Evidence of meeting #46 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 recording is available from Parliament.
Conservative
Pat Kelly Conservative Calgary Crowfoot, AB
Well, yes. Mr. Turnbull raised a point of order, and I was going to—
Liberal
Conservative
Sandra Cobena Conservative Newmarket—Aurora, ON
It relates to it because, in the subamendment, we are asking for greater transparency, but the subamendment is being dismissed by members opposite as red tape.
There's that common theme, as I mentioned, around better information for Canadians. This whole theme of relabelling of line items within the budget, which is in the spring economic statement, is what we're discussing right now. In fact, it makes it more difficult for Canadians to understand the numbers, because now, with a new definition, not only is it difficult to have a comparative analysis from previous budgets, since everything has now been reclassified, but also, when you're trying to do a comparative analysis with, for instance, other countries, if the definition is not used anywhere else in the world, that would be difficult to do. Again, getting back to this reclassification or new capital framework that is being used in the spring economic statement—
Liberal
Ryan Turnbull Liberal Whitby, ON
Madam Chair, on a point of order, we're not talking about a capital budgeting framework. We're talking about a very specific measure in the spring economic update and implementation act, which is to reduce CPP contributions. I get that the subamendment, as claimed by the Conservatives, is supposed to increase transparency on something that already gets reported on, but the argument that Ms. Cobena is making doesn't seem to be relevant to the issue at hand.
Liberal
The Chair Liberal Karina Gould
Thank you, Mr. Turnbull.
Ms. Cobena, I remind you that we're in clause-by-clause, so there's a requirement to be relevant when we're talking about the subamendment that is being presented. Focus your remarks specifically on your arguments for that subamendment.
Thank you.
Conservative
Sandra Cobena Conservative Newmarket—Aurora, ON
The subamendment, as I mentioned, is about showing Canadians exactly how much money they would save if the CPP contribution rates were reduced. Right now, the subamendment requires reports on the impact of the CPP changes. The subamendment would require those reports to include examples for Canadians to analyze and understand.
There were three examples of different income levels, as I mentioned, in the subamendment: $50,000, $70,000 and the maximum pensionable earnings for the relevant year. For example, if the CPP contribution rates were reduced by one percentage point, for instance, then the report might have to show differently. That's what the subamendment is about. It is, again, about showing Canadians more information, clear information and relevant information, which is, in fact, the opposite of what the spring economic statement and the redefinitions mean for Canadians.
As I was mentioning before, the changing definitions create a scenario where, for simple terms for Canadians to understand, it's like calling your grocery bill a mortgage payment, or a utility bill an RRSP contribution. Unfortunately, Canadians don't have the luxury of being able to follow exactly what the government is doing in terms of its reporting, and so, in a number of these amendments, what we are proposing is more information and greater transparency at that.
When the government takes Canadians' money and then gives it away, for example, in subsidies—
Liberal
The Chair Liberal Karina Gould
Ms. Cobena, just as a reminder, this is on a subamendment to an amendment of a report on the Canada pension plan. Keep your remarks focused on the subamendment at hand, please.
Thank you.
Conservative
Sandra Cobena Conservative Newmarket—Aurora, ON
This goes in line, like I said, with the subamendment in that the spirit of it is providing more information to Canadians. The subamendment specifically talks about an analysis around the different income levels that Canadians...and the savings that Canadians would benefit from if the CPP contribution rates were reduced.
At this point, I suppose I'll.... I have more commentary that I don't think I will be allowed to provide, unfortunately, despite the fact that it is around transparency and the lack of information that Canadians have available to them to be able to understand the bill as a whole, or the reports that come out quarterly for the financial books of the country—not being able to reconcile those because of the change in definitions—
Liberal
The Chair Liberal Karina Gould
Ms. Cobena, this is specifically about an amendment to a report on the Canada pension plan.
Conservative
Sandra Cobena Conservative Newmarket—Aurora, ON
At this point, I think it may be best to cede the floor, then, to the next speaker.
