Debates of Oct. 6th, 1997

Canada Pension Plan Investment Board Act

[Werner Schmidt, Reform, Kelowna, BC]

Mr. Speaker, I found the speech very interesting, and I would like to commend the hon. member. However, I found the last two or three sentences not only disturbing but literally frightening. I think the comment made was that the plan that is being presented is there for my children and my grandchildren.

I would like to ask the member to explain in detail just exactly how it is that this is going to happen when the premiums go up to about 9.9 percent, and I believe that is supposed to last forever. We know where that kind of promise went the last time. It went all over the place. However, what is more significant is that there is no corresponding increase in the benefits that will be paid to the people who will actually benefit from the CPP.

We have a 73 percent increase in the premiums but no change in the benefits. How can that be a benefit to children and grandchildren?

[Marlene Catterall, Liberal, Ottawa West—Nepean, ON]

Mr. Speaker, again the member may not have heard my earlier comments before question period.

We have to anticipate. We cannot just wait for it to happen or it will be a disaster for pensioners. We have to anticipate that the baby boomer generation which hit our high schools throughout the sixties and put tremendous pressure on our school system, will, 10 years from now, hit the pension system.

The proportion of seniors in the population will grow from 12 percent today to 16 percent shortly after the turn of the century to 25 percent of our population. At the same time the proportion of income earning Canadians in the population will drop dramatically. That is why we have to act now.

We can wait and do what the auditor general said would be necessary in the next century and increase the payments my children and grandchildren will have to pay to 15 percent or we can act now and ensure that we have a fund that will meet that growing bulge in the retirement population. We can do it fairly over the people who are going to be contributing in those years, until that boom hits us. Frankly that is a fairer way to do it than to turn a blind eye and leave it to the next generation to worry about.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, I appreciate the member's comments. I would like to ask her a question about what has been said in the House. Many members have indicated that the current beneficiaries of the CPP are getting a high amount. In fact the Financial Post indicated that current pensioners are getting about $7 out for every $1 in.

Would the member comment and assure seniors about what their status is, those who are presently drawing benefits who have reached age 65 by the end of this year. What will this bill do with regard to those current beneficiaries?

[Marlene Catterall, Liberal, Ottawa West—Nepean, ON]

Mr. Speaker, that has been one of the big concerns of people who have already retired, who have no capacity to increase their earning power, especially for those Canadians for whom the CPP was primarily intended. Those who have had very modest incomes throughout their working lives have not been able to afford the $14 billion of public subsidy that is provided to people who can save for RRSPs and which the Reform Party wants to increase to the benefit of its wealthy friends. But those people will find that they will continue to have their benefits fully indexed so their pension income will not erode. They will not see a reduction in their benefits.

[Deepak Obhrai, Reform, Calgary East, AB]

Mr. Speaker, I would like to address my comments to the member and draw on what my colleague from Calgary Southwest said about job killing.

That is job killing for the workers, but what about the small businessman, and the extra tax burden which the government does not want to call that, but it is a tax burden on small business. What about the small business, the extra tax on small business? It will kill many businesses that are borderline because of the high taxes of the Liberal government.

What about killing small businesses which will in turn kill jobs and will take livelihood away from small businessmen. What about that?

[Marlene Catterall, Liberal, Ottawa West—Nepean, ON]

Mr. Speaker, what about the impact on those same small businesses if we close our eyes, say we do not have a problem, and leave it to 10 years from now to increase those rates to 15 percent? What about the impact on small businesses if we cannot afford indexed pensions and more and more seniors slip further and further into poverty? They will not be able to patronize small businesses. They will not be able to afford groceries. They will not be able to have their clothes cleaned or go out for an occasional restaurant meal.

That would have a far greater impact on small businesses than an increase in their contributions to a good pension plan.

[Diane Ablonczy, Reform, Calgary Nose Hill, AB]

Mr. Speaker, at a time when Canadians are brimming with energy, excitement and ideas, this Liberal government as tired, apathetic and unimaginative. It continues to repeat the mistakes of the past.

The citizens of the city of Calgary, I am proud to say, exemplify this new energy, excitement and ideas. This is a city which returned a Reform member to every riding in the last federal election. Its influence, and Alberta's influence, on national affairs through creative policy alternatives and new ideas that flow from the area, is considerable. I salute the citizens of Calgary and Alberta. I am proud to be a representative of that city and that province.

