Debates of March 17th, 1995

Questions Passed As Orders For Returns

[Bill Gilmour, Reform, Comox—Alberni, BC]

What was the total dollar amount (direct and indirect) and source of government funding per annum from 1990 to the present to the following interest groups: Western Canada Wilderness Committee, Sierra Club of Western Canada, Greenpeace, the CANI-Clayoquot Project, the Environmental Youth Alliance, and the Clayoquot Biosphere Project?

(Return tabled.)

[Peter Milliken, Liberal, Kingston and the Islands, ON]

I ask, Mr. Speaker, that the remaining questions be allowed to stand.

[The Deputy Speaker]

Is that agreed?

[Some hon. members]

Agreed.

The House resumed consideration of the motion.

Supply

[André Caron, Bloc, Jonquière, QC]

Mr. Speaker, I am pleased to participate in the debate on the Reform Party motion, which proposes to replace Canada's current social security system with a registered personal security plan.

From the outset, the wording of the motion reflects its underlying philosophy or principles. The Reform Party wants to replace a social security system with a personal security plan. A

social security system is a plan designed to look after the needs of the poor, so that they have the minimum required to live in adequate conditions. On the other hand, a personal security plan concerns a single individual, namely its beneficiary. Such a system has no social dimension: it only concerns the individual.

The underlying principle of that proposal is obviously the prevailing ideology within certain groups promoting a free market, the law of the jungle and the "every man for himself" philosophy. This is not the principle which guided the building, in Quebec and in Canada, of the current social, economic and even political structures.

This morning, I listened to the hon. member for Calgary North, who mentioned some countries which had set up plans somewhat similar to the one she is proposing. She referred to the United Kingdom under Mrs. Thatcher and Chili under General Pinochet.

I do not think these examples would be acceptable to people who have any social conscience at all. The British experience under Mrs. Thatcher, for the past fifteen years or so, was not a particularly happy one. If we compare that experience with the option chosen by France which has taken a different approach to managing and funding social programs, we realize that people in the U.K. are not better off financially than people in France, at present.

As for Chili under General Pinochet, we need only consider what happened during that period and what this every man for himself, this free market ideology produced. It produced torture, deregulation and anti-union behaviour and made the poor even poorer. I do not think people would welcome that kind of system in Canada, especially since we recently had another example of a government that applied this ideology.

Which country was mentioned in glowing terms by the International Monetary Fund? Which country was, in recent years, applauded for its privatization model? Which country was cited as an example for its cuts in social programs? It was Mexico. And look at where Mexico is today. This is a country that wanted to implement a foreign ideology, a country that took steps that had a disastrous impact, first on the poorest in Mexican society and later on the entire Mexican economy.

We cannot disrupt people's lives for ideological reasons, and we cannot apply half-baked theories developed by academics in their ivory towers. We cannot just go ahead and blindly apply these ideologies to advanced societies like ours.

Clearly, I do not support the motion presented by the Reform Party. I intend to analyse it, however, because there are some aspects that must be condemned outright and that are downright shocking.

First of all, the motion proposes to reform existing social programs which are said to be failing, an expression that has a certain currency among certain groups. Who says social programs are failing? The people who do not need them.

Why do we have social programs in Quebec, in Canada, in the western world? Workers and the least well-off have always sought protection against poverty resulting from sickness, unemployment and old age. Often, when people can no longer work because of age they are poor if they had only their job as a source of income.

Western society, has always, and particularly in the past 20 to 30 years, sought protection against the poverty resulting from these scourges. I think they have clearly succeeded. We have health care programs to help the sick, unemployment insurance programs to support those who have lost their jobs and old age security programs to provide a decent standard of living to seniors who have worked all their lives.

I do not know how we can claim these programs are ineffective. I think Canadians and Quebecers know what is involved; they want to keep their social programs. I have two personal examples for you that will confirm what I am saying.

When the Minister of Human Resources Development tabled his proposed social reforms, I called a meeting in my riding for anyone interested in the subject. Some 200 people showed up-people from community groups, the unemployed, union people-These people made it clear to me that we had to protect the social programs we enjoy in Canada today. We might have to change them a bit, but the conclusion was that they had to be protected.

My second example is the petition given me by the movement known as Solidarité populaire, Saguenay-Lac-Saint-Jean. This petition contains nearly 11,000 names requesting the minister to keep the social security safety net in Quebec and Canada.

In the light of such a showing, I can only support those who elected me, particularly because I share their beliefs, and insist that the government maintain the social programs we currently have in Canada, adjusting them as necessary to suit circumstances and to improve their effectiveness.

We hear a lot about the cost of social programs. Of course, unemployment insurance, old age security and health insurance cost money. To some extent, we can surely limit expenditures. We need think only of the duplication of federal and provincial initiatives, which we could stop.

We could also consider cutting expenses by adapting certain programs to reduce their costs and so that the people running them give greater thought to costs. Given the effects of these programs in social terms, I do not think that current costs are exorbitant.

The problem with these issues of cost is the lack of fiscal resources. Why are we lacking fiscal resources in Canada? Because our policies on employment are ineffective.

Certain circles, especially people from the Reform Party, have the following to say about employment policies: "We do not need to have a policy on employment, because jobs are created by the private sector". This point of view is slowly winning over some of our friends opposite, from the Liberal Party. What a pity. Although it is true that business creates jobs, in advanced societies like ours, the government should blaze the trail and take job creation initiatives whenever there is a need.