Liberal
Conservative
Tamara Kronis Conservative Nanaimo—Ladysmith, BC
Thank you, Madam Chair.
The subamendment we're debating now is about making the minister's report practical and understandable to Canadians.
To recap, the amendment before us would require the Minister of Finance to prepare a report on the impact—I'm getting there, I promise—of the CPP amendments contained in this division. That report would, of course, look at the financial state of the CPP and at contribution rates.
Earlier subamendments dealt with the need for clear financial projections, real inflation-adjusted numbers and plain-language explanations of the CPP's long-term sustainability.
What this subamendment does—
Liberal
Ryan Turnbull Liberal Whitby, ON
I have a point of order.
Madam Chair, you can probably anticipate what I'm going to say. This is not about previous subamendments. This is on a specific subamendment. I would just ask that Ms. Kronis.... I hope I said it right. Maybe you could encourage her to focus on this subamendment and not speak to previous ones that—
Liberal
Liberal
The Chair Liberal Karina Gould
We've already dealt with those matters, so could you please focus your remarks on this specific subamendment for relevancy with regard to clause-by-clause, which we are going through at the moment? Thank you.
Conservative
Tamara Kronis Conservative Nanaimo—Ladysmith, BC
The words that literally were coming out of my mouth when Mr. Turnbull made his point of order were “this subamendment”. While I agree with you about repetition, and while I agree with you about the importance of the subamendment, when we are debating a subamendment and when people are trying to follow along at home, I would submit to you that it is not unreasonable to do a sentence or two at the beginning of the remarks in order to say, just for people following along at home, that this is the amendment and this is what it does and this is how the subamendment fits in.
I also want to make the point that if I had been allowed to give my remarks, it would have literally been faster at this point.
Liberal
The Chair Liberal Karina Gould
Ms. Kronis, you are allowed to continue. You do have the floor, so please continue.
Conservative
Tamara Kronis Conservative Nanaimo—Ladysmith, BC
Getting back to what I was going to say, what this subamendment does is it adds another important piece. It says that the report should “include representative examples showing the estimated annual impact of the reduction in contribution rates on employees, employers and [people that are self-employed] at different levels of pensionable earnings, [specifically] including earnings of $50,000, $70,000 and the maximum pensionable earnings for the relevant year.”
In plain English, Madam Chair, what that means is that the government would have to show Canadians, through this subamendment, what the contribution rate reduction actually means for someone's paycheque or payroll costs. The reason this matters is that a phrase like “a reduction in CPP contribution rates” sounds technical. A phrase like “40 basis points” is technical.
Many Canadians who are watching this committee at home may not know what that means in real life. They may not know whether it means five dollars, $50 or $500 a year to their paycheque. They may not know whether the benefit is the same for everyone or whether it changes depending on income. What this subamendment would require is that the government spell that out. It would require examples for an employee earning $50,000, an employee earning $70,000 and an employee earning the maximum pensionable earnings for the relevant year. It would also require examples for both employers and employees, and for self-employed persons. That's important because these groups are, of course, affected differently.
For an employee, CPP contributions come off their paycheque. If the contribution rate is reduced, what that means is that the employee will see a slightly larger number at the bottom of their pay stub. For an employer, CPP contributions are a payroll cost. If the employment rate is reduced, or if it is increased at a different time, the cost of employing workers will go up or down depending on the direction of the change. For a self-employed person, of course, the impact is different again, because self-employed Canadians pay both the employee and the employer portions. They are both the worker and the employer for CPP purposes, so when the combined rate changes, they feel the full impact of that rate directly.
These differences matter. A worker earning $50,000 and an employer employing someone who makes $50,000 are going to see a different dollar impact from someone who is earning $70,000, and of course, someone at maximum pensionable earnings is going to have the largest dollar impact in one direction or the other compared with an employee at the same earnings level, because, of course, they are either paying or receiving both shares, depending on the direction of the change. Canadians, I think, deserve to see those examples in clear terms, because, of course, as we know, Canadians care very much about CPP, because it is one of the main facilitators of retirement.
