Evidence of meeting #45 for Finance in the 45th Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was subamendment.
A video is available from Parliament.
Liberal
Conservative
Mike Lake Conservative Leduc—Wetaskiwin, AB
Madam Chair, I think I've made the points that I wanted to make at this point in time. I'll listen to what our other colleagues have to say.
I will point out, though, that I'm very glad to see that some Liberals are willing to take part in this conversation, not just simply rubber-stamp through legislation, as I've been seeing in almost every other committee since the Liberals took over the majority in all committees. Thank you.
Conservative
Tamara Kronis Conservative Nanaimo—Ladysmith, BC
Thank you so much, Madam Chair.
I really want to thank everyone for welcoming me to this committee. I'm actually really glad to be here. It's not a committee that I've been to very many times, but it is a really important committee.
We're discussing clause 43.1 of Bill C-30, which impacts the Canada pension plan, and I know that's not only important to people in my community but important to people in all of our communities.
I'm sorry, but did I say something funny?
Conservative
Tamara Kronis Conservative Nanaimo—Ladysmith, BC
I'm sorry.
What we're debating, if I understand it correctly, is a subamendment to an amendment to add clause 43.1 to Bill C-30. I'm going to break it down and explain why I'm here to support that subamendment. I know that sounds incredibly procedural. Particularly for the people in my community watching from home, I'm going to explain why that matters.
Clause 43, which is the overall part of Bill C-30 that we're studying, deals with changes to Canada pension plan contribution rates. Those are the rates that workers, employers and self-employed Canadians pay into the CPP, which means this clause would affect how much money is collected for the Canada pension plan on a go-forward basis.
As my colleague from across the table said, this clause would reduce future CPP contribution rates. For employees and employers, that rate would move down to 4.75%. For self-employed people, who are paying both the employee and employer portions, it would go down to 9.5%. That change, in case anyone wants to find it, is in division 5 of part 3, which is the part of the bill that deals with the Canada pension plan.
As my colleague from across the table said, we would be reducing CPP contributions “by 40 basis points”. That would be good for some Canadians in the short term, but it would not be automatically good for all Canadians overall, because it would depend on—as those who look at this area on a regular basis know—whether the CPP can absorb the lower revenue without weakening the plan. If that were to happen, it would create future pressure to raise the rates again. That would shift the costs onto younger workers, which is something we talk about in the House of Commons on a regular basis.
Conservative
Tamara Kronis Conservative Nanaimo—Ladysmith, BC
I'm getting there. We're talking about a subamendment to an amendment, and I'm talking about why I'm supporting it.
Liberal
Ryan Turnbull Liberal Whitby, ON
She invoked the Simms protocol, so we're allowed to [Inaudible—Editor].
Conservative
Tamara Kronis Conservative Nanaimo—Ladysmith, BC
Thank you.
Going from 4.95% to 4.75% looks like 0.2%, but when they're taken together, the total employer and employee contribution is reduced by 40 basis points. In the short term, it's going to help workers because a little less CPP comes off their paycheques.
It will also help employers—as I'm sure my colleagues are happy to point out—because their payroll costs go down slightly. It also helps self-employed Canadians because they pay both sides of the CPP, so they see the full reduction directly. When it comes to small businesses, especially in this economy with tight margins, even a small reduction in payroll costs can matter when rent, wages, insurance and other expenses are already high.
There is no question that my colleagues across the table are going to present this as affordability relief. However, it could also hurt younger workers. One of the themes we have seen consistently in this government is that there seems to be a lack of consideration for young people and for people who are trying to save to buy a house and trying to save to get ahead. It certainly affects the people coming along behind them, because if or when the reduced contribution rate leaves the CPP with less revenue, it will definitely create pressure for higher rates later.
That also hurts future retirees, because if the plan's financial cushion is reduced over time, that is going to have an impact, even if benefits are not cut now. It could also hurt contributors more generally if Parliament is not shown whether the lower rate is sustainable. That, in turn, can hurt the trust in CPP if the government lowers contributions without clearly explaining the long-term impact.
That is the key point here. The change doesn't necessarily mean CPP benefits are being cut now, but it does mean less money is being collected than would otherwise be collected, and that raises a question of whether the lower revenue is safe for the plan in the long term.
That brings me to the amendment and the subamendment, because it shows us why they matter. The government is going to say that the reduction is safe. If that is what they want to say, then they should be able to show the numbers—not just the headline number and the total assets in future dollars, but the real value of these assets after inflation and what these assets look like per contributor and per beneficiary.
If that 40 basis-point reduction is helpful in paying CPP today but creates a risk for people relying on CPP tomorrow, that is something Parliament should be aware of and is something reasonable to debate, because the decisions we have to make in the House always involve trade-offs.