I am not suggesting that we introduce initiatives based uniquely on a certain ideological or theoretical framework. We must look at the needs of the population and make sure that they are met, to the extent that this is possible.

I would like to move on to a more thorough critique of the Reform Party proposal, as regards a personalized system. The concept of universality would be thrown out. People who have contributed to a plan would be able to use it, and people who have not made contributions, well, who knows what would happen to them. The principle of universality is important, because it acknowledges a citizen's right to receive services by virtue of being a citizen, and, if all citizens have equal rights, they should all have access to many different kinds of services, like health care, education, social security and old age security, just because they are citizens.

Of course, those who are better off may possibly, through various means such as taxation, be required to pay back the benefits that they receive, but it still remains true, I think, that in a society, it is important that citizens collectively have the right to certain services, by the simple fact that they are citizens.

Under the personalized system proposed by the Reform Party, everybody would contribute to the plan, everybody would invest money in a fund in order to pay for their own eventual social needs. But, what happens to people who, for one reason or another, do not contribute to the plan? What happens to people who are unemployed, who cannot afford to make contributions? The chronically ill? People whose lack of training prevents them from being part of the active population? What would we do about them? Would we create a dual social security system?

And if we did, how would the people who have to contribute to a personalized plan feel? They will say: "We are already paying, so why should we pay for others?" In that case, will we let the poor pay for the poor? We can already see where a proposal like this one would take us. It would take us to a two-tier society with rich people living well and poor people starving. Quebecers and Canadians alike condemn that kind of society.

The proposal refers to tax-sheltered savings accounts. This means that the personalized system will be tax-deductible in a way. In other words, the Reform Party is saying "every man for himself", except that the state will have to give tax deductions to those who contribute funds to this system. I think that this is a covert way of making the state pay. It is all very well to say: "Yes, people will invest, take themselves in hand, put money aside-"

I heard our Reform colleague explain to us this morning that if you invest so much per year, you end up with a fortune after 15 or 20 years. This reminds me of the financial advisors who visit people in their homes and tell them: "If you deposit $500 every six months or $1,000 a year, with interest rates, you will become a millionaire". After he leaves, you see yourself as a millionaire, but you are not one penny richer.

While we are on the subject, our Reform colleague said this morning while explaining her system's benefits: "Assuming that a person invest so much as such-and-such an interest rate and that this person is never sick or unemployed, he or she will be a millionaire in 30 or 40 years". Such assumptions do not feed the poor, care for the sick or provide our old people with the support they need.

As for tax-deductible RRSPs, you may think, Mr. Speaker, that I am against RRSPs in principle, but that is definitely not the case, neither for me nor for my party.

In fact, in prebudget debates, we spoke in support of not taxing RRSPs, in spite of the fact this currently deprives the Canadian government of $15 billion in revenues, because we think it is not fair to change the rules of the game along the way, after a contract was signed or a tacit agreement has been reached by the government and citizens who invest in RRSPs. It had been agreed that these benefits would not be subject to tax.

As a party, we are not against RRSPs. We do not want RRSPs to become taxable, but at the same time we cannot understand why one would want to apply the RRSP formula to everyone in our society.

I see that I am running out of time, but I would just like to address one issue that our colleague raised this morning. What happens to those who invest in RRSPs if something goes wrong with the economy, if banks go under, if bad investments are made, if our currency is devalued, if the interest rates go down, if there is an economic crisis? I could go on and read you the entire Apocalypse. Many things can happen that will cause funds invested in RRSPs vanish. You could then come up to us and say: "Well, I am poor now. You must help me". If the Reform Party members were in power, here is what they would tell you: "Look here, sir, you made investments and you lost money. You are a loser and losers have no right to ask the society for help. When you lose money, you lose money, and you shut up".

Basically, the Reform Party's proposal is for the rich, the healthy and the educated.

The other problem with this proposal is this: these funds can and should be drawn only in an emergency. The proposed plan would replace the Unemployment Insurance Plan, the manpower training programs and the pension plans.

What happens when an individual has the misfortune to become unemployed repeatedly over the course of several years, if he has the misfortune to be ill and therefore unable to contribute to his pension plan? What happens if that he drains his personal registered savings plan and ends up with nothing to fall back on.

I think that the Reform Party's proposal takes a rather simplistic view of society and public finance. They are telling us that the public finance problem would be resolved if there were no public expenditures, which is rather simplistic, since it is so obvious. Except that public spending exists precisely because there is a public, a population, whose needs must be taken into account by politicians.

Solutions such as the one proposed by the Reform Party may seem attractive to someone watching us on television, while relaxing in the living room. However, such solutions are not acceptable to the needy.

In conclusion, since my time is running out, when faced with proposals such as this one from the Reform Party, we must remind our fellow citizens and politicians what social solidarity, society and community living are all about. Nowadays, these realities are too often forgotten. We hear about personal success, free market and registered personal security plan. This is a self-centred philosophy. I will not make a long speech about sacrificing everything, including ourselves, to help others, but we live in a society and we have a responsibility toward social solidarity.

I invite Reform members to reflect on life in a society and to realize that we do not live only for ourselves but also for others, who also live for us. This is how we can all function in a society. And this is what we hope to preserve for a long time to come in Canada and in Quebec.

