Mr. Speaker, the amendments proposed in Bill C-2 are simply not acceptable to the party to which I belong. However, I agree that we have to decide on a course of action quickly. We should not prolong or delay the deliberation of this bill.
I am also sure that many Canadians will agree that the proposed changes will harm their retirement years. I would like to address three main points which arise from the legislation.
CPP premiums will rise at a faster rate than originally planned. Taxpayer disposable income will be negatively affected as their budgets will need to be altered once again. Changes in the way benefits are calculated will slightly reduce the pensions of future beneficiaries, reduce health benefits and make it harder to qualify for disabled benefits. This means that present contributors will be forced to pay more while being told they will receive less.
Bill C-2 sends out messages to three groups. First and perhaps most relevant are the working Canadians who over the next 20 years will pay out more in CPP premiums and in the end receive less in benefits. Even if current forecasts are incorrect, the previous pay as you go system which had today's workers paying for today's pensioners will be overhauled to become a fuller funding system, where today's workers will pay for today's and tomorrow's pensioners and will have nothing for themselves. It used to be a privilege for Canadian citizens to receive the CPP. Now it has become a burden for working Canadians as they must pay more and more as premiums increase.
Second, the proposed changes in the legislation will force working Canadians to rely more heavily on workplace pensions and RRSPs. Higher CPP premiums imposed on Canadians leave less disposable income for individuals to manage their own private retirement portfolios.
The fact that benefits received will be based on the average of the past five years' earnings instead of three means that for most recipients pensions will be 3.7 percent lower than in the present system. Therefore the need for private pension plans is even more relevant.
Third, I am concerned for the self-employed worker who will consequently be hit hardest by the changes proposed in Bill C-2.
We know that small businesses in Canada are stressed with payroll deductions, but now they must face yet another hike in expenses.
Those who are self-employed will be excessively strained for cash as they must contribute 100 percent of the proposed increases. The self-employed individual must contribute both his or her portion plus the employer's contribution, who in this case is one and the same. This means that by the year 2003 an additional $3,270 must come out of the pockets of small business owners based on the proposed figures.
What financial incentives do we offer Canadians who are self-employed or who are considering self-employment? I would argue none. This is a time when the self-employed are driving the economy, creating jobs and growing rapidly. Self-employed individuals should be offered greater tax assistance on what normally would be the employer's share of the CPP contribution.
Changes to CPP benefits should not only impact on future generations but also on individuals currently collecting the Canada pension plan as well as those nearing pension eligibility.
Working Canadians and future generations will be hard hit by both reduced benefits and increased contribution rates. It is imperative that the government strive for fairness with the pension system. This means that changes must be applied fairly to all Canadians. Higher contributions mean less disposable income, disposable income that could be used to save smartly for retirement.
Women will be hit hard by the proposed amendments. It is a fact that not only do more men than women have workplace pensions, they also have more in those pensions. Most women have very little disposable income to invest in RRSPs. Economists have found that a small percentage of men and women will be financially secure upon retirement.
Canadians are in need of legislation that secures future needs but will not rob them of their independence to manage their present and future plans. Premium increases place greater burden on the working poor than on wealthy Canadians. This is not a fair deal for Canadians as current recipients will not be affected but future benefits will be lower for Canadians taking into consideration inflation.
Our youth are another group that will be affected by the proposed legislation put forth by the government. As I have alluded to, the cost of this fund will not be shared equally among the generations. The burden of this tax grab will fall most heavily on young Canadians just entering the job market. Taking into account inflation and any possible changes in policies, today's young Canadians are faced with small or even negative real returns on their retirement investment under the Canada pension plan.
One must consider the following points with respect to the proposed amendments. Canada pension plan premiums will rise at a faster rate than originally planned. Changes in the way benefits are calculated will slightly reduce the pensions of future beneficiaries, reduce the death benefit and make it harder to qualify for disabled benefits. The plan no longer will lend funds to the provinces at preferred rates. Those proposed changes offer nothing to make the Canada pension plan self-financing. They do nothing to offer CPP premiums with tax cuts and do not encourage greater RRSP savings.
Canadians realize that it is imperative for them to begin planning for retirement in advance. More and more we see that Canadians are striving to ensure stronger financial security in retirement via retirement savings plans. However, it is becoming extremely difficult due to the rules governing RRSPs which are preventing Canadians from getting maximum potential returns on investment.
Restrictions on foreign content hinder diversification in a host of investment opportunities required to minimize financial risk. Our current government has twice reduced the annual contribution limits and is moving even closer to taxing RRSP savings. This is unacceptable to Canadians.
The current foreign content limit of 20 percent reduces Canadian pension earnings by about $700 million per year. If this rule is removed the market value of CPP could potentially increase by 20 percent to 25 percent. The side effect of a foreign content rule reduces the competitiveness of Canadian companies as they have less incentive to be efficient.
The proposed amendments to Bill C-2 raise questions as to the amount of money the current government can pull from the pockets of the middle class when at the same time it is cutting future retirement benefits. The Liberals have no overall plan for the retirement of Canadians. Honest working Canadians pay more today, receive less later and have less disposable income to do responsible planning for their retirement years.
We must not rush into a plan without clearly knowing what the long term repercussions are. The Canada pension plan must be fair and equitable to all Canadians.