Mr. Speaker, this is my first opportunity to speak as the first member of Parliament for the new federal riding of Ottawa West—Nepean. I want to take this opportunity to thank my constituents for the trust they have placed in me to represent them in this Parliament into the next century and for generously sharing with me their ideas and opinions during the election campaign in June.
I also want to take this opportunity to pay tribute to the hundreds of thousands of volunteers across this country who worked in this campaign, whether they made donations, knocked on doors, printed flyers or put up signs. These are the people who keep democracy strong in this country and who make it possible for people of limited means to seek office and to serve in Parliament. This is an extremely important part of having a Parliament that represents the people of this country.
Half of my constituents are new to me. They have been represented since 1988 by Beryl Gaffney as the member of Parliament for Nepean. They are accustomed to a member of Parliament who is accessible, responsive and deeply involved in her community. I shall do my best not to lower the standard of service to which Beryl accustomed them.
Beryl's legacy to Parliament is also important. It is a reminder to all of us that we are not here to serve ourselves but to serve the greater good of our country and of humanity. She especially reminded us that we are here to speak for those who most need the support of a caring, compassionate society, for children, for the poor and for those around the globe who are suffering the abuse of their human rights.
Canada's system of retirement income is one of the hallmarks of a country that represents the values Beryl Gaffney espoused, a country that cares for its citizens in need.
Fifty years ago this country had a serious problem of poverty among its elderly. Since then we have built retirement income, old age security, guaranteed income supplements, the CPP and public assistance to the tune of $14 billion a year to people's private retirement savings which has ensured each and every Canadian a retirement income which allows them to live at a modest level of dignity.
Although Canada's system is one of the best in the world, major demographic and economic shifts are threatening its long term sustainability. In particular the number of seniors will escalate dramatically when the baby boom generation starts to retire. The proportion of seniors in Canada will rise from 12 percent today to 16 percent by the year 2016, which is not as far away as it sounds, and to nearly 25 percent of the population by the year 2040.
This is important because at the same time there is a growing proportion of seniors in our population, there will be a shrinking proportion of working Canadians. As we all know, the CPP is essentially a pay as you go system where the contributions of today pay the pensions earned in the past.
Security in Canada's retirement income system has been a key priority for the government. The reforms the government is pursuing in part with the legislation on the Canada pension plan today will maintain the three pillar retirement system. The reforms will strengthen each pillar to ensure that all Canadians, including those who will not retire until several decades from now, will have an adequate, affordable pension which they will be able to count on when they reach retirement age.
I represent a large number of seniors. One of my priorities in the last Parliament was to make sure that the views of my constituents were well understood and well represented to the government on pension reform. Along with good health care, adequate income is essential to a decent quality of life in retirement.
The level of public interest in this was demonstrated admirably when over 200 people turned out to an all day forum which I held in 1995 to hear from constituents of all ages. Those individuals have continued to be involved. We have kept them informed with follow-up meetings and mailouts on how the reform of the public pension system is developing. Those individuals have shared their opinions with me. They have let me know their views on what the government is planning to do. In turn I have kept the ministers and the prime minister involved.
Let me tell the House some of the things I heard at the all day forum. They have not changed their minds. They are a very consistent bunch, the people of Ottawa West—Nepean. They wanted to ensure the security of their income. Participants in the workforce also wanted to ensure that they could count on the Canada pension plan being there for them and being affordable throughout their working lives. They wanted an assured benefit when they reach retirement age. Those who are already in retirement wanted to be assured that their benefits would not diminish.
Over all, participants of all ages supported a publicly funded, reliable, sustainable pension plan which is affordable and which protects against inflation. The participants insisted that a public pension system is instrumental in promoting fairness and alleviating poverty.
They also understood the significant demographic changes in Canadian society which are creating the need to ensure the sustainability of the Canada pension plan for the long term. They were also very concerned that those who are already in or near retirement not be affected because they had based their retirement planning on the expectation that the CPP would be there for them.
The government as a whole also consulted with Canadians across the country. In co-operation with the provinces, hearings were held in 18 different cities. Over 270 individuals and organizations made presentations. Thirty-three sessions were held. There were another 140 written submissions and over 6,000 telephone comments from Canadians as we looked at how we could maintain our public pension system and what was needed to achieve that goal.
