something like that. You can find that actuarial report from just after 1977, when the first dropout was added.

We asked former chief actuary Bernard Dussault for his opinion, and he did a back-of-the-envelope calculation based on those numbers that would suggest the cost of adding the child-rearing dropout to the enhanced benefit would be even more modest than that going forward.

Given that we now have the chief actuary's 28th actuarial report on the CPP, and it confirms that the legislated additional contribution rates to support the enhanced benefit are sufficient to fund that benefit over the long term and that there's a bit of wriggle room in what's possible, we think it is very likely possible to reintroduce or extend that child-rearing dropout to the enhanced benefit within the cushion and the room that exists. I think that's something the office of the chief actuary will have to undertake, though.

[The Chair, Liberal, Wayne Easter]

Okay. Mr. Yussuff.