[Garry Breitkreuz, Reform, Yorkton—Melville, SK]

Mr. Speaker, I listened carefully to what my colleague from the Bloc Quebecois had to say. He asked several questions which I think should be answered immediately.

He asked who is saying social programs are inefficient. The Auditor General has said social programs are inefficient. I want to give the member some quotations from the Auditor General's 1994 report in which he says rising social program use and high repeated use suggests that social programs may be creating long term dependency among some users.

The Auditor General also says these social programs create disincentives to work when benefits from social programs compare favourably to earnings from jobs. He goes on to say employers and employees may be using unemployment insurance to support short term layoff strategies.

Another point the Auditor General makes is that interaction among social programs may result in programs working at cross purposes to each other. One of the other things he says is unemployment insurance may be a factor in Canada's rising level of unemployment and the lower level of outputs that result.

The Auditor General has said we need to take a closer look at this.

My colleague then said this is an idea that rich people and Reform MPs have thought up. My colleague seems to think these are just our ideas. I do not think he has any idea of how the Reform Party works and how we arrive at our policies and principles. The very principles and policies we are discussing here today as Reformers have been brought to us by the poor people of Canada as an alternative to protect them.

I would like to point out to my colleague how a grass roots party works. The idea we are debating today started with our members, not with our leader and not with a group of academics working on some government funded ministerial task force of some kind. Some of the best ideas that come forward come from the grassroots people, not from some top down, antiquated, political, bureaucratic system of some sort. The member should listen very carefully because these are not ideas that we have hatched in the back rooms of some office.

I cannot understand where my colleague from the Bloc is coming from. For a party that wants the provinces to have more control, I do not believe he would argue with what we are discussing today. He is supporting more federally run, big, social programs. We are saying they should be decentralized even to the point where local associations and individuals would have more control over their affairs.

One of the advantages of an RPSP is that there would be a lot less involvement of this big government in our lives. Taxes could be substantially reduced as individuals, local associations and charities would assume more responsibility for their lives in the communities. I believe this knew social order he alluded to

would have a positive effect even on reducing crime. He should take a closer look at what we are suggesting.

I do not have a lot of time today to go into this, but there are other areas, such as higher education, where we could look at this concept. I will give a personal illustration. I have four children. I did not feel that when it was time for them to go to university or whatever institution they chose that I would have the wherewithal to send them there. Therefore, I laid a little bit aside every month when they were young. It was not very much. It was equivalent to the family allowance given by the government at that time.

That small amount of money has grown to the point where now that they attend university, this RRSP type of saving pays for almost half of their education. The hon. member may not know, but I do not come from a wealthy background.

The plan could be applied in so many areas. Poor people could actually provide for their children and provide more security for themselves.

This country is in need of a major overhaul. The very idea the member suggests is unacceptable. Our country is not defined by our social programs, as many members are suggesting. I do not think Canadians can relate to the concept that we are Canadians and what makes us different from other countries in the world are the social programs we have.

It is individual initiative, responsibility, sharing and co-operation. It is the charities we set up. It is caring for our neighbours and our communities. It is the freedom, the strong families and values we have established, the personal assistance we give to each other, not some great social program. That is what has built up this country.

Thirty years of Liberal social engineering took away the personal responsibility. The very fabric of our society is being destroyed and the morale of the people is being broken.

I would like the hon. member to comment on what I have said. Does he not agree the government has failed miserably in running social programs? If he does not agree with our suggestion, what better suggestion does he have?

[André Caron, Bloc, Jonquière, QC]

Mr. Speaker, I would like to make a few quick comments on what my colleague just said.

Regarding the auditor general, I recall getting the impression from his report that he blamed Mr. Axworthy, to a certain extent, for proceeding with social program reform before thoroughly analyzing the efficiency of Canada's existing programs.

I do not think that we can determine with any precision whether our social programs are efficient based on what the auditor general says. The auditor general has asked the government to review the situation.

My second comment is about what my colleague from the Reform Party said when he claimed that his party's proposals are grass roots proposals. My proposals and the ideas I shared with you earlier also came from the people. I told you that I met with some constituents. I told you that people from Saguenay-Lac-Saint-Jean asked me to give Mr. Axworthy a petition which 11,000 people signed. Therefore, I can also safely say that my ideas come from the people. I think that people want to keep the social network or social net, which we all have in common.

Now, regarding the opinion expressed that I should be happy to see social programs disappear because I am a sovereignist and because most of these programs are federal, and their disappearance could very well be politically opportune, simply because they are federal, this is not how the Bloc Quebecois sees it. Yes, indeed, we believe that the federal government should leave social programs to the provinces, because social programs do not lie within federal jurisdiction. What we are asking for is a system where the provinces would administer social programs in exchange for tax points corresponding to the cost of administering them.

I think that federalists, like my colleague from the Reform Party, should be more careful when they talk about the importance of social programs, because some Quebecers say that the railway and social programs are what Canada means to them. The railway is being dismantled and so are social programs. Therefore, in the opinion of many people, Canada is also crumbling.

Regarding the question I was asked about social program reform, I agree that the government ought to determine whether each social program meets the end it was designed for. I do admit that, in certain cases, it would be appropriate to adapt the program, and in others, to restrict them because they do not really meet any needs.

In my opinion, Canada must continue to invest in social programs because Quebecers and Canadians are very proud that the neediest people in our society can still live in dignity.

