Mr. Speaker, I am very concerned about the issue of CPP reform, as are a number of Canadians. If there is one thing I have learned over the last four years it is how Canadians are concerned about a few key issues which relate to their future.
Health care is very much an area of concern for Canadians, especially as our population grows older. Education and training are important issues, but so are pensions and planning for our retirement. They all have one specific thing in common, that the demographics of our country are changing very rapidly to the point where if we want to understand the full impact of this issue we also have to start by understanding and recognizing that in this country today, for every person who is of retirement age there are five people who are working. In 20 years there will be only four people working for every person who retires.
As I look at the pages in front of me, I think of their retirement, which may seem like a few years away for them. They should know, as they plan for their future, that there will be only three people working for every person retiring. We will go from five to four to three in a short period of 40 years. Given that dynamic, it requires extraordinary effort from governments in Canada to plan, to think ahead, to think these changes through, especially given the added elements in our economy. We have a $600 billion debt and high taxation levels. This is a key question in our future and how we are going to deal with it.
In my experience, and I think I know the Canadian public very well, people feel this public pension system is very important, both as a policy and a program.
Of course the Government of Quebec has a different plan. The Quebec pension plan administers a similar plan, but the fact remains that both in Quebec and elsewhere, Canadians believe that this plan is very important for their future. People want governments to plan ahead so we will know exactly how to deal with these rapid demographic changes that will occur.
The CPP over the last few years has been jeopardized by inadequate contribution levels and inefficient plan management. We have known that for some time. People in the House will equally know that the plan is administered with provincial governments. The federal government is not alone in deciding what direction we have to take. This is very much a plan that requires a joint effort.
We also know, for instance, that the money in plan was lent to the provinces at rates the same as 20 year bonds. This was way below the rates that could have been obtained in the marketplace. It certainly was not the kind of policy that would allow the plan to garnish surpluses; quite to the contrary. It was certainly a lot less than a private sector plan earned. No wonder Canadians were concerned and certainly worried about the plan.
We also need to look at how the plan affects middle class Canadians and how it will affect their working years. Not only must we look at how it represents a take off their paycheque every week. We also must look at how it would effect employment because it is very much a payroll tax.
In this respect we need to compare the ideas that have been put forward, some of them during the election campaign on our side. I noticed that on the Liberal side we have what is typically the return of Liberalism. The government that was not in favour of taxing people and cutting spending in the last four years is now in favour of taxing people and spending.
Keeping with that new found philosophy as expressed in the Speech from the Throne, what is the Liberal government proposing to Canadians through this change? It boils down to something quite simple and very straightforward. It represents an $11 billion tax bite out of our economy over the next six years. Let me repeat that. The number is so big that it is difficult for people actually listening today to get a sense of what it is. Some $11 billion will be taken out of the Canadian economy over the next six years by the Liberal government for the purpose of trying to change and sustain CPP.
It is one of the biggest tax attacks we have witnessed in the history of the country. It represents something that would have a dramatic effect on our economy if it were left as it is.
Other political parties such as the Reform Party have also tried to cobble together some sort of a plan, but it is important to note from the perspective of Canadians that the Reform Party has not put any numbers forth. It says “here is an idea” but there are no actual numbers. We are walking into what would be fundamental changes to people's pensions, but there are no numbers to back up what exactly it would do or how it would operate. However that is not a big problem for the Reform Party. It is just willing to do it.
What is more disturbing in this vague concept of recognition bonds is that they would end up reneging on CPP. They would just scrap it. What happens to people who have paid into the system and who had planned according to these payments? I guess the answer is tough luck. They will get recognition bonds.
Who will pay for this? It is not clear who will pay for it except that the younger generation of Canadians, certainly according to the Reform plan, will pay a hefty price no matter what the scenario is.
Of course the system is different in Quebec, the Quebec pension plan is managed differently, but to them all this is not terribly important. The Bloc Quebecois does not expect to be here to administer these changes, that is if it ever reaches its goal.
