Evidence of meeting #56 for Finance in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was benefit.
A video is available from Parliament.
4:05 p.m.
Liberal
4:05 p.m.
Liberal
The Chair Liberal Wayne Easter
Thank you, Mr. MacKinnon and witnesses.
Mr. Deltell, you have the floor.
4:05 p.m.
Conservative
Gérard Deltell Conservative Louis-Saint-Laurent, QC
Thank you, Mr. Chair.
Ladies and gentlemen, welcome to the Parliament of Canada and to this parliamentary committee.
My first questions are to the representatives from the CSN. Ms. Lévesque, Ms. Joncas, Mr. Enault, welcome to Ottawa.
You have expressed your support for the spirit of the bill, but nonetheless underlined two points that are of concern to you. First, there is the question of time. Yesterday, experts from the Department of Finance confirmed to us—to use the image of the wheel turning—that it would take 40 years for the real impact to affect all Canadians directly and that those who are currently retired would not benefit from those improvements. You have concerns about that. You want the wheel to turn a little faster, which is understandable.
Furthermore, my understanding is that you don't want the increase to apply to the low income earners. Is that correct?
Earlier, you looked at Ms. Joncas and mentioned an acronym. Could you clarify that?
4:05 p.m.
Vice-President, Confédération des syndicats nationaux
If you don't mind, I will ask Ms. Joncas to answer your question.
4:05 p.m.
Actuary, Confédération des syndicats nationaux
We think low-income groups should also have a cumulative credit, as provided for in the bill. However, we would not want people with low incomes to have to contribute more, because they need the income they have. A person whose income is 50% of the maximum allowable earnings needs...
4:05 p.m.
Conservative
4:05 p.m.
Actuary, Confédération des syndicats nationaux
I was talking about the maximum allowable earnings. This affects those who earn about $25,000 and will be entitled to the tax credit. Someone who earns less than $25,000 cannot really pay a retirement premium. However the bill provides for a tax credit that offsets the contribution. Would a less awkward mechanism not have been better, as well as a zero-level contribution?
Our concern is that at a certain point, the tax credit may disappear. Over the years, will the tax credit always match the contribution? There is no mechanism that will connect these two things over time. Would an employee contribution equal to zero not have been preferable to a mechanism that means that people have to contribute first and recover it later through a tax credit?
It might have been preferable to include a mechanism in the Canada Pension Plan allowing these people not to make a contribution, without having to resort to tax credits. However, with regard to the overall impact, we are entirely in agreement with the result for those with low incomes.
4:05 p.m.
Conservative
Gérard Deltell Conservative Louis-Saint-Laurent, QC
Thank you for that clarification. I think it is important going forward.
As you probably know, we too would like this zero impact to apply to all workers. Our points of view are different, but I thank you very much for having taken part in this meeting and having provided that clarification. Our points of view are different in that we don't like the idea of there being less money in the pockets of taxpayers. We prefer to let people make their own choices.
My question is for Ms. Moreau, of the Canadian Federation of Independent Business.
In your document, you indicate that more than half of Canadians wish they could contribute more to pension funds, such as the TFSA, that we created, or RRSPs.
In your opinion, what explains people's participation in this type of voluntary retirement savings?
4:05 p.m.
Director of National Affairs, Canadian Federation of Independent Business
As I explained earlier, our members, and SMEs everywhere in Canada, understand the situation and want to put money aside for retirement. They see that there are retirement savings tools that allow them to have bigger tax returns. As for our members who have to pay these premiums, any increase aimed at improving the plan will have a significant impact on them, whether their enterprise makes money this year or not.
4:10 p.m.
Conservative
Gérard Deltell Conservative Louis-Saint-Laurent, QC
According to evaluations, the average cost for a business would be $1,000 per employee.
In your opinion, what impact could this have on a small Canadian business that will also have to pay the Liberal carbon tax, and will not benefit from the 9% corporate tax rate that had been promised? Furthermore, SMEs are going to have to pay an additional $1,000 per employee for the pension plan.
4:10 p.m.
Director of National Affairs, Canadian Federation of Independent Business
I'll use the average rate for our members, which is 11%, as an example. Think of a small corner store or convenience store in your region. For these businesses, a yearly increase of $11,000 a year is a lot of money. You mentioned the carbon tax. We don't know the details of that yet, but we expect it to have an impact. The tax rate is an issue, but so are employment insurance premiums. They are going to increase for SMEs in 2017. Tax credits for small and medium businesses were not renewed in 2016. In 2019, changes will be made to the CPP and the QPP. I don't know if things are going to go on like this.
4:10 p.m.
Conservative
Gérard Deltell Conservative Louis-Saint-Laurent, QC
You are describing quite an intense environment for businesses, but in your opinion, will these additional expenses stimulate, or slow, job and wealth creation?
4:10 p.m.
Director of National Affairs, Canadian Federation of Independent Business
I will let my members answer that question, since 46% of them said that an increase, even if it involved an eventual increase in benefits, would reduce investments in their businesses. After taking into account the impact on salaries and the number of employees who work in their businesses, they feel that would be the immediate effect.
4:10 p.m.
Conservative
November 15th, 2016 / 4:10 p.m.
Director of National Affairs, Canadian Federation of Independent Business
Thank you.
4:10 p.m.
Conservative
Gérard Deltell Conservative Louis-Saint-Laurent, QC
Thank you.
What you have to say is very interesting.
What concerns us in this regard is that it is not the government that creates jobs, but private enterprise. You are the backbone of our economic system. You are the ones who generate wealth and jobs.
In light of all these additional charges, are you concerned that me might see the opposite effect, that is to say that people will not invest and may have to lay off more personnel?
Indeed, for a small convenience store, $11,000 more per year is a lot.
4:10 p.m.
Director of National Affairs, Canadian Federation of Independent Business
In fact, you have answered the question. Our members told us that with an increase to improve the CPP and the QPP, they will have trouble investing in their business, continuing to hire people, making investments, and so on.
Moreover, this will probably prevent them from making other investments in their employees' pension plans. They will be forced to share the cost of the CPP and QPP instead of perhaps offering a bonus to an employee that year. For his part, the employee might have preferred to reimburse his student loan or other important obligations. The effect of this is that it will eliminate certain choices that employees could have made.
4:10 p.m.
NDP
Scott Duvall NDP Hamilton Mountain, ON
Thank you, Mr. Chair.
Thank you to all for your valuable time and for coming here to express your concerns and views. We really appreciate it.
I'd like to direct a question to Mr. Janson on his remarks. At any point during the years of the debate over the CPP expansion, did you or your union have any indication that the child-rearing or disability dropouts were on the table for CPP expansion?
4:10 p.m.
Senior Pensions Officer, National Office, Canadian Union of Public Employees
No, and as I said today, it was a surprise to us to see they were not included. The signed document the finance ministers put out in June and the backgrounder they produced at the time said nothing about this, so it was only when we saw the legislation. During the years of talks we had not heard that this was an item to be discussed and perhaps changed.
4:10 p.m.
NDP
Scott Duvall NDP Hamilton Mountain, ON
Yesterday, we had some government officials here and they said the child-rearing and disability dropouts were subsidies within the plan. Do you agree that they are subsidies?