The solution lies in job creation, which will ensure that more Quebecers and Canadians are contributing money to the government. This is how we will be able to sustain the social programs which make us so proud and which make us the envy of many countries of the world.

[Garry Breitkreuz, Reform, Yorkton—Melville, SK]

Mr. Speaker, it gives me pleasure to address the issue before the House today.

It is clear to everyone but I suppose the Liberal government that 30 years of social engineering have failed miserably. The main reason social programs have become unaffordable and unsustainable is that they create greater and greater dependency on social programs. No matter how these programs are designed, the end result would always be the same. More and more people use the system and eventually it becomes unsustainable because the government can no longer afford to pay the huge sums of money needed to satisfy everyone's so-called needs.

This is why half the people on welfare today are described as employable. This is why our unemployment insurance program actually creates unemployment. Economists call this moral hazard and people in Saskatchewan call it plain stupid. This is something that must be addressed in the debate. The debt and the deficit seem to be issues that people do not even consider in the comments they are making in regard to this matter.

The Department of Human Resources Development issued a report in January 1994 which provided an even more damning indictment of the negative effect of the unemployment insurance program. I want to address most of my remarks to the unemployment insurance aspect.

The report examined over a dozen existing studies which concluded that the changes made to the Unemployment Insurance Act in 1971-72 resulted in an increase in the unemployment rate in the range of 1 to 1.5 percentage points. That is how much unemployment was raised because of the change. The report also noted two unpublished papers that produced estimates showing that the UI rate was as much as 3.5 percentage points higher than it should be. That is very serious.

Using the range of estimates provided in the government's report, it means that instead of the current unemployment rate of 9.7 per cent it should be somewhere between 9.2 per cent and 6.2 per cent. That is a huge difference.

The UI program is so poorly designed that somewhere between 64,000 and 448,000 workers are unemployed because of it. It has not helped that we have suffered through 30 years of incompetent government and a lack of leadership has brought us to where we are today: on the brink of bankruptcy. Now we have 44 per cent of the people in Canada doubting whether they will ever receive old age pension and 42 per cent doubting whether they will receive their Canada pension even though they have paid into it with their own contributions.

The government's incompetence in dealing once and for all with the annual deficit by balancing the books is directly responsible for the deteriorating lack of confidence in our social security system. Instead of adding to our personal security, the approach of the Liberals to social programs is adding to our insecurity. They think if they just tamper with them a bit-and my hon. colleague from the Bloc suggested that we should tinker with them-they can make them better.

We have tinkered for 30 years and now we are on the brink of bankruptcy. Not only have the Liberal social engineering experiments failed us fiscally and economically but they have also failed us socially. The number of single mothers is increasing dramatically, not because teenagers are not smarter than they were when I was young but because many provincial welfare programs will pay welfare to teenagers who leave home just because they have had a disagreement with their parents. It is clear to everyone except politicians that social programs are also destroying families.

Today I want to look specifically at how the registered personal security plan system we are putting forth might be used to improve the current unemployment insurance program. The Reform Party's policy with respect to unemployment insurance has been developed and approved by Reform Party members at a number of assemblies since 1988. Reformers believe the program should be returned to its proper role as a true insurance program to cover periods of short term unemployment and that it should be administered by the employees and employers who pay the premiums, not by some big government in Ottawa.

At our membership assembly held in Ottawa last October Reform delegates, the supreme governing body of our party, voted almost unanimously in favour of the following resolution:

Resolved that the Reform Party investigate the feasibility of replacing the compulsory, government operated, privately funded, taxpayer subsidized Unemployment Insurance Program with a voluntary, personally financed, privately administered, government regulated Registered Unemployment Savings Plan.

That is what we are bringing forward today as a suggestion that should be explored by the government.

Reformers are not alone in thinking that the RPSP concept might have applications beyond savings for our retirement. This is what the Canadian Institute of Actuaries had to say about the possibility of expanding the use of RPSPs to replace the existing UI program in its submission to the human resources development committee:

A well designed Unemployment Insurance Program would be one which would encourage and reward attachment to the workforce. A capital accumulation program would fulfil this role, as this type of plan could be set up to deposit employer and worker contributions into a registered unemployment savings trust account. This account would be tax sheltered and invested at the sole discretion of

the worker, similar to a group RRSP arrangement. This program would be compulsory for all workers and would replace the existing UI program. This could be co-ordinated with CPP/QPP to enhance retirement security.

While the Canadian Institute of Actuaries is saying contributions would be compulsory, Reformers have still not made a decision on whether the program should be compulsory or voluntary. The Reform Party is still investigating this concept and it will be a number of months before we will be able to make a final recommendation to our members.

The winning proposal selected in the Fraser Institute's 1992 economy and government competition estimated that replacing the current unemployment insurance program with the RPSP type program could save governments over $5 billion a year. The proposal also estimated the greatest positive impact came from replacing the disincentives to become hooked on UI with real incentives to work.

Another huge benefit described was the increased economic activity and job creation that resulted from having about $12 billion a year left in the hands of workers and employers instead of being sent to government to be wasted by spendthrift ministers and bungling bureaucrats.

Many other benefits were noted in the study including a $1 billion saving in government administration costs, a reduction in paper burden and red tape for employers and employees, more money in private hands for training and upgrading, and ending the duplication of effort between UI and provincial welfare programs. Surely everyone would realize that and support our proposal on that basis alone.

