Thank you, Mr. Chair, and thank you to the committee members for having CUPE here today.
CUPE is Canada's largest trade union. We have 639,000 members across the country. Pensions are a very big deal for our members. Half of our members don't have good defined-benefit plans in their workplace, so this is an important issue for our members, their families, and their communities.
The labour movement, as the CLC representative said, has long been a champion of Canada's public pension system, and of seeing it grow. At a similar committee hearing to this in 1965, labour representatives appeared and said that they endorsed the creation of the Canada pension plan that year, but were sharply critical of the too-limited level of the benefits that were provided. The 25% replacement rate that was set out that day remains today.
At the time, labour representatives called for CPP benefits to be doubled. The government did not listen and implemented what we saw as a very modest pension system. In choosing a very modest public pension plan, Canada really put all their eggs in the basket of a private pension system that needed to work very well.
The CPP just turned 50. This is a good time to look back. We now have 50 years of evidence showing us quite clearly that this private pension system wasn't working very well for most Canadians. We've never had a situation where most Canadians had a pension at work. Today, six in 10 Canadians don't have a pension at work. Those who do have pensions are seeing their plans become less generous and less secure over recent decades. The individual systems of the RRSP and the tax-free savings account simply aren't working for most Canadian workers. You add all this up and it's no surprise that study after study showed we were facing a big problem, that Canadians simply weren't saving enough and that future generations of retirees were looking at very steep drops in living standards unless something was done. That problem was projected to get worse with each subsequent generation.
Clearly, something had to be done, so in 2009, as the CLC said, the labour movement revived our 50-year campaign to see CPP benefits increased. The labour movement and CUPE were very strongly supportive of the deal that was struck in June. We recognize changing the CPP is not an easy thing to do. The two-thirds/two-thirds rule makes this harder to do than changing the Canadian Constitution, so we applaud the federal government and the provincial governments for sitting down and getting that job done.
Like others here, while we recognize this as an important step forward, we also can't escape the fact that we were calling for a doubling of CPP benefits. The increase provided in Bill C-26 goes only about a third of the way to getting there. CUPE is still going to continue to fight for better public pensions for all Canadians.
Like the CLC, we are extremely concerned about the dropout provisions in Bill C-26. The child-rearing dropout and the disability dropout provisions, which I know you discussed at committee yesterday, have been long-standing provisions of the existing CPP. In Bill C-26 we were surprised to see that these provisions would not apply to the expanded portion of CPP. At first, we thought this must have been oversight and should be an easy fix, but yesterday departmental officials confirmed that this was actually intentional.
These two provisions have been long-standing aspects of the CPP. The child-rearing provision was introduced under the Liberal government of Pierre Trudeau in 1977 with much fanfare. Ministers of the day said the provision “would ensure that a contributor who remains at home to care for young children will not be penalized for that period during which he or she has low or zero earnings” and that “parents should not be penalized under the CPP for undertaking a socially desirable and necessary task”.
This child-rearing provision has mostly been used by women. It has helped women narrow, but not close, the gap between what they earn under the CPP and what Canadian men earn under the CPP. On average, for every dollar a Canadian man earns, a Canadian woman earns about 70¢ in the CPP. That's with the child-rearing provision intact. If the child-rearing provision were not there, that 70¢ would certainly be lower.
It's the same point on the disability dropout. This has been a long-standing provision of CPP. Since day one, this has been part of the Canadian pension plan. It ensures that workers who are forced to collect CPP disability payments do not see their CPP retirement payments suffer as a result. They're simply allowed to drop those years of zero or low earnings from their CPP calculation.
In our view, these are very important principles within the CPP. They're equity provisions within the plan. They've worked well for decades, and we don't see why they should not continue to work well into the future under the expanded CPP. They're still going to apply to the base CPP going forward; they should apply on the same basis to the expanded CPP.
We wonder whether the provinces were aware that these provisions would not apply when the deal was signed in June, and whether they know now. The discussion yesterday at committee clearly showed this has not been costed by the chief actuary's office or Department of Finance officials. We would suggest it's a pretty simple first step, which could be taken at the committee, to find out what this is going to cost on that side of the ledger, but then on the benefit side of the pension ledger to run some numbers to find out what this is going to mean for women going forward, or for Canadians with disabilities, in terms of the CPP cheques we expect they're going to receive under the expanded portion of CPP. These are important principles. They've applied for decades and they should absolutely continue to apply.
Thank you for your time.