Today we begin debate on Bill C-2, which is a very poor attempt by the government to remedy serious flaws in the design and management of a major part of Canada's social security system. Bill C-2 is a good illustration of the government's tired thinking, lack of imagination and unwillingness to look at new and better options.

My colleague, the leader of the opposition, pointed out this morning in the debate the ways in which the government is eroding the retirement security of seniors. Bill C-2 also illustrates the government's failure to consult with young Canadians and to look after their interests. Millions of young contributors will be financially brutalized—and that is not too strong a term—if this legislation passes in its present form.

At the end of this debate I trust that Canadians will see and understand that Bill C-2 is poor legislation and that it should not be passed. Canadians will see that there are alternate ways and better ways to save, to invest and to secure their retirement incomes and their futures.

Canadians dislike unfairness. We dislike seeing the young, the disadvantaged or the infirm exploited. Canadians dislike paying for inefficient government. They dislike seeing funds poorly invested or hard earned dollars frittered away on foolish, made in Ottawa schemes. Canadians dislike intrusive government meddling in their personal affairs. They dislike being told by government how to manage their paycheques. They particularly dislike being told by distant government what is best for them and how their earnings should be spent.

I would ask the House to consider these Canadian characteristics and then reflect on the legislation before us today. Members will see that the legislation is grossly unfair to younger contributors, continues to perpetuate poor management and investment practices, and is out of touch with the needs, desires and aspirations of Canadians.

The legislation, if enacted, would result in a massive plunder of the earnings of younger Canadians. Younger contributors to the plan will receive less back in retirement benefits than the value of their contributions. Not only will they have to pay for their benefits, they will also have to pay for the massive debt accumulated through the errors of previous Liberal administrations.

The fact that younger Canadians will be asked to pay many times more for their CPP retirement benefits than their parents or grandparents is no longer news. The dimensions of this rip-off, however, are not well known. The cynicism of the government in papering over the cracks in this plan has not yet been exposed.

My job and that of my colleagues during this debate is to expose the magnitude of the plunder and to unmask the Liberal cynicism which underlies this bill.

The chief actuary of the fund tells us that the CPP paid a real return after inflation of 22.5 percent for those retiring in 1979. But that falls by more than one-half to 10.1 percent for those who retired in 1994 and it falls again by more than one-half to 4.9 percent for those retiring in 2013, and falls yet again to 1.9 percent for those retiring in 2053 and to 1.8 percent for those yet unborn.

For those retiring in 2033, which are many people who have just entered the plan, their return will be, according to the chief actuary of the fund, only 2.5 percent. These people will receive only a 2.5 percent return for investing nearly 10 percent of their earnings in a pension plan. All this with contributions soaring.

Although I realize that so many numbers are difficult to follow they must be in the parliamentary record in fairness to future generations. It is no wonder that young Canadians are becoming outraged by these proposed contribution rates. The CPP is a shabby, unfair and unjust scheme for the young and those yet unborn.

Talk about unfairness and political cynicism. What political party would design a pension plan that passes the massive debt it ran up on to Canadians too young to vote or even yet unborn? I merely have to look across the Chamber to see such a calculating, cynical political party.

The next time members opposite speak to their children or grandchildren, or their neighbour's children, tell them what is being done to their future, how they are being shackled for the rest of their working lives with the cost of this and previous Liberal government mistakes, mistakes that the previous Liberal speaker in this debate even admitted were well known in the 1960s.

The CPP is a pay as you go pension scheme, and was not even properly funded to begin with. It provided the attraction of low contributions to those first in and a high rate of return exceeding what could be expected in any normally funded investment plan. That is how the Liberals got Canadians to buy into it in the 1960s.

If you understand pyramid schemes or the chain letter concept, then you will understand the concept of the CPP design. Some writers refer to Canada's pay as you go CPP as a Ponzi type scheme. For those who do not remember, Charles Ponzi was a small time but well known swindler. He promised a 50 percent profit on money in 45 days, double that in six months. Investors flocked to him. To maintain the promised rate of return he passed the funds of new investors along as dividends to earlier ones. But when inevitably the number of new investors declined, the whole scheme fell apart and Ponzi ended up in jail.