Based on our initial research and the positive reaction to the idea of RPSPs by economists, business leaders, the general public and even the media, Reformers believe the idea is one whose time has come. Reformers invite the government to support our motion Work with us to help complete our investigation of the feasibility and application of the RPSP concept. We want to work together with government members. They said they were going to co-operate. This is one aspect where we can.

Reformers will initiate extensive research effort in the next few months. We will use this background information to launch a far reaching consultative process to get public input. The concept will become part of the Reform Party's policy development process and will lead to discussion and debate in hundreds of constituency associations across Canada, culminating in a vote and a decision at our next membership assembly. If approved by our members the concept will form part of the Reform Party's election platform for the next general election. Reform will campaign using the RPSP concept, and if elected Reform will have the mandate to implement the changes we propose.

The Liberal approach is the reason many Canadians become cynical with traditional parties and old line politicians. They never say what they are really going to do and they never really do what they say. The Liberals are masters of old style politics more than anything else. Reformers came here to change the democratic system.

Voters under a Reform government would have real power as a result of democratic reforms which would include citizen initiated legislation, free votes for MPs, referendums, MP recall and a triple-E senate.

Reformers know the government started out to solve the problem but now government itself has become the problem. My goal as a Reform MP is to get the government off the backs of people and out of their pockets. The registered personal security plan is one that will help us achieve that goal.

That completes my presentation as I am willing to split my time with my colleague.

[André Caron, Bloc, Jonquière, QC]

Mr. Speaker, I listened carefully to the hon. member's comments. I want to ask him about an issue to which I alluded during my speech. What happens to those who make bad investments? What happens when interest rates get too low? What happens when banks go bankrupt? It may sound a bit ridiculous that a bank could go bankrupt, but it has happened in western Canada. It almost happened with the old Barings bank, in England, which experienced serious problems following some unfortunate investments by one of its managers. What happens if the tax-exempt money put in safe banking institutions does not grow? What happens if, after 10, 15 or 20 years, the personal security plan is ruined by some crisis?

[Garry Breitkreuz, Reform, Yorkton—Melville, SK]

Mr. Speaker, the question could be put to people who put their savings away today. What happens to savings in a bank today if the bank goes broke? I think the hon. member realizes that banks have insurance, that those funds are insured. The system would virtually be no different.

I would like to turn it around. What is ensuring Canadians today with all the deposits they have made to the Canada pension plan that they will get anything? It has been administered by a government that has run the fund virtually into the red. It is over $500 billion in the hole. The liabilities in the Canada pension plan are over $500 billion. That is of a far greater concern than possibly some bank that may go under.

The government can regulate this kind of thing. We are putting the suggestion out there. It is something that can be explored by Reformers and the government.

A much more serious problem is being overlooked, the fact that the government will not meet the commitment it made to senior citizens. Years down the road it will be unable to fulfil its commitment.

Interest at the present time is eating into our social programs to the point where it will not be very long that we will be paying more interest-and it may be at that point already-than we will be getting back in social programs. This is how critical it has become. This is why we need to look at alternatives and this is one alternative that should be seriously considered.

[Herb Grubel, Reform, Capilano—Howe Sound, BC]

Mr. Speaker, the introduction of the current Canada pension plan was preceded by an intense discussion over the merit of fully funded rather than a pay as you go social security system

Under the fully funded system Canadians would have paid taxes to the government which would have been forced to make private market investments with the money. The system could never have gone bankrupt and would have increased enormously the amount of savings in the economy and therefore the rate of investment in economic growth.

However, such a funded system would have resulted in unpredictable retirement benefits since the earnings of the funds would have been uncertain. In addition it would have resulted in high costs of portfolio management and a serious concentration of financial powers in the hands of the managers of a very large amount of money.

The Government of Canada decided to adopt a pay as you go system under which continuously a currently working generation is taxed to pay for the pensions of the retired generation. This approach fit well into the political climate of the time when private markets were distrusted deeply and governments could do no wrong. The system also had political advantages. The population was growing rapidly and was expected to continue to do so.

As a result, the tax burden on the relatively large number of working age people was and always would be low to provide the pensions for the relatively small number of those retired. In addition, the government could set guaranteed pension benefits and cover any unexpectedly high costs by raising government taxation rates.

Sophisticated economic and actuarial models showed that in a world of constant population income there would be perfect intergenerational equity as all working contributors to the scheme would receive in return exactly the same amount they contributed.

The Canadian pay as you go system is now in some trouble because the predicted population growth did not take place. Using reasonable assumptions, the unfunded liabilities of the Canada and Quebec pension plans have a present value of $750 billion. In other words, the amount that is promised to be paid out is smaller than the amount to be taxed under current rates. If we sum all of those future deficiency of payments we will come to a discounted value of $750 billion, about the same as the value of our current debt that is so hotly disputed all the time.

In the early part of our next century the working generation may have to pay as much as 15 per cent of its come to pensioners. Other disadvantages of the present system are that it has lowered the private rate of savings and investment in economic growth. Public opinion surveys show that Canadians have become skeptical about their ability to receive promised benefits when they are retired. The ideals of the system for a population free of worries about retirement finances clearly has not been realized.