The party that I lead here—and in the election campaign we made it very clear—has set out three clear benchmarks in changes to CPP we would like to see happen.
The first is that CPP must be self-financing. It is critically important that we understand the lessons over the last few years and that we make this plan self-financing.
The second one is a very different from the one held on the government side. We know the government has a different position. It is ready to increase premiums to the tune of $11 billion. If it is to be made self-financing there must be tax cuts to offset the $11 billion bite in the economy. That is the second benchmark.
This means that if we are to go down this route there have to be reductions in employment insurance premiums paid on a weekly basis, which is a payroll tax. There also have to be personal tax reductions so that the decision or move to make CPP self-financing will not damage our economy the way the Liberals are ready to tolerate in the plan they are presenting.
The third is to complete the whole picture. We have to allow the young Canadians who are with us today in the House of Commons to plan for their retirement and give them a fair break. They are not asking for favours. They are not asking for special treatment. They are just asking for a fair break and an opportunity to plan. We also have to make changes to RRSPs so that they can plan for themselves and make decisions for themselves and for their future.
Those are three key benchmarks that we as a political party certainly believe in as we assess the changes we bring forward for CPP.
How would we meet these objectives? We think there has to be an increase in CPP contribution levels to rates that are adequate to ensure the long term viability of the plan. We do not quarrel with that, not at all, but these increases in contributions as I mentioned before must be offset by substantial reductions in taxation for Canadians. Otherwise we are turning in circles.
We would make provisions to finance the extra costs per year of senior benefits resulting from demographic changes. I mention this because there are those who look at the books of Canada, at spending, and are surprised to find that even if we held the line on spending in all departments on an annual basis it would still increase to the tune of about—if I remember correctly and I am quoting from memory—$2 billion a year.
Those sitting in the galleries of the House of Commons today are asking themselves how that could happen, why it is happening. There is an answer that has to do with demographic changes in society.
Even if we hold spending the fact of the matter is that people are growing older. They are eligible for certain programs. The health care system take is higher because of a growing population. We need to understand these things.
My point today is quite simple. Not only do we need to understand them. We need to plan for them. We need to think ahead. I know that is a new idea on the government benches, but it is one that is critically important to the young Canadians who are with us today.
We also need to reassure Canadians the funds will not be mismanaged as they were in the past. We have to take a completely different approach. I will be happy to speak to the issue of return.
We need a separately managed Canada pension trust. That is very much the route we should take. In this respect we are doing what has already been done successfully in the province of Quebec.
One of the major successes of the quiet revolution in Quebec has been the creation of the Caisse de dépôt et placement. Of course it is not perfect, as an institution. From time to time there have been attempts to manipulate the activities of the Caisse, but by and large, I would say the Caisse has been well rated on its performance. This is an institution that has been very successful in Quebec. It has been very, very successful and has managed the funds in its care with due diligence.
So it is a concept that is worth imitating. It may be a very new approach for some people, but when the federal government sees people with good ideas who get good results, it does well to borrow those ideas. In this case, we think that is what it should do.
The Canada pension trust needs to be completely independent from the government of the day if it is to work. Its trustees have to be appointed on a non-partisan basis, recruiting from experts in the financial, business and actuarial communities in consultation with the provinces.
The mandate of the Canada pension trust and its trustees would be to advise the government on how and where to invest the money, on contribution levels, and on how to select the best private sector managers acceptable in industry to administer the fund.
In this way we would have some assurances that in the long term the accumulated surpluses would be invested in a wise manner. We would offer some intergenerational equity with regard to how we deal with pensions.
The performance of the fund could be evaluated on a regular basis to guarantee and ensure Canadians some transparency on how well it is being done.