Although the architects of the CPP did not end up in jail, the poor design of the plan is glaringly obvious. The government should admit this as a first step in removing the blinders and considering new and better alternatives to this defective plan.

In addition, there are enormous implications for the proposed Canada pension plan investment board and it needs to be thoroughly thought through. I do not believe the government has even begun to do that.

The bill proposes to establish an investment board to manage the funds transferred to it from the Canada pension plan account. Eventually, this board will control enormous amounts of money, particularly in a country with such a small capital pool. Estimates suggest this fund will be over $200 billion in just 15 years.

The investment board will be managed by 12 directors, including a chairman and each director will be appointed by, guess who, the cabinet on the recommendation of the minister. The board, therefore, and the fund will be susceptible to political manipulation. After all, this huge pool of capital would be a great temptation to any government. If anyone does not believe me, just look at the jobs transitions fund that is being misused with and the questions which arose in question period about that. That fund is not even close to $200 billion, but politicians cannot keep their hands off even small funds.

As members will know, the CPP is a pay as you go scheme. The result is that millions of Canadians have been promised a pension but no fund of money is sitting there to pay them those pensions. We have a lurking disaster, a staggering debt of over $500 billion, almost as much as the entire federal debt again, arising from the mistakes in the design and management of the CPP must be borne by all Canadians.

While there may be many different proposals to achieve this, one thing is clear. This debt should not and must not be put on the backs solely of the young and the unborn.

The Reform Party believes that new thinking is required to save the CPP. Our proposal calls for moving from the present pay as you go public system, to a fully funded system based on individual accounts while protecting the benefits of current seniors. This means that individuals will own all the assets in their account and their retirement benefits will be substantially greater. When they die their children and their spouse will inherit the capital. This would go a long way toward eliminating poverty for elderly widows, for example.

If young Canadians knew that each dollar they put into a retirement plan would go into their own personal account and that they would receive it back, including a fair market return on the investment, they would gladly accept the plan and even leave some portion of their premiums to pay the present beneficiaries.

If the government had the fortitude to ask young Canadians, certainly those in their 20s, 30s and 40s about their preferences, it would find an overwhelming number who would like to own their own retirement assets and not rely solely on the promises of a debt-laden government with a sorry track record.

This government, like previous Liberal regimes before it, arrogantly believes it knows what is best for people and continues to introduce legislation that is not in the best interest of future generations and that is intrusive and inflexible.

If this legislation goes ahead as it is written, the CPP is headed for certain disaster because the young will not support it and they will eventually defeat it.

Reform speakers will raise many other considerations that must be debated before we vote on this bill. Countries around the world are following the example of Chile in moving from publicly to privately owned and managed pensions. These include Australia, Argentina, Bolivia, Columbia, Mexico, New Zealand, Peru, Singapore and Uruguay. Great Britain has already partially privatized its public pension system and is considering a more ambitious reform.

I want to say again to Canadians watching this debate, and I hope that thousands of Canadians are watching it, that the issue before the House today and in the days ahead is tremendously important to the interests of all citizens of this country. The future of the CPP is a question that every working Canadian and every retired Canadian needs to carefully consider because working Canadians will soon have an extra $700-plus every year taken from their income to keep this current scheme afloat and retired Canadians will also be watching carefully to make sure that their pension security is there.

However, the impact of the changes to the CPP go beyond the financial consequences now or even the security of our retirement. I believe this debate will be a turning point in our children's attitudes toward our generation. Their attitudes could have—

[Bill Casey, Progressive Conservative, Cumberland—Colchester, NS]

Mr. Speaker, I rise on a point of order. I call for a quorum count.

[The Acting Speaker (Mr. McClelland)]

We have a quorum call. Do we have a quorum?

And the count having been taken:

[The Acting Speaker (Mr. McClelland)]

We have quorum. The hon. member for Calgary—Nose Hill.

[Diane Ablonczy, Reform, Calgary Nose Hill, AB]

Mr. Speaker, I would think that government members would have enough interest in the Canada pension plan and the future of our security that they would at least be in the House to participate in this debate.

The impact of changes to the CPP go beyond the financial consequences now or even the security of our retirement. I believe this debate will be a turning point in our children's attitudes toward our generation. Their attitudes could have significant consequences for society when our children and younger Canadians stand in our place and when it is their turn to make decisions affecting us. I believe we will be judged in not too many years on the measure of fairness we show now.