With this empirical information about the shortcomings of the present system available now, the Reform Party believes it is time to replace it with a fully funded, what we call private security system. Canadians will continue to make mandatory contributions to their retirement savings just like under the present system, with some money coming from their pay and matching funds from employers. These contributions are deducted from income before taxes are calculated. There would be reasonable maximum contributions to prevent use of the instrument for massive deferral by high income earners.

The biggest difference from the current system is every Canadian would have the option to pay these funds to a private trust administered by approved financial institutions, much like they can now under the registered retirement savings plans.

All income and capital gains earned in the private system investments are also sheltered from income taxes. As a result, the average Canadian worker who contributes to such a scheme during their full lifetime may be expected to have accumulated a surprisingly large sum. This is possible in spite of seemingly small annual contributions they are used to now. The power of compound interest working on a tax free income works wonders.

Rough calculations show that persons now 65 who started to work at age 20 and enjoyed average wages and returns on their investments would be the proud owners of a nest egg greater than $1 million today.

The individual Canadian would own this money and all rights to it. Access to it would no longer be subject to the whims of Parliament and other generations. However, because the fund was built with deferred tax obligations provisions have to be made that taxes are paid at some point on the assets.

For this purpose the owners have the same three basic options that exist under the present RRSP system. The entire fund can be turned into an annuity at age 71, permitting the payment of taxes during the remaining years at the relatively low rates applicable to the annual annuity.

Alternatively the funds can be freed from all restrictions on use by paying income taxes in the years it is done. The third option is that funds can be withdrawn at minimum rates that roughly assure the entire amount is depleted at age 94 or one progressively higher in the future as people live longer. Taxes are payable on the withdrawal of funds each year.

The preceding represents my own tentative ideas on the operation of the proposed personal security system. Actuaries, accountants and economists are needed to work out the details and assure the viability of the system.

Much work has to be done to assure the smooth and equitable transition from the present to the new system. I am confident the devil and the detail will not destroy the basic vision. The system can also be used for the tax free use of funds for mortgage down payments, higher education, medical expenses and possibly unemployment.

Such a universally funded and privately administered system would take Canada into the modern age when governments have to accept that socialism and collective approaches have failed. It would increase freedom and economic growth. Get to it, Canada.

[Shaughnessy Cohen, Liberal, Windsor—St. Clair, ON]

Mr. Speaker, during this debate members of the opposition have raised many issues arising from the budget, in particular about building an effective social security system for Canadians.

The motion before the House today and pronouncements from the Reform Party indicate one perspective on social programs, a perspective I do not share, one which no one on this side of the House shares, a perspective not shared by most Canadians and certainly not by the constituents in Windsor-St. Clair.

In the federal budget and in the vision sketched out by the Minister of Human Resources Development there is quite another vision. The difference is clear. While Reform rambles on, indiscriminately cutting here and hacking there, the government is taking a thoughtful approach to human resource issues.

The government is turning the page from the strait jacket of rigidly centralized Tory programs. The government is leaving behind the Tories laissez faire approach of writing cheques and to the more Tories the better.

It is an innovation, something Reform does not know much about. It should not be the Reform Party. It should be the regression party. It is innovative in terms of social programs far beyond the simplistic notions of the Reform Party.

In essence the budget reinvents government for the 1990s. These social programs and the budget are built on our belief that Canadians want communities and individuals to have the tools to make their own decisions while ensuring basic principles are in place on a national basis.

It is very important to listen carefully to what Reformers say so that one can compare what they say to the government's vision of social security, peace and good government for this nation.

Here come the guns. This government's approach begins with a focus on three priorities. We want to keep our citizens alive. We do not want them shooting each other. We are concerned about employability. We want to find the best way to combat poverty.

Employability by helping people to find, keep and improve their jobs and skills and the elimination of poverty are our goals.

We have learned there are many ways to achieve these goals. The employment needs of a single parent led family in a housing project in Toronto are substantially different from the employment needs of a family which formerly made its living in the Atlantic fishery. In a country as diverse as Canada, there is no one size fits all, quick fix answer like Reform would suggest.

For that reason provinces and territories are joining us in finding these new answers. They know innovation is not reserved to one level of government in our Constitution. One place that will become clear is the new Canada social transfer. This will shift federal support for post-secondary education, health, social assistance and social services into one package starting in the fiscal year 1996-97.

Currently transfers under the Canada assistance plan come with a lot of strings attached. Strings have become less and less relevant to today's world. We believe some of these strings are unnecessary. We believe they impede innovation, restrict flexibility and increase administrative costs. They also impede regional solutions to very real and very different regional problems.

In short, this cost sharing approach hampers provinces that need the breathing room to design and deliver social programs in line with their local needs.

We believe the provinces share our goals to improve the employability of Canadians and to reduce poverty. What they also want is the flexibility to deal with these problems in a way that responds effectively to people's needs.

Under the Canada social transfer we will allow this to happen while remaining faithful to certain fundamental national prin-

ciples. First and foremost the conditions of the Canada Health Act will be maintained. In other words, universality, accessibility, portability, comprehensiveness and public administration will be respected.

Canadians also do not want to see their mobility restricted because of minimum residency requirements. Beyond those principles but consistent with them always there will be flexibility and partnerships.

The Minister of Human Resources Development will be inviting all provincial governments to work together to develop through mutual consent a set of shared objectives that will underlie the new Canada social transfer. By achieving a coherent framework with provinces and territories we will be able to tackle the core problems of employability and poverty.