Today, we cannot afford to overlook certain realities. My point is that with all these efforts to set up a pension plan for the future, it is also extremely important for the government, for all governments but especially the federal government, to control its own spending if we again go in the direction Liberal Party of Canada is asking us to go, in other words, start spending again. These are not rumours.
This morning, I read in the newspaper that the Minister of Finance himself had a meeting with volunteer organizations and urged them to apply for federal funding. I am not making this up. This was the Minister of Finance, who is sitting just a few desks down, opening the flood gates and making this announcement to the public. It is as though he put up a sign saying:
“They were open for business. Please come and ask for your money”. It is signed by the Minister of Finance.
Even if the government revamps the Canada pension plan, if spending is out of control, it will get nowhere at all. The government must take steps to keep spending under control.
It must also plan for the increased demand for old age security, because even if we control spending, there will still be this annual increase. I wish the government would say it thought about this and has calculated, on an annual basis, what the additional cost will be to give these people the pension to which they are entitled.
We also need to improve the security and returns of registered retirement savings plans. The young men and women in the Chamber who serve Canadians so well as pages are the ones who will be the most affected by these decisions. They also need to be able to plan for themselves beyond whatever government can do. That means more flexibility in registered retirement savings plan.
The first thing I would like to hear coming from the Minister of Finance is an ironclad commitment, a guarantee that the increased value of sheltered funds will never be taxed while they remain in RRSPs. That is a commitment the minister has yet to make.
The reason I raise this point today is that every time a federal budget is on the horizon and in the weeks that follow there are always rumours the Minister of Finance or the government of the day will make a tax grab on RRSPs. Canadians have planned and saved and put this money aside for themselves. There is never an assurance that one day the government will not turn around and change the rules, try to grab that money. The government needs to speak very clearly on the issue and guarantee it will not happen.
The second thing that needs to happen is an immediate increase of the allowable allowance for foreign content for RRSPs from 20 percent to 50 percent. The issue is quite simple. Our market is too small. It is fine to encourage Canadians to put their money aside, but the same Canadians should be allowed to get the maximum return on the money they are setting aside. By limiting the foreign content to 20 percent the returns are being limited.
Most Canadians who have any understanding of the markets and the way they operate will know that this is an untenable position. Not only should we move to increase the foreign content of RRSPs from the current limit of 20 percent to 50 percent. We should move to zero by the year 2001 so that Canadians are allowed the full freedom they should be allowed to get the best return possible on their money rather than have the people down here telling them where they can and should invest. The people up in the galleries are the ones who should be able to say where they want to invest their money, the money they earned.
We cannot forget seniors benefits. We have to plan. In this regard I want to know, as do other Canadians, the hidden agenda of the Liberal government. We have yet to find out the impact of the changes to seniors benefits for Canada's middle class. What will be the impact on women, particularly older women who will be dramatically affected by changes to the seniors benefits?
Has the government planned? What numbers are available? I assume it put some numbers out. It cannot be proposing these changes without having studied the effects they would have on the middle class. Surely it has not entered into the changes without considering the impact they would have on women. We are all waiting anxiously to find out. We certainly have a great deal of concern with respect to how it will affect women in particular.
I want to make reference to a concept we have not heard a lot about but will hear more about, the concept of intergenerational equity. As the demographics of the country change it is important for us to accept that we are asking a smaller group of Canadians to carry a heavier burden than ever before with respect to retirement policies. This will have a disproportionate effect on them, on their revenue and on the decisions they will make with respect to their own savings. Ultimately it will have an impact on the decisions they will make with regard to where they want to work.
This is very much a global economy. This is an economy where people who have certain skills are in high demand everywhere in the world. We know how easy it is to travel on a Canadian passport. The Government of Canada has certainly demonstrated that to us.
These Canadians deserve some equity. I leave this as an idea. We did not mention this in our platform but this idea deserves some real study on how we can offer some tax relief. We could target it at younger working individuals and self-employed people on whom we are going to rely. Then there could be a stable predictable retirement system for Canadians in the future.