Our economic security tomorrow will surely be influenced by the concern we demonstrate today for the interests of the next generation.

Bluntly stated, the proposed changes to the CPP are completely unfair to our children and to younger working Canadians in three ways.

First, it places on their shoulders most of the burden for paying for the disastrously poor design and past mismanagement of the plan.

Second, it misses a golden opportunity to allow them to get the best pension return possible for each dollar paid into the plan. The Liberal plan gives young workers a return so low that no one would ever buy into such a scheme of their own free will.

Third, it imposes a 73 percent increase in employees and employers CPP contributions. This amounts to the biggest tax increase in Canadian history and is an enormous payroll tax hike.

Even the Liberals admit that payroll taxes kill jobs. This whopper comes at a time when youth unemployment stands at a staggering 17 percent, and by some estimates is 25 percent in real terms. Not only does the Liberal plan kill the hope of young Canadians for a decent pension when they retire. It also kills their prospect for jobs today.

That is why the debate is critical and one with far-reaching consequences for all of us and for the future well-being of Canadian society. Reform is urging the government to move toward giving Canadians ownership of their own pension contributions and restoring the belief, especially of younger Canadians, that the plan will deliver decent retirement security for reasonable contributions.

The proposed changes by the Liberals are immense and far-reaching and simply cannot be allowed to be rammed through in a hurry. We will be insisting that public hearings be held across Canada before the government touches the Canada pension plan.

I invite Canadians to join with the Reform in addressing this vital CPP issue. Canadians must have a considerable say in the future of the program.

In closing I quote a statesman from another parliament in another time but whose words are very appropriate today. I hope the government will listen. He said “A politician plans for the next election”.

That is what the Liberals are doing. They know there is a mess in the Canada pension plan. They are simply trying to infuse it with more money at the expense of our children to keep it afloat until they can take off with their own gold plated MP pensions and not have to worry about it any more.

The statement goes on “A statesman plans for the next generation”. We have a duty and an obligation in the House to plan for the next generation. I urge us to take that obligation very seriously.

[Murray Calder, Liberal, Dufferin—Peel—Wellington—Grey, ON]

Mr. Speaker, the member for Calgary—Nose Hill is getting a lot of partisan politics messed up in the CPP. She is probably not aware of the fact that starting last year one-third of Canada's population was turning 50 at the rate of 500,000 a year.

If CPP is to be there for the upcoming generation we have to make changes to it right now so that they can survive. She has a lot of problems with the return coming out of CPP, but she is only looking at one of three pillars. We have CPP, seniors benefits and the RRSP program which gives an 18 percent tax shelter on income. She is obviously expounding their super RRSP program.

CPP is not only a pension plan but is a disability insurance policy. It is a very comprehensive one and a very good one because it is backed by the Government of Canada. Their super RRSP program is a typical Reform way of looking at things: we will pay them money out of their RRSP program but if they are not able to contribute to it, tough luck.

[Dick Harris, Reform, Prince George—Bulkley Valley, BC]

That is not true.

[Murray Calder, Liberal, Dufferin—Peel—Wellington—Grey, ON]

Could the member tell me what kind of disability insurance programs are incorporated into their super RRSP?

[Diane Ablonczy, Reform, Calgary Nose Hill, AB]

Mr. Speaker, I am surprised the hon. member opposite just figured out that a lot of people will soon be turning 50. Surely we have been around long enough for this to have been obvious some time ago, to provide for our pensions, and to get this plan on track before now.

In 1994, just after I was elected, I asked a question in the House of the Minister of Human Resources Development about how secure the plan was since we were having to dip into the contingency fund. The minister essentially patted me on the head and said “Don't worry. Be happy. Everything is under control. No problem. Don't raise any alarms here. Everything is fine”.

All of a sudden the government figures out that people will be turning 50 and may want their pensions pretty soon. I am outraged that we are in a crisis situation we should have known was coming. Now the government is trashing any proposal to try to fix this situation in a sensible way.

Let us talk for a minute about the disability portion of the plan. The disability payments under the plan amount to only 17 percent of the payout of the plan. It is a small portion of the plan. It is not like there will be a huge amount of money to make up to ensure people have disability coverage.

