Thank you very much, Mr. Chair.
I'm certainly glad to have the opportunity to weigh in on the question of the Canada pension plan. I will start by talking a little bit about the plan. There has been a lot of discussion around the table so far, particularly by Conservative members, but there hasn't actually been a lot of talk about the Canada pension plan.
I think the Canada pension plan has been an excellent thing for Canadians. The only deficiency in the plan, as far as I'm concerned, is that we're not paying enough into it to get a larger benefit out of it. When the Canada pension plan was designed, it was meant to be only a third of Canadians' retirement income. It has been an incredible success in terms of what it was designed to be, which is just a third of what people would need to get by in retirement.
The other third was to be a company pension. The final third was to come from Canadians' own personal savings and investments.
We live in a Canada today where over 70% of people working at a job don't have a company pension plan of any kind, whether it's a defined contribution plan or a defined benefit plan. Right there, when we're talking about the Canada pension plan and what it was designed to be—to work in concert with a company pension and personal savings—we know that the Canada pension plan won't get people through their retirement because they don't have that other leg of the three-legged stool that was supposed to be the foundation of Canadians' retirement income.
I think that's a problem. Employers should be exhorted and pushed to bring back company pensions or we need to recognize that the CPP now is meant to provide at least two-thirds of Canadians' retirement income. We don't have a Canada pension plan that is built to provide two-thirds of Canadians' retirement income.
I would say that the CPP was designed for a system that no longer pertains. We either need to considerably expand the Canada pension plan or develop a strategy for pushing more employers to offer their own pension plans to employees.
When we look at the third leg of the stool and at the affordability crisis we are facing today.... Frankly, from the early 1990s on, real wages have not kept pace with the pace of inflation. Even when inflation was at target, wages did not grow as quickly as the price that people were paying for housing. For as much as the housing crisis has accelerated over the past two or three years, it's a 30-year trajectory that has led us to where we are. It's on an exponential curve.
For those at home who aren't familiar with exponential curves, the further you go on the curve, the more quickly things rise. As we continue on this exponential crisis curve, it's not a surprise to see that prices are increasing more and more every year.
Canada still isn't addressing some of the fundamental causes of the housing crisis. What that means for Canadians' personal savings and their ability to buy RRSPs, to invest or to just sock away cash, is that it diminishes as the cost of groceries, food, prescription drugs and everything else goes up. That means the third leg of that stool is also in bad shape.
The good thing about the CPP is that the premiums are taken from employers. They're taken off the cheques of Canadian workers before that money enters into their accounts, so Canadians aren't forced to bid that money to increase the price of a home to get it over that of either the other Canadians' or the investor they are competing against to get a home. The money people make as part of their wage package has not contributed to inflation in housing because it's already getting socked away in a pension plan and is not available to bid on the cost of the home. That's also been a great benefit to Canadians.
The only solid leg of the retirement savings three-legged stool that's supposed to get Canadians through retirement that is in any kind of good shape is the Canadian pension plan. It is in very good shape. They are required to have regular actuarial reports that pronounce on the state of the Canada pension plan. That plan is in good shape for the next 75 years-plus.
Over the last 10 years, it's seen an average return of 10%. Many Canadians who have private investments through mutual funds and other things like that would be very happy to see a 10% return over the last 10 years.
That return is partly because of the size of the Canada pension plan. It means that it can play in investment space that smaller mutual funds can't, and it's also able to spread the risk over all of the Canadians who work in the labour market, which is millions of them. I don't have the exact number, but if you think of the 40 million Canadians, most of them are going to participate in the workforce at some time in their life, and they are going to pay into the CPP. That means spreading the risk across everyone in Canada, whereas normally, if you invest in a fund, you don't have that big a fund. This is going to be relevant too when we talk about Alberta deciding to have its own pension plan if, indeed, that's where the Conservative government in Alberta wants to go.
The CPP is the only part of the Canadian retirement savings edifice that's in good shape. It does that in part by sharing risk over a larger group of people. Say, you ask someone this: Would you like to be in a pension plan with 10,000 members, would you like to be in a pension plan with 100,000 members, would you like to be in a pension plan with a million members, or 40 million members? I think most Canadians are going to say, “I'd like to be in the plan with 40 million members, because, wow, is that ever going to allow me to spread the risk across lots more people.” It's going to allow their pension fund to make investments that are more likely to get a return and to spread risk across the portfolio. That's one of the great benefits.
Moreover, there's another great benefit of the Canada pension plan. Because it applies to all workers no matter where they live and work in the country—with the exception of Quebec, of course, which has its own plan—it's fully portable. Now, that has been an advantage to Canadian workers, who have had to go to other provinces to secure work, but ultimately want to retire in their home province. It has also been an incredible advantage to employers who have wanted to secure labour from other parts of the country when their own province hasn't been able to meet the labour need. It has meant that people don't have to compromise on their pension in order to go to work in another part of the country.
I think the portability of the CPP as well as its ability to spread risk are two very important advantages.
There's another advantage to having the Canada pension plan that I'm going to highlight today. I talked earlier about how over 70% of Canadians working today don't have any pension plan at all, but for those who do, often and more and more as time goes on, there are defined contribution plans.
What that means is the whole risk of the pension lies on the worker. If the investments don't turn out, that means a reduced benefit for the worker, whereas in a defined benefit plan the workers are guaranteed a certain benefit that they can bank on, that they can budget with.
We know when it comes to the CPP that that defined benefits have not been growing quickly enough to make up for rising costs, and Canadians, who are depending only on their CPP.... Again, that would be true for a larger and larger share of workers who haven't had a company pension as they retire. They've struggled to be able to put money away, while they're trying to pay the rent and the groceries. But their CPP amount will be the same amount, and even though it doesn't grow fast enough, it will grow by predictable measures. That is an incredible benefit to Canadians and another reason why, in my view, we should be talking about expanding the Canada pension plan. I think it's really unfortunate that the major debate we're having about the Canada pension plan right now is about shrinking it by having the Province of Alberta exit.
I disagree strongly with Premier Smith in Alberta, who has been driving this. I think there's a lot of public opinion polling showing that this isn't actually something Albertans are calling for. This is something that the government is trying to create a desire for in the province of Alberta. I don't believe that will be good for Albertans, and I don't believe it will be good for Canadians in the rest of the country, because the CPP is an excellent plan for all the reasons I have just mentioned.
So, what are the problems with Danielle Smith's plan, or what she's proposing? Well, there's a LifeWorks report that the Alberta government commissioned a couple of years ago, but didn't release until after the election—presumably because they knew what we know, which is that the overwhelming majority of Albertans aren't interested in leaving the Canada pension plan, and for good reason. Apparently they understand something that Danielle Smith does not.
They hired LifeWorks. We know LifeWorks by another name. They reinvented themselves. It used to be Morneau Shepell. In other words, Danielle Smith hired some random Liberal to run the numbers for her. It's odd to see Conservatives, who usually really get in a tizzy any time you quote a Liberal source, unless it happens to agree with the position they have already taken.... It would be very interesting to go back and see all of the things that Conservatives have had to say about Morneau Shepell, particularly those who would seek to defend Danielle Smith.