We may or may not decide we want to help today's workers, employers and self-employed Canadians with this modest reduction in contributions, taking into account the ways it might hurt future retirees and workers. If the lower rate weakens the CPP's long-term financing or if it leads to pressure for higher rates later, that is something we should be taking into account.
The responsible position isn't simply a yes or a no, a good or a bad. The responsible position is to show us the actual actuarial impact—boy, that's a tongue twister—and then let's discuss it. Let us work together to do what is best for Canadians.
I'm sorry, Mr. Turnbull. Are you trying to say something to me?
Liberal
Ryan Turnbull Liberal Whitby, ON
Madam Chair, she's asking me a question. She's evoking what's called the Simms protocol, which is in the Standing Orders. I can cite it for you. She can ask me a question and not cede the floor, and I can answer.
Liberal
Ryan Turnbull Liberal Whitby, ON
No, I was just adding a point to your argument, which is that there was a report tabled in Parliament yesterday. That's what we heard in witness testimony. The impact that you're asking for is already in that report, which was tabled in Parliament yesterday. Essentially, the argument you're making is redundant. I just want to make sure that you are aware of that.
Conservative
Tamara Kronis Conservative Nanaimo—Ladysmith, BC
I am aware of that, and that's where I was heading. In fact, you practically anticipated the next sentence that I was going to say, which is that the office of the chief actuary already publishes reports on public pension plans and can value the impact of tabled bills and amendments affecting public pension plans, which is the kind of transparency that Parliament should require and is exactly the information that the minister should be paying attention to.
That's where the amendment and the subamendment are heading, because what we would like to do with this amendment and subamendment is force the government to show its work, not simply in an actuarial report that may be tabled, but in a ministerial report that is tabled in the House and that can be debated by parliamentarians in the exercise of our discussion of these issues in the best interests of Canadians.
Basically, what the amendment then says is that shortly after this change takes effect, the Minister of Finance has to prepare a report explaining what these CPP amendments do to the financial state of the CPP and to contribution rates. Then the report has to be tabled in both the House of Commons and the Senate within a set timeline. I think it's 15 days. That way, Parliament wouldn't just pass a rate cut and move on. What would happen is the minister would have to come back to the House with a formal public account of the impact that we could then debate in the House of Commons and that Canadians would become aware of.
What the subamendment does is add more detail to what the report has to include. It requires the minister to include projections of CPP assets done two ways. The first part would be in nominal dollars, which means the raw dollar amount for future years. The second part would be in inflation-adjusted dollars, which is what those dollars are really worth after taking inflation into account. This matters, because a big future number can sound reassuring, but inflation can make it less meaningful.
That's something Canadians of all walks of life are seeing right now in our communities. It's something that we see every time we go to the grocery store. These numbers are big, and inflation is impacting our bottom line. We know that in most cases, inflation is going up faster than our wages, and that is something we are concerned about.
What this does—
Liberal
Ryan Turnbull Liberal Whitby, ON
I have a point of order, Madam Chair.
Wages have been increasing faster than inflation for over three years.
Liberal
Conservative
Tamara Kronis Conservative Nanaimo—Ladysmith, BC
Even I know that's debate.
I was saying that what the report will do is require the minister to report the impact of the changes that the government wants to make in Bill C-30 to the Canada pension plan in both nominal dollars—the numbers as you do the math—and inflation-adjusted dollars. That matters, because while a big future number may sound reassuring, inflation can make it less meaningful. For example, saying that the CPP fund will have a certain number of billions of dollars in 2040 doesn't actually tell us that much today unless we also know what that amount is worth in today's dollars. It also, I suppose, helps to know what projected inflation rates might be and what those numbers might convert to in the long run.
The subamendment would also require, where the information is available, the minister to come back to the House with projected CPP assets per contributor and per beneficiary. That's important, because the total size of the fund is not the whole story. As Canada's population ages, we need to know not just the number of people making contributions but also the number of people who will be drawing benefits. That matters a great deal. We've had a lot of talk in the last decade or so about how shifting demographics are going to have a big impact on the CPP and on the plan, so it's important to do that.
What that means is that the fund may grow in total dollars, but the amount available per worker or per retiree may be less strong. That's something that Canadians really care about, because it affects our future ability to support Canadians in their retirement as we move on. Put very simply, what the amendment says is that if the government wants to lower CPP contributions, that's fine—they can make it sound as good as they want—but we want a report back to Parliament on what that means for CPP's finances. The subamendment says that, on top of that, the report shouldn't be allowed to just use broad headline numbers. It has to show the real value of CPP assets after inflation and show not only what the fund looks like on a per-person basis but what it looks like for contributors and beneficiaries.
The reason this is important and the reason I'm here to support this subamendment is that it's about protecting transparency. CPP is not a normal government program that's funded from general revenue. It is a contributory pension plan that workers and employers pay into over their entire working lives. Changes to contribution rates affect paycheques today, but they also affect the long-term strength of the plan.