I can make a couple of points. The CPP for some odd reason takes over the disability obligation of private disability insurance plans. A person cannot be doubly indemnified. After a fairly brief period of time the CPP kicks in. It takes precedence over the private plans. Many Canadians have disability insurance but the CPP gratuitously and unnecessarily takes that over. Even the amount the plan pays out in disability is not necessary in many cases.

If as Canadians build up their own capital account, their own pension plans, they unfortunately become disabled they would have the money to start drawing on. The protection would be there. If people become disabled they would have to make use of his benefits earlier than anticipated.

There is every reason to think there could be measures put into place to protect people against disability. We all know we could become disabled. There are no guarantees for any of us. We want to protect and we will protect.

It is nonsense to throw that red herring out and say that Reform's proposals are no good because somehow they will not handle disabled protection the same way as the Liberal's proposals will. There are plenty of good ways to do it. I urge the hon. member to get on with looking at some of them.

[Werner Schmidt, Reform, Kelowna, BC]

Mr. Speaker, I appreciated the depth and the analysis of my colleague from Calgary—Nose Hill. There has been a tremendous interest, not only an awareness, in the scam perpetrated on the public over the last number of years. She called it the Ponzi scheme, which is not an unfair analogy. I think she explained it rather well.

There is a real indictment not only on the present government but on previous governments. The time has come.

Could the hon. member explain exactly how it is that one generation must show a leadership role for the next generation? How can they be shown to prepare for the future, whether it is financial responsibility or responsibility for one's own life?

Could she provide leadership, direction and guidance to the people who are coming up so that they will live a better life and not be the Ponzis as has been the case in the past?

[Diane Ablonczy, Reform, Calgary Nose Hill, AB]

Mr. Speaker, it is important that whatever we do with the Canada pension plan is fair to the present beneficiaries of the plan who were promised a pension, who paid in good faith and who now in many cases have done their financial planning on the basis that they would receive the promised benefit.

It must also be fair to the people who will have to pay the costs, to the people who are now being asked to double their contributions into the plan for no greater benefit, for actually less benefit than they were promised, for less benefit than present beneficiaries receive.

Our plan would simply take measures to top up the unfunded liability in the plan by sensible means. There are many of them. We are exploring several, even though we are only the official opposition and do not nearly have the resources of government.

It is clear the government is not getting on with the job with the resources at its disposal. It is incumbent on someone to make sure that the people who are receiving their benefits will continue to do so, and at least to make sure that the amount of money left to go into the benefits of younger generations will give them the maximum bang for their buck.

All we are promising them, as I said in my speech, is that those entering the plan now will get a whopping 2.5 percent return on that huge investment.

If the premiums were invested over 30 years or 40 years at normal market rates of return and managed by proven money managers, the return would be incredibly higher than the government is proposing to give younger Canadians.

Why not at least let them get a maximum return while still protecting the current beneficiaries? It does not make sense to ignore that proposal.

[Dick Harris, Reform, Prince George—Bulkley Valley, BC]

Mr. Speaker, we are into a full blown debate on the issue now. During Liberal presentations we were told about the investment board that would look after the huge Canada pension plan premium fund.

Let us be clear. We are talking about a potential $200 billion. The most information we have heard about the management of the fund is that the Liberals will appoint an investment board.

I have a question for the member for Calgary—Nose Hill. Given the Liberal record of handling money, could we have any confidence in this new so-called arm's length investment board that the Liberals are talking about?

[Diane Ablonczy, Reform, Calgary Nose Hill, AB]

Mr. Speaker, the member raises the question which I think is one of the least well considered in this whole scheme. The more experts and analysts and opposition members start to examine this aspect of the plan, the more worrisome and the more troublesome it will become.

There is nothing arm's length at all about the investment board. It is appointed directly by cabinet and serves at the pleasure of cabinet.

There is no question there will be a lot of input and influence on this aspect of the plan. The literature and the commentary of the government are already referring to regionally equitable investments.

Here again we see political considerations even before the thing is set up creeping into the direction given to the board. We know from the QPP, public pension funds, the Alberta Heritage Savings Trust Fund, and other avenues of government managing money how unlikely it is that political considerations will not get in there sooner, later, last, first and always.

We need to be very concerned and be very vigilant that it does not happen.

[Alex Shepherd, Liberal, Durham, ON]

Mr. Speaker, it is with great intent that some of my colleagues are discussing Bill C-2 respecting changes to the Canada pension plan board.

