Mr. Speaker, I will be sharing my time with the hon. member for Markham.
Mr. Speaker, when the Minister of Finance tabled his bill to amend the Canada pension plan last February, he claimed to have guaranteed the future of the three pillars of our retirement income system. Those three pillars are the Canada pension plan, old age security and the guaranteed income supplement, and the fiscal support mechanisms for retirement savings, such as the registered pension plans and RRSP's.
The government has indeed proceeded with some major changes to our retirement income system, but like most of the things it did in the course of its first mandate, these changes are full of inequity, lack vision and are an unprecedented attack on those people who most deserve help from the government.
Regarding old age security and the guaranteed income supplement, the government announced in its 1996 budget that it would replace these two measures by a single seniors benefit. The government made a commitment at the time to introduce a bill and start public consultations on the new benefit in the fall of 1996. A year later, still no bill, still no consultation on legislation that will affect many Canadians.
The government did not want to proceed with thorough public scrutiny of the seniors benefit before the election. What was it afraid of? It was afraid that the truth would be revealed and Canadians would realize that with the new seniors benefit, single seniors with an income exceeding $31,000 would be disadvantaged, as would couples with a combined income of $26,000.
He was also afraid we would discover that recovery of 20 percent of the benefits combined with the current rate of taxation would result in a real rate of taxation of 60 percent for middle income seniors. Nobody would want to save anymore for their retirement anymore.
In terms of tax breaks for retirement savings, the Liberals received $300 million in new taxes from seniors by deciding that the old age tax credit would be included in income. Furthermore, the 1996 budget requires Canadians to convert their RRSP in the year they reach 69, whereas in the past they could wait to do so until they were 71.
They also twice cancelled planned increases to RRSP contribution ceilings. The government has also considered more than once the possibility of taxing RRSPs. Canadians have no choice but to take other measures to ensure long term retirement income before the end of their active life. An ever growing number of Canadians have already understood and are contributing to registered retirement savings plans.
However, because of the regulations governing RRSPs, they are unable to get the best return on the market for their money. Restrictions on foreign holdings prevent them from creating a portfolio varied enough to reduce financial risk.
Now the government is asking us to approve the principles of these changes to the Canada pension plan. Although everyone agrees on the need for reform of our pensions, the government's approach contains some very disquieting elements.
According to the Minister of Finance, the current CPP contribution plan should be changed in response to the concerns of the plan's chief actuary.
This means that Canadians will have to pay $11 billion more a year in CPP premiums without the benefit of other tax cuts to offset this hike. In fact, this was such a contentious issue during negotiations with the provinces that the agreement, which was supposed to be reached in 1996, was only announced in 1997 by the Minister of Finance and the Minister of Human Resources Development.
Ottawa's refusal to bring down EI premiums at the same time as CPP rates go up had been the biggest barrier to an agreement. Self-employed Canadians will be hard hit by this accelerated hike in premiums as they have to bear the burden of the combined employer-employee tax rate. This means they will have to pay $3,270 a year in 2003, thus removing financial incentives.
Self-employed individuals should be provided with greater tax assistance on what normally would be the employer share of contributions. Premium increases also place a greater burden on the working poor which include women and young people.
Nowadays, there are five people of job age for every retired person. In twenty years or so, this will have changed to four workers for every retired person and, when today's young people retire forty years from now, the proportion will be three for every one.
Future generations will bear the cost of the changes, because they will have to pay higher premiums, while receiving lower benefits. The cost of changes will not be borne equally by the different generations, and this should be unacceptable to a government that says it is concerned about the future of young people. Many of them have no faith in a public pension plan and who could really blame them?
The Liberal government promised that retired people and those over 65 on December 31, 1997 would not be affected by the change. The government also promised that those now receiving disability benefits would not be affected by the measures.
When we know that 4,000 people are now waiting for their application for disability benefits to be heard by the CPP appeal tribunal, we are entitled to wonder whether the government is not trying to drag out the process so that people will receive reduced benefits under the new rules.
This may well not be the government's intention, but we must point out that it is unacceptable that those waiting for disability benefits must wait up to four years for a settlement.
This mismanagement does nothing to give the public faith in the ability of the present government to administer the CPP. This lack of faith now extends to the government's proposal to modify substantially the structure, financing and investment of the CPP.
You will forgive me for not believing what the government says about the benefits of reform. I do not question that it is sincere in wanting to rectify the problems facing the CPP. I just question its methods.
I urge the government to review the impact these changes will have on the most disadvantaged and to take action to ensure that the cost of restoring the viability of our pension plan is borne equally by all Canadians.