Madam Chair, the reason this is a good subamendment is that it turns a policy change into something that people can understand. When a government announces a change to contribution rates, it can sound like a big deal in one direction or the other, but Canadians should be able to judge that claim for themselves, and they should be able to see what the change means in dollars per year for different types of workers and for businesses. The report should provide that information. If someone earning $50,000 receives a modest annual benefit, then the report should say that. If their deductions go up or down, the report should say that. It's the same for someone who's earning $70,000 a year and someone earning at the maximum pensionable level. I think that the decision to include those three levels in this subamendment is quite a reasonable thing to do, because we think it reflects the space in which many Canadians actually live their lives. If the employer receives a matching benefit, then the report should say that too.
It's really important for businesses in this country to be able to understand the impact that the financial decisions we make in this place have on them, because it, of course, will assist them in their long-term planning in their businesses.
Even more so, self-employed people often don't have the same resources available to them that businesses do, although small businesses have challenges as well. If a self-employed person receives that combined effect because they pay both sides, then that also should be shown clearly.
We don't think that this is complicated, and we really don't think that it should be controversial, because it is exactly the kind of information that Canadians would expect from a government asking Parliament to approve changes to the CPP. The Canada pension plan, as we all know, is funded by contributions from workers, employers and self-employed Canadians. That means that the people who are paying into the plan should be able to see how a rate reduction affects them.
The subamendment is also important, because it helps Canadians understand who benefits the most from the reduction. Because a contribution rate reduction is not the same as a flat payment to every Canadian, it doesn't help everyone in this country equally. First of all, it helps only people who are working and paying CPP contributions, and the dollar value depends on how much pensionable income they earn. A person who is unemployed will get no direct benefit from a change like the change that we are seeing being proposed here in this piece of legislation.
That's really important, because when the government talks about wanting to help the people who are the hardest hit by the financial crisis that they've, quite frankly, created, it's important to know that those people are in fact receiving no direct benefit whatsoever from these proposals. A senior who's no longer working and is not paying CPP contributions also will get no direct benefit, despite the fact that this government claims to be concerned with those people.
A low-income worker, in fact, gets a smaller dollar benefit than a high-income worker, and that actually makes these proposals in some ways regressive, because a worker earning closer to the maximum pensionable amount is going to get the largest dollar benefit from this. A self-employed person earning the same amount is going to see a larger direct effect, because they pay both the employee and the employer shares, but if they aren't employing very many people or they've had to lay people off because of the state of the economy, that is going to be diminished.
These are not arguments against showing the examples. These are arguments for showing them, because these examples show the work of the government proposals, and they show Canadians what the impact is of these proposals on them. If the government wants to present this as affordability relief, then Canadians should be able to see how much relief is actually being offered and to whom.
By the way, I would add that Canadians who are watching this at home will see the objections of our colleagues across the way to this and will be able to look at who wants to be able to provide them with this information and who does not want to provide them with this information. This is especially important at a time when many Canadians are struggling with the cost of living and paying more for groceries, rent, mortgages, gas, insurance and basic bills. A reduction in payroll deductions or an increase in payroll deductions is going to make a real impact, and while it might be welcome, people deserve honesty about the scale of the benefit. If the benefit turns out to be incredibly modest, then that is going to affect Canadians' views about whether or not this is effective.
If employers benefit as well—if this is benefiting large corporations that employ a lot of people—then that's important to show as well. What we're trying to get across with both the amendment and the subamendments to this is that Canadians shouldn't have to guess. Canadians shouldn't have to figure out what their government is doing. They shouldn't have to go to 200-page actuarial reports. They should be getting this information in plain language, clearly, in a way that allows them to assess what their government is or is not doing for them.
I would also add that the report and the subamendment with the content that we've asked for, including the subamendments and specifically this subamendment, could really help Parliament assess the trade-offs that are involved in this particular policy choice. At the moment, it's a reduction in the rates, but in a different budget—even under a different government, including a Conservative government—it could be an increase or a decrease. We've talked about that, so I'm not going to go into that in too much detail.