I listened with great interest to the member for Calgary—Nose Hill talk about the importance of a consultative framework. I know from my fellow colleagues on this side of the House that we have already done this. Years ago we went out and conducted town hall meetings in our ridings, asking the people of Canada what they wanted to do with the Canada pension plan.

I conducted three of these meetings in my riding. The conclusions of the people of Durham are very much part of this legislation. In particular, they told us that they wanted to maintain the Canada pension plan. Also they told us that they wanted to see a different investment format.

They were concerned about the government directly investing it and giving money back to the provinces. They wanted to see an independent board. The bottom line is that we have been listening to the people. That is exactly what the people of my riding, and I am sure many ridings, have told our government. They want this money set aside and managed in a businesslike fashion. That is essentially what this act attempts to do.

Some members have mentioned there is going to be an increase in the size of the fund. Some talked about $100 billion and some of my colleagues who like to double everything are up to $200 billion. That is a substantial fund for this country.

It is interesting to note that some members opposite talked about payroll taxes. When some of them spoke I had to reach for my Oxford dictionary because they referred to the CPP as a tax. Perhaps I could buy the members a dictionary because they do not seem to have one. I opened up my Oxford dictionary and it clearly says that a tax is a contribution to the state.

Deductions for the Canada pension plan are either currently being paid to beneficiaries or invested in a fund. They do not come into the general revenues of the Government of Canada. By definition in the Oxford dictionary clearly they are not a tax.

When people talk about Canada pension plan contributions they somehow end the discussion at the payment of premiums. Once again it is the same discussion Reform Party members often get into when they talk about spending, that somehow it is gone, ended and never heard from again.

Members are talking about a $100 billion fund. We have to ask what does it mean. What does the fund go into? The government is empowered to carry on normal market interventions much as mutual funds do now, purchasing equities in Canadian owned companies and bonds. I suspect this is going to have a double effect economically. It is going to provide more capital for small and medium size business. As businesses expand they either borrow or raise equity. Businesses are expanding, building new buildings and plants and facilities. Invariably when they do that they create jobs.

Therefore it is a circular argument that by paying these premiums we are going to lose jobs. However, when we look at the other side of the argument of creating robust capital markets in Canada, we are creating jobs. This is simple economics which the Reform Party often likes to look at, the bad side. The reality is there are a lot of positives.

To take this one step further a lot of people are saying that they are concerned about the amount of money in the fund. If we compare it to a privately managed fund today, the Caisse dépot et placement du Quebec has a fund which is now at about $57.6 billion, the Ontario Teacher's College pension plan is at about $50.9 billion and the municipal employees fund is at about $25.9 billion. By definition those are some very significant funds.

When we talk about the Canada pension plan we have to talk about the demographics, the fact that our population is getting older. As the fund becomes more robust, active and intervening in the private sector it could well have an impact on the reducing interest rates because it will make more capital available, looking for capital and it will be more competitive in the capital markets and thus may reduce interest rates for small and medium size businesses.

Through this fund process the possibility is there for lower interest rates and also we have created the availability of more debt and equity capital for small businesses which will create jobs. The Reform Party is not interested in that because it is a very positive thing.

I also heard the member for Calgary Southwest talk about other negative aspects of the plan.

The important thing is Canadians want to know their funds are being invested. As has been mentioned a number of times in the House, Canadians have said where did that money go, where is it in the system. Now they will be able to see where their money went. There will be a quarterly report which will show where their money has been invested.

Reform Party members often talk about the super RRSPs. The hon. member for Calgary—Nose Hill said that only 1 percent of the payments from the Canada pension plan are related to disability. I suggest she read the financial statements. She will see that Canada pension plan payments to the disabled amount to about 19 percent. The Reform Party has no plan to ensure that factor.

I can tell hon. members opposite that there are many people in my riding who are living on disability payments. It is hard for me to believe they are concerned about the hardships these people face.

Second, members opposite have gone on and on about the intergenerational tax. The hon. member for Calgary—Nose Hill called it a rip-off.

The Leader of the Opposition was concerned about the clawbacks in the old age pension system. Then the hon. member for Calgary—Nose Hill spoke about the 200 percent return on investment that some of these people are receiving.