This government wants to work with the provinces and territories to increase access to good quality child care. This can help improve the employability of many Canadians with low income. It can offer children a great environment that helps them learn and grow.

We would like to work out better means of helping persons with disabilities to get jobs and to achieve greater independence. We believe provinces and interested groups will welcome that commitment and will help us achieve it.

In these two areas, as in our entire array of federal-provincial relationships, we want to build new partnerships that focus on results and that are grounded in common values.

While that is the government's approach, what about Reform? The record is silent. Reform has nothing of substance to say about any of these issues. Employability? Who knows. Reducing poverty? I think we can guess what Reform's perspective is.

Perhaps I should simply move on to some other subject on which Reform members actually do have a policy. Unemployment insurance is a very good example. Their position is that we should knock $3.4 billion loose from the unemployed by cutting out all special benefits and the interest differences tied to local unemployment rates.

Who would pay? Women would pay. There would be no more Maternity benefits. That is the Reform's idea of a baby gift. Welcome to Newt Manning's Canada, little one. The sick would pay. The sickness benefits under unemployment insurance would be cut out. Under Reform's plan we would have to guess that we might break our leg in advance and save up for it. Welcome to Preston Gingrich's Canada, convalescent Canadians. People in less prosperous regions would pay. Reform wants to see UI entrance requirements that would be sharply higher than they are now to bring them up to the level of the wealthy regions. Welcome to the land of neo-Newtism, unemployed Canada.

Can the UI program be reformed? Absolutely, but this is not the way. The government has been quite clear that we need to move forward from the current unemployment insurance program. We believe it does not do enough to help people get back to work. We believe it can be a far more active policy. We have set a target for program savings of at least 10 per cent.

As the Minister of Human Resources Development has already said in the House, unlike Reform we will not achieve these results at the expense of 165,000 new mothers a year. We will not achieve these results at the expense of 155,000 people who fall sick annually. We will not achieve these results at the expense of 30,000 fishers. These are precisely the people Reform is attacking when it claims saving for a rainy day equals an intelligent social policy.

The same holds true for seniors and seniors benefits. The Reform Party claims there is $3 billion waiting to be plucked from the old age security program. I cannot wait to hear what the seniors I meet for coffee at McDonald's on Wyandotte Street in east Windsor have to say about that.

Like so many Reform proposals, we know the price but it will not tell us what we would be buying. Precisely who would lose their benefits and how much would they lose? Would it be a clawback? At what rate? From what income level? There is no way anyone can squeeze $3 billion from OAS without taking it from the seniors, whom no one would call wealthy.

It is clear from the budget response Canadians support the direction the government has taken very strongly. They see the complaints from the opposition and from some provincial capitals about this new direction for what they are: pure politics, old fashioned politics, politics as usual. Our citizens know, even if some partisan politicians do not, we must build real ways to work together productively. They have no time for transparently obvious grandstanding. They have no time for ideological shell games.

The government is determined to build a better system of social security for Canadians, one which could be sustained financially, one which sets clear goals and one which enlists consistent support to achieve those goals. The government's budget is a blueprint for that system.

At the end of the day we have to wonder which approach is better. Canadians clearly prefer the approach of the government and reject the simplistic, facile approach of the Reform Party.

[Leon Benoit, Reform, Vegreville, AB]

Mr. Speaker, I have seldom heard as much distortion of another party's policy at one time. The member has done an excellent job of that and I congratulate her if that is her goal. There has not been that much distortion from a single member in a long time.

The member referred to the Liberal budget and how there has been so much flexibility given to programs under the budget. I would like to ask the member how this budget gives flexibility when it will still mean adding $24 billion per year, by the finance minister's own figures, to the debt and when interest payments on the debt will increase to $51 billion per year by the end of the three-year period?

How does that give flexibility to social programs where billions and billions more will have to be taken from social programs to make interest payments? How does that give flexibility if the Canadian economy collapses and we go hat in hand to the International Monetary Fund asking for a loan and it says that we have to get rid of a lot of our social programs, otherwise it will not lend us the money? How does that give flexibility?

[Shaughnessy Cohen, Liberal, Windsor—St. Clair, ON]

Hello. Earth to Reform. Mr. Speaker, Canadians want the deficit handled. They want the deficit managed. We are doing that. We are taking a little longer than Reform would because we do not want babies to starve in the street, we do not want children to miss their education and we do not want old people to not have income support.

Hello. Earth to Reform. This is the real world over here.

[Herb Grubel, Reform, Capilano—Howe Sound, BC]

Mr. Speaker, I have never heard such rubbish.

Is it really an honourable debate of issues when somebody gets up and says the superior Liberal Party doesn't want to kill people and doesn't want babies to starve on the streets? By implication it is suggesting the people on the other side would have policies which deliberately would kill people and make babies starve.

We do not by that kind of debating style advance the cause. Let us understand that all of us wish to have the best for all Canadians. The issue is how do we best get there. Only by discussing the issue of how we get there is any progress being made.

Let me take the issue of unemployment insurance. The hon. member has never read any of the royal commissions made by previous governments, including Liberal, on the examination of the unemployment insurance system. They have universally said that system was created to protect Canadians from the hazard of unemployment. There was never any conception this should be used to pay for people who choose to become pregnant or who are ill, as she noted.