There are short-term and long-term effects to this that other subamendments we have proposed and other things we want included in this report would get to. It's very important for Canadians to have visibility to CPPIB. It's CPP and CPPIB, for that matter, because Canadians care very much about how their money is managed. It is really important for Parliament to understand both sides of the ledger. This subamendment is one of the tools that will help them do that.
One side of the report should tell us what this means for the plan. The other side of the report should tell us what this means for the people. That, Madam Chair, is balance, and that is the kind of balance we need. We don't think it's enough for CPP to say that it will collect less money or more money. By the way, when it collects less money, what Canadians really should read into that is that the government has actually miscalculated what it would need and is giving Canadians back some of their hard-earned money in this particular case, minus the administrative costs of running the numbers and actually getting the money back.
What we've proposed through this subamendment is to know how much Canadians will save and which Canadians will see the largest savings. This is why we've picked the examples. It gives Canadians a range. It shows how the effect changes as income changes. It allows people to see where they fit into this government's priority. The subamendment makes sure the report answers those questions.
This is particularly and especially important for self-employed Canadians. Many people don't realize that self-employed Canadians do pay both the employer and the employee CPP contributions, which is a significant cost. These are people running small businesses, doing contract work, freelancing, farming, working in trades, consulting and operating local services. It also includes some people who are piecing together income in ways that don't always fit the traditional employee model. For them, a CPP contribution rate change can have a different impact from the impact it has for a regular employee. If the government is changing those contribution rates, then the report should show the self-employed impact clearly, not bury it in a general statement.
The same, quite frankly, goes for employers, because payroll costs matter. For a small business, the cost of employing someone is not just their wage. It includes CPP contributions, EI premiums, vacation pay, workers' compensation, benefits where offered, training costs, and other costs of keeping people employed. A reduction or an increase will affect employers. Parliament should know by how much.
I would add that these numbers are going to be useful for provinces and municipalities. One of the major complaints of people who run businesses in this country is that very often, because of the way our federalism works, sometimes the left hand does not know what the right hand is doing. Inadvertently, the federal government, the provinces and sometimes municipalities come out with regulations, really in short order, that often amplify in unintended ways the impact of various provisions, including provisions like these. A small business owner doesn't think in basis points. Certainly, when I ran my business, I did not think in basis points. What we think about is payroll. We think in terms of whether we can afford another worker, another employee or another piece of equipment.
In some cases, we're hearing from CFIB and other business organizations about the entrepreneurial drought in this country. People are thinking about whether or not they can afford to stay open for another month.
That is why plain examples like the ones we are proposing through the subamendment matter. They matter because they limit spin and the announcement effect that we see so often from this government. Any government can describe a contribution reduction in a way that sounds incredible. It can say that it's reducing payroll costs. It can say that it's helping workers.
Conservative
Laila Goodridge Conservative Fort McMurray—Cold Lake, AB
On a point of order, the bells are now ringing.
Liberal
Liberal
The Chair Liberal Karina Gould
There is no UC to continue, so we will suspend. We will be here 10 minutes after the conclusion of the votes.
Thank you.
Liberal
The Chair Liberal Karina Gould
Thank you, everyone. Welcome back.
I believe Ms. Kronis has the floor. Is she here?
Liberal
Ryan Turnbull Liberal Whitby, ON
I have a point of order. I apologize but I just wanted to ask the chair this.
Given the late hours and the many hours that we've sat in this committee, I want to thank the public servants who have been here for quite extended periods. I also ask that maybe, when we take breaks for votes or suspensions, we can make it clear that they can have a health break.
Some of them have been staying in the back of the room for long periods of time when they haven't had the predictability, and I just want to make sure that we have a healthy work environment for them. They're not elected officials. They're public servants, and they need to be treated with the greatest respect possible.
I would like to put that on the record and see if maybe we can be really explicit when we take a suspension that we will be gone for 20 minutes, if that's possible, so that they know they can take a break.