What is it going to be? Are they going to be concerned about intergenerational transfers? Are they going to be concerned about a 200 percent return on investment? Are they going to be concerned about clawbacks to seniors pensions?

The bottom line is they cannot have it all ways. They cannot argue out of both sides of their mouths all the time.

As the member suggested, there would be a $500 billion deviation if we actually tried to fully fund that plan today. I have not heard any opposition member tells us how they would do it.

We went to the people and we asked them how to do it. This is the plan they told us they wanted. This is the plan which is acceptable to them.

Some of our younger people are worried that the premiums are going up, but everything is not absolute in history. The reality is our younger generation has other benefits which have been given to it by government. It has support in the educational system and other benefits from our system.

Who knows in 20 years what the premium levels or what the benefit levels will be. It will depend on the demographic shifts in our country.

This government has had the intestinal fortitude to look at a situation that was breaking up. Many governments in the past have shifted this on to other administrations. It would be easy for us to do just that, shift it on to another administration. The problem would get worse and worse. However, we have faced reality and are dealing with the problem.

That is what this government has done. This is good legislation. I encourage all my fellow members to support it.

[Jason Kenney, Reform, Calgary Southeast, AB]

Mr. Speaker, I would commend the hon. member for his remarks; unfortunately there were several inaccuracies in his characterization of the Reform plan.

It would appear to me that the hon. member, who I believe is an accountant and well acquainted with actuarial concepts, may not have done exhaustive research on this subject. It is not merely the Reform Party which has proposed a mandatory retirement savings plan to replace this giant rip-off Ponzi scheme which Liberal and Tory governments have perpetuated for the last 30 years. Very credible independent think tanks such as the C.D. Howe Institute, the World Bank and even the Bank of Canada have made favourable comment on the concept of a self-funding, defined contribution, mandatory public retirement savings plan.

I wonder if the hon. member has read any of the studies.

[Bob Nault, Liberal, Kenora—Rainy River, ON]

Name the countries that have it.

[Jason Kenney, Reform, Calgary Southeast, AB]

The Chilean government has it. An hon. member mentioned some of the other governments which have adopted this kind of plan.

The Government of Chile did it. It is an enormously successful plan which members from every stakeholder group in the economy, from labour unions to business to small business to taxpayers, have embraced. The public opinion polls in Chile show overwhelming support for the self-funding pension plan established in that country.

The member says that Reform has no plan to deal with the unfunded liability of $600 billion. We do. Part of the contribution that will continue to be made to mandatory pension savings would go to fund the unfunded liability which this Liberal government has allowed to develop.

Does the hon. member not think this is a responsible approach to meet the obligations we do have toward older Canadians? Has he not looked at any of the very serious arguments put forward by credible organizations such as those I have listed? Has he not looked at any of the international examples to see that this kind of plan actually can work?

[Alex Shepherd, Liberal, Durham, ON]

Mr. Speaker, we have a privately funded plan that already exists in our country. I think this is where the member is looking at absolute jurisdictions like Chile. I have read some of those reports. However, we have a three tiered system in Canada. We have the basic social benefit, the Canada pension plan system and the tax assisted RRSP system.

Our RRSP system is one of the most generous in the world. We have total limits of up to $13,500 of premium contributions as a tax assisted support for private pensions. In the United States that same deduction is only $2,000. The reality is we already have a privately funded system in the sense of a voluntary system through the registered retirement savings plan.

What we are talking about are those other two tiers, the ones that the Reform Party keeps wanting to forget about, the people on lower incomes who are not able to take advantage of those RRSP levels. We are talking about the basic integrity of our pension plan system. The people of Canada told me and my colleagues they want to keep it, and so we are.

[Pierre De Savoye, Bloc, Portneuf, QC]

Mr. Speaker, I listened to the member for Durham. He covered many aspects of the CPP and of its reform.

One aspect has been overlooked in this House. I referred to it this morning and I would like to mention it again now. Even if the necessary parameters are built in to ensure the viability of the CPP, with the best intentions in the world, this plan must still be wisely, appropriately and properly administered.

As we know, last spring the auditor general sharply criticized certain practices in the present administration of the CPP. Does the government intend to take the necessary action to ensure that the plan is properly administered, both with respect to its information systems and with respect to the criteria for certain benefits, including disability benefits? I await an answer from our colleague, the member for Durham.