Thank you very much.
Thank you for inviting me today. In my previous incarnation as president and CEO of the Canadian Federation of Independent Business, I've appeared before countless parliamentary committees. This is my first one, since my retirement from CFIB, on behalf of Working Canadians.
We want to provide a voice, a counterpoint to the extremely strong voice that unions have in Canada, particular public sector unions. As you may know, the majority of unionized employees in Canada today work for government. They have a disproportionately loud voice as a result.
I don't want to be too redundant. A few of the issues I want to touch on have been mentioned before. I want to mostly address briefly tax-free savings accounts, but also the inequities in the tax treatment of retirement savings between the private and the public sector, and how these inequities contribute very significantly to the financial struggles of most Canadians.
As was mentioned, the TFSA ceiling was reduced. That was very unfortunate. It was misrepresented as a tool only for the rich, and yet when you look at the actual data, over 11 million Canadians have TFSAs, which is over half of working-age Canadians. It's a very popular instrument among Canadians for something that's only been around since 2009. When you actually look at those who top up their TFSAs, about 60% of those earn less than $60,000 annually. This is a tool that is very valuable. Clearly, Canadians like it a lot. It's nice and flexible, as others have mentioned, unlike things like CPP, which are not, and restoring that level to a $10,000 ceiling would certainly be a very positive measure for the vast majority of Canadians who do use this.
It was also mentioned that the limit was reduced because it was supposedly unaffordable for government, and yet contemplate that in 2014, public sector pensions cost over $21 billion of our tax dollars. That's only for the federal level of government; the others, of course, are considerably in addition to that, but we'll deal with the federal level at the moment. Yet on the TFSA, government revenues that were so-called foregone by the TFSA were around $1 billion. So for the 80% of Canadians who do not work for government, I think we can afford a little bit more to increase that TFSA ceiling, given the many, many tens of billions that we spend on very generous public sector pensions.
Again, we did see, as others have mentioned, an increase in the CPP and a reduction in the TFSAs, which, again, is regrettable. I'd also like to make a few remarks regarding other inequities in the tax treatment of retirement savings, when we compare the private sector, which is about 80% of Canadians, versus the public sector, the other 20%.
The allowable contribution limit for RRSPs, for example, remains at 18% of income, up to a ceiling of around $25,000 for this calendar year. Yet when you look at public sector pensions and the allowable contribution—this includes both top-ups that happen and the usual matching that typically takes place in a public sector pension from the private sector taxpayer—those numbers, compared to the 18%, are frequently 30% or higher, so significantly higher, in terms of the very favourable tax treatment given to a public sector employee vis-à-vis the private sector worker. Again, that 18% limit should be considered for increase, simply to restore some fairness.
Some people mentioned RRIFs and the fact that at the age of 71 one is converting an RRSP into a RRIF. Again, increased longevity would suggest that the age of 71 should be increased further so that people don't outlive their money.
There's a lot more that could be said on the large inequities that exist between compensation and retirement arrangements between the public and private sectors. These inequities are unfair, but they're also unaffordable, as they impose a large burden on private sector Canadians to support a privileged public sector class. It's also widely acknowledged that most public sector pensions in Canada are very seriously underfunded. We see them requiring ongoing infusions, often several billions of dollars, every time they get into hot water. We know we're not seeing high rates of return for the foreseeable future, and this is hitting those public sector pensions hard, just like it's hitting the rest of us.
As an example, from the recent Canada Post negotiations we saw that the pension plan is currently underfunded by over $8 billion, a pretty sizable chunk of change. This is only one agency of government, so you can imagine if we summed up the entire situation, we are dealing with hundreds of billions of dollars of underfunding. Even the Chief Actuary of Canada concedes that the superannuation plan, the largest plan, is underfunded by about $175 billion to $180 billion.
To conclude, we've seen a lot of attention paid to the so-called 1% of high-income earners and how unfair that is perceived to be by a majority of people, but not enough focus has been directed at the glaring gaps between compensation, retirement arrangements, and other benefits enjoyed by government employees at the expense of their private sector counterparts, who can't come close to achieving such benefits for themselves. Working toward a system where private sector Canadians, 80% of us, can enjoy an equivalent level of tax assistance for their retirement savings as do public sector employees is a goal that would greatly assist low- and middle-income Canadians in the private sector as well as restoring some fairness to the policy framework.
Thank you very much.