Madam Speaker, I am delighted to address the subject of MPs pensions today but my perspective has changed over the last year and I want to describe the change for members.
Just one year ago I campaigned long and hard against the gold-plated pension plans that members receive, which was easy to do since I was not at that time eligible to receive one. Today I stand in a far different position.
For a year now, I have experienced the trials of living far from home and family, the extra expenses of being a member of Parliament and the very demanding schedule that an MP must follow. In short, my whole heart and soul has been required of me this past year.
Members would be right to ask if my perspective has been altered by this reality. Under the current system, if I remain here in the House for five more years, I will be eligible to receive a pension. I am not alone. Over 200 new members will be eligible for an incredibly generous pension after just six years.
Most of these new members campaigned to change the pension plan, a task we could accomplish today if our resolve for change is not softened in one short year. While my perspective has changed over the last year, I have certainly not lost my desire for reform. I still believe that our pension plan needs change. Change at the top is essential to provide an example for the rest of the nation. I want to make a few proposals today that would bring our pensions out of fantasyland and into the real world.
I would also point out to all members that it is a mark of integrity to desire change even if it hurts so I am happy to see that Reformers at least are still speaking out on this issue, even though it could cost them a significant part of their future income. This is a mark of integrity and the electorate will remember it.
Allow me to set the stage for a moment so that we can all be clear about what the pension plan offers to members of Parliament. I would like to quote from a major international study on parliamentarian's compensation called the Sobeco report which was tabled in February of this year.
This is what a retiring member of Parliament receives: "The pension plan provides the payment of a retiring allowance to any person who is an MP for a period of at least six years. This lifetime pension commences as soon as a member ceases to hold office regardless of age".
It goes on to read: "The amount of retiring allowance for a member is equal to 30 per cent of the average sessional allowance after six years as a member and increases by 5 percentage points for each additional year to a maximum of 75 per cent after 15 years".
This means that a lowly backbencher or an opposition member like myself could walk away, after being re-elected just once, with a pension of about $20,000 a year for life. For a few members of Parliament who are very young, this benefit would indeed be of great value. Cabinet ministers who have a higher salary of course fare much better. In 1993 the average pension paid to cabinet ministers was almost $49,000 annually. Former Liberal Prime Minister John Turner is receiving $85,000 per year for life.
The study also notes that the pension is indexed after age 60. It goes on to say that members pay only 20 per cent of the value of the plan while federal civil servants contribute 40 per cent to their plan and private sector executives about 35 per cent. The pension plan is more generous than those in the private sector and even in the broader public sector.
I mentioned that the Ernst and Young study was an international study. How do our pensions compare with those in other countries? Our system is exceedingly generous. Only Australia and Belgium top our pensions. In fact our pensions are triple the pensions that politicians in the United Kingdom, Sweden and, yes, even the good old United States of America receive. Not only that, but no country allows the payment of a pension as early as Canada does. In fact the payment of a pension before the age of 52 is possible only in Sweden and Australia. In the U.K. you have to be at least 60. In the United States a politician must work for 25 years before getting a pension.
Finally, how do we compare with the provinces? Only the two most generous provinces, Ontario and British Columbia, offer comparable pensions but there is a major difference in the cost to the taxpayer. That is that provincial members are not eligible for a pension until they are at least 55 years of age in Ontario and 60 in B.C. Can you imagine the difference in cost to the taxpayer between receiving a pension from age 30 and receiving it from age 60? The cost differential is of course enormous.
Listeners will not be surprised to find out that just a month before this study was tabled the government commissioned a completely new study called "Democratic Ideals and Financial Realities" that looked at all the same things. This is because of a statutory requirement that the compensation of MPs must be reviewed at the beginning of each Parliament which is a wasteful law that should be abolished as far as I am concerned.
However, I would note that the commission's report arrives at virtually the same conclusions. I do not know how much that report cost but it is the same.
There are really only a couple of principles that should guide us on potential pensions for members of Parliament. First, the pension should not offer to members benefits that are unavailable to other Canadians. For example, it must have a maximum contribution level equal to that of other Canadians. Pensions should pay benefits at retirement age, not when a member is 45 or even 35 years old, but 55 to 65 like others. The MP pension plan should be the same for all members.
I hear that the finance minister may soon allow members to opt out of the plan. I still believe this is wrong. Some members will opt out but the rest will be allowed to remain with the current plan which means that after a long communication strategy in trying to sell what they are doing and much bragging about change and options and all the rest, most of the MPs, especially across the way, will remain at the trough and taxpayers will be even more sceptical of their members of Parliament. As usual, the more things change around here the more they will stay the same.
Double dipping must be eliminated. By that I mean that a retired member must only receive one benefit at one time from the federal crown.
Pensions must be actuarially sound where the money going into the plan equals the money being paid out of it. I would remind members that the unfunded liability of our pension plan at the end of 1991 was $12.2 million and that was after the government topped up the fund with 158 million taxpayer dollars earlier in that same year.
The second broad principle is that our pension plan must show how members are willing to lead by example when it comes to government belt tightening. It is no surprise that when Premier Klein started to cut back on government expenditures, a move promised but not yet delivered by this government, the first thing he did was to abolish-he did not scale it back, study it,
consider it or talk about it-the MLAs pension plan. Only then did he move on to work on other government programs.
A good leader only asks of others what he himself is prepared to do. Government members would do well to heed this management principle. The words of comfort to university students and UI recipients facing cutbacks will ring hollow indeed if members choose not to lead by example.
A wise saying applies here. It goes like this: "Your actions speak so loudly I cannot hear your words". Let us put the empty rhetoric aside and start a massive overhaul of our pension scheme starting today.
Finally, we come to the solution. What do we offer MPs who give their considerable time and effort to serve their country? We want to be fair and equitable. I think we need a pension plan that is comparable to private sector pensions, but which ones I suppose you could ask. There are all sorts of pensions in the private sector. I think we need pensions comparable to those that are available to private sector executives, for example.
Private sector executives get where they are because they display talent, ability and commitment. They are rewarded according to their performance rather than their seniority. They make major companies work and prosper in this country and they compete with the best in the world.
We want to be able to attract this kind of talent, this kind of person to run for Parliament. We need top flight, private sector individuals to make our country run. Not only do people sacrifice careers and time, privacy and family and other things to become elected officials, they also take a drastic cut in the salary portion when they enter Parliament.
Since the salary range for members is already lower than the salary range for private executives, there are few other things that Parliament can offer them in the way of compensation. There are fringe benefits, I suppose, such as a certain amount of notoriety or prestige. Thankfully, this costs nothing to the taxpayer and it is at best a double-edged sword since it also means a corresponding loss of privacy.
Another benefit is the personal satisfaction derived from having direct influence on government policy. Yet another compensation might be the pension they would receive. I think MP pensions need to be as generous as possible while remaining within the industry standard for those types of people.
It would be fair for government to match the contributions of members like other civil servants rather than paying two and a half times what MPs currently contribute. I remind the House that the public service pension fund is in fact overfunded through employee contributions by a large margin. There should be no special deals, no long term obligations that would cost the taxpayer exorbitant amounts of money, just a fair deal that would allow MPs, like everyone else, to plan their future with a minimum of government involvement.
Canadians have a right to demand an end to the current plan. It is an issue that crosses party lines. Let us not grant ourselves special privileges. Let us lead by example and use this opportunity to restructure the current plan. By doing this I believe we can take a step toward restoring the confidence of the Canadian people in the integrity, the equality and the leadership of all members of Parliament.