The point is we have different systems for taking care of these things. It is totally inefficient and inequitable to ask some people to pay for hazards for which they are not exposed.

Her calculations on welfare payments are totally off. We are currently paying $20 billion in UI and government OAS benefits to retired people. We are paying $18 billion in CPP-QPP. That is $38 billion.

If $3 billion is cut out of that from the top, the arithmetic shows it is not necessary to go to the lower level. That is the kind of discussion we need, not saying we want to save lives and the other people want to kill Canadians. That is totally inappropriate for the Chamber. It is an indignity.

[The Deputy Speaker]

I would invite the hon. member for Windsor-St. Clair not to use that phrase, which she has used twice before. It does not contribute to the dignity of the House.

[Shaughnessy Cohen, Liberal, Windsor—St. Clair, ON]

Thank you, Mr. Speaker, for the admonition. Whatever the language, we just heard it. The Reform Party does not want to support women who choose to get pregnant.

[Herb Grubel, Reform, Capilano—Howe Sound, BC]

That is not true.

[Shaughnessy Cohen, Liberal, Windsor—St. Clair, ON]

The Reform Party does not want to support sick people. That is what I just heard.

[Herb Grubel, Reform, Capilano—Howe Sound, BC]

Rubbish.

[Jim Hart, Reform, Okanagan—Similkameen—Merritt, BC]

Mr. Speaker, it is amazing what we are hearing here today.

A prominent politician told me recently that politics-I know the Liberals may not agree with this-is the art of the possible. The member for Labrador told me that. I agree with that statement. Politics is the art of the possible.

The Reform Party has given the House an idea. What we are hearing is the idea being stifled, not legitimate criticism or maybe a suggestion or two to add to the idea, but accusations and fearmongering from the other side of the House. It is unacceptable.

This government has one answer to the problem of poverty and one answer to the problem of people being unemployed. That is massive amounts of government money being thrown at the problem when it is shown clearly that it has not worked.

The government is like a baby. At one end it has a huge appetite and at the other end it has no sense of responsibility.

[Shaughnessy Cohen, Liberal, Windsor—St. Clair, ON]

Mr. Speaker, I am trying to figure out what part of the anatomy is at the other end from the brain where the sense of Reform responsibility comes from.

[Ken Epp, Reform, Elk Island, AB]

Mr. Speaker, I would like to begin by focusing on what we are talking about today. Maybe we could begin by agreeing on the things that we agree with.

We agree that all Canadians living in the best country in the world would expect from their government good fiscal management, so that all of our resources, all of the people with all of their energy, with all of their integrity, would be able to manage their affairs. Those affairs that are managed for them by the government would be done in such a way that the benefits are sustainable.

In my short life I have had a number of occasions where we have been beneficiaries of living in this country. The first one is the privilege of being able to come here.

I am a first generation Canadian but I remember distinctly my grandparents. Long before they passed away, they use to speak of the privilege of being in Canada. They did not want handouts. My grandparents were rugged, self-sufficient individualists. When they immigrated to this country they declined government benefits. They said they will live poorly but they will make it. They did.

I am happy to be in a family that has a rich record of helping other people. It is not true that you can only help people by having the government pluck the pockets of the taxpayers, spin it around in the whirlpool in Ottawa, use up a whole bunch of it for administrative purposes, have politicians and bureaucrats decide of the money that is left who is entitled to it. That is a false assumption, if you stop to think about it.

They have not created any money. They have not created any wealth. All they have done is taken the wealth away from the people, thereby reducing their ability to help those around them in need.

I know of what I speak. I am old enough to remember before all of these programs were in place. I remember as a youngster one of our neighbours was very sadly, suddenly and tragically killed in a farm accident. There was no government program at that time to help the widow harvest her crop.

I remember my dad organizing the neighbours. I was probably only five or six. I still remember that our neighbours went and that lady had her crop harvested first. When that was done, each one of the neighbours went back and did their own. That is the essence of charity. That is the essence of looking after people.

There was a young couple my wife and I were familiar with who did not have regular jobs. They had financial difficulties. They obviously needed a lot more help than just money thrown at them. I am very happy to say that one of the best experiences of my life was I, one of the leaders in the group, got a number of mutual friends together. This man who was in financial trouble, was living in subsidized housing and the rent was high. He said he could get into a housing program if only he could get a down payment. There was a house builder who had really good starter homes, but he did not have the down payment. His payments if he got into it would be less than his rent.

The most fun I ever had was when this small group of us could get together. Some of us made a donation to this. Some of us gave interest free loans. We went to this couple and we said we have arranged for the $6,000 they need as a down payment, let us go and buy the house. That was fun. The couple picked up on that and said that they now had an obligation to pay it back. They became more accountable. It did not take them long to pay back the money some of us had given them as interest free loans.

That really was a good experience. However, that was before the government was taxing us to death. Now we are getting more and more government intervention which prevents us from looking after ourselves.

This plan the Reform Party is promoting today simply says: We reject the premise that the government can look after our long term savings, our long term benefits or our temporary need for assistance when we are out of a job. We reject the premise that the government can do it better than we can ourselves or with the help of someone close to us. It is too far away and too inefficient.

[The Deputy Speaker]

It being 1.30 p.m, the proceedings on this matter have now expired.

The House will now proceed to the consideration of Private Members' Business as listed on today's Order Paper.