This touches on issues of intergenerational fairness and touches on issues of transparency, and those are some of the core issues that we come to this place to address. A lower contribution rate may very well give workers and employers some relief now, but I have to tell you, Madam Chair, that when government is going to the CPP to be able to provide relief, it is really going into one of the core pockets where Canadians get really worried about things. They get really worried about the state of our economy. I get a lot of emails in my office urging us to keep our hands off the CPP—emails from those worried about what we might do to it in this place.
When we talk about affecting our financial cushion and adding risk for younger workers, it's difficult. What these reports we are asking for through the amendment and the subamendment would do is make the numbers harder to spin. A report that only gives total assets in nominal dollars could make the program look stronger than it really is. Requiring inflation-adjusted figures and per-contributor and per-beneficiary figures gives parliamentarians and Canadians a clearer picture. That strengthens accountability, and it is something that I think we would all agree we're here to do. That's why I'm surprised to hear that members across the table are potentially not supporting this amendment and subamendment.
When you explain it the way that I've explained it—when you explain in plain-language terms that people care about the Canada pension plan because it is their financial cushion in retirement—it really lays bare why this amendment and subamendment are so important to us. The simplest way to say it is that the amendment is about making sure that Parliament and Canadians know whether cutting CPP contributions is truly safe for the long-term health of the pension plan, and not just whether it sounds like another good announcement to make in the short term. I think Canadians are looking for that kind of reassurance. They want to understand the financial state of the Canada pension plan and the effect that the things we do in this House will have on contribution rates.
The amendment says that the report has to be filed “in each House of Parliament on any of the first 15 days on which that House is sitting after the report is completed.” By “both Houses”, what we mean is that the report has to be provided to both Parliament and the Senate. That is important, because, of course, it allows both Houses, which represent Canadians and deal with those issues, to have input and look at it from the different perspectives and different dynamics that both Houses provide. That is another thing that I hope is going to reassure Canadians that we are acting responsibly with the CPP and with their money, because, again, that is something I hear about on a regular basis.
The first 15 sitting days matter because we don't sit every day of the week. That gives the government a defined parliamentary timeline, as opposed to just a number of days, to table the report. The subamendment doesn't replace the reporting requirement or create a separate report. It adds more detail to what the minister's report has to include. It says the report has to include, as I think I've said, assets in both nominal dollars and inflation-adjusted dollars.
Of course, when we talk about a projection, what we're talking about is an estimate of how much money or value the CPP is expected to have in the future—not just current figures, but also forward-looking numbers that will help parliamentarians and Canadians understand what the plan may look like over time. We're asking the minister to bring the actuarial report that my colleague talked about to life and turn that information into what I hope will be highly digestible information that will be tabled in both the House and the Senate so that we can consider it.
That's also why the subamendment talks about inflation-adjusted dollars in addition to nominal dollars. Inflation-adjusted dollars will show the real value of the assets.
Liberal
Ryan Turnbull Liberal Whitby, ON
I have a point of order.
I think that's the fourth time the member opposite has mentioned the very same point. I know we've tried to decrease repetition in the interventions.
Liberal
The Chair Liberal Karina Gould
Wait one second, Ms. Kronis.
Thank you, Mr. Turnbull.
It has become a practice, and it is also in the Standing Orders, not to be repetitive when we're doing clause-by-clause, so if you could, make new arguments or allow one of your other colleagues to continue.
Conservative
Tamara Kronis Conservative Nanaimo—Ladysmith, BC
I'll try to bring it back. I know it has been a really long day for everybody. These are very important topics, though, that are close to Canadians' hearts. I'm trying to do this in an unrepetitive way. I apologize. This is a very dense bill and a fairly dense meeting. I'm trying to do that.
As the population ages and more Canadians retire, more people will receive benefits from the CPP, which is why we need to understand the impact on a per-beneficiary basis. I want to clarify that we're not debating and we're not suggesting that there should be a completely separate process. What we're talking about is whether the reporting requirement in the amendment should be strengthened so that the report is clear, useful and meaningful. That will allow for more information to be available.
I also want to clarify that this is not about allowing red tape for the sake of it. It really is about making sure that what we get is a real report with real numbers that can be tested and understood and will tell the whole story.
I'll close by saying that the Canada pension plan is not ordinary government spending or a short-term program. It is a long-term promise that we make to Canadians. Our constituents, no matter where we are in the country, expect Parliament to manage the CPP carefully. They expect us to be transparent and to do our job.
That is why I support both the subamendment and the amendment. I think it is clear. I think it's reasonable. I think it's accountable. If the changes in the division are sound, then the government should have no concern about providing this information. If there are risks, Parliament and Canadians deserve to see them. For that reason, this amendment and subamendment have my support.
Thank you.