The result of these consultations and subsequent federal-provincial discussions is the legislation that is before us today with respect to the Canada pension plan. I should point out that the agreement reached was endorsed by eight of the provinces, the territories and by the federal government. Clearly we have a strong national consensus to act in the interests of Canadians.
Basically what we have is a three part approach to restoring the financial sustainability of the CPP and ensuring its viability for future generations.
First by increasing contribution rates now, they will not have to rise to the much higher levels predicted for future generations. Second we will improve the rate of return on the CPP fund by investing it prudently in a diversified portfolio of securities. The investment is to be managed by a new independent board at arm's length from the government. Third we will match the growth in cost to the ability to pay by tightening up on the administration of benefits and changing the way some benefits are calculated.
A number of the principal features of the CPP remain unchanged. First, individuals currently receiving pension, disability, survivor or combined benefits under the CPP will see no change in their benefits. Furthermore, people over the age of 65 as of December 31, 1997 who chose to begin receiving CPP pension benefits after that date will not be affected by the changes either.
Second, all benefits, with the exception of the death benefit, remain fully indexed to inflation.
Third, the retirement age remains unchanged.
The 9.9 percent contribution rate now to be introduced over the next few years ensures that the CPP will remain affordable for Canadians into the future. Canadians will not have to face the 14.2 percent contribution rate projected in the 1995 actuarial report on the CPP. I know there are some who would like to pretend that does not need to be done, that we can just wait and leave it to another generation to worry about the pensions 15 and 20 years from now. We do not believe that is responsible.
This legislation also ensures the continuation of full indexation.
The cost of keeping the CPP sustainable will be shared more equitably under the legislation. It will be shared among those who will benefit both in the short term and in the long term. We will not be carrying on paying out pensions now and leaving it to a future generation of Canadians to worry about how they will pay for their pensions then.
The fact that we will be reviewing the CPP every three years ensures us that we will be well ahead of any changes and able to address any problems that are developing on a more timely basis.
I want to talk about other approaches to pensions we have heard about in the House.
Reform has told Canadians that they want to throw away the CPP and set up some super RRSP system. But what the Reform Party cannot tell us is how they will do it or at what price and what will be lost.
The CPP provides more than just retirement pensions. It provides disability benefits to contributors who are no longer able to work for example. The CPP has other benefits that RRSPs do not have. For example the time that parents spend out of the labour force to care for their children does not diminish their CPP pension, but it certainly does diminish their contributions to an RRSP.
Members of the Reform Party would like to see the government phase out the CPP. What they do not tell Canadians is that if we decided to shut down the CPP today, we would still have outstanding obligations to current pensioners and those who will be paying into the system for the next 30 to 60 years. The cost of paying CPP's outstanding obligations on a year to year basis would be close to 8 percent of contributory earnings for the next 10 years and then 6 percent to 7 percent for the following 30 years, on top of the cost of setting up their new RRSP.
I want to talk about the rhetoric that has been adopted by the Reform Party and the Progressive Conservative Party in the House, talking about CPP contributions as payroll taxes.
This country has been built on the philosophy of sharing of responsibilities for one another, where we contribute. The CPP was set up as a contributory plan. Today's paid workers contribute to the CPP to pay the pensions of those who have come before them and who have contributed to building their hospitals, their educational institutions and the quality of life we now have in this country. These are employer and employee contributions. I am quite happy to leave the payroll taxes to the neo-Cons on the opposite side of the House.
There is some unfinished business in the legislation before us. One of the proposals that was on the table in the latest round of negotiations was mandatory splitting of credits between spouses in CPP.
We believe and it is legally enshrined in law in this country that the family is an economic unit. Both partners in that economic unit deserve to share fairly in the money that is earned during the course of the marriage, whether one partner is working in the paid labour force or working for free at home, or both are working in the paid labour force.
One of the provisions our government put on the table and which was supported strongly by the Government of Manitoba was to enshrine mandatory splitting of CPP credits. Much to my regret, and I challenged one of the NDP members on this earlier this morning, the Government of Saskatchewan and the Government of B.C. chose not to endorse this. In fact the Government of Saskatchewan specifically allows a woman to sign away her rights to split her husband's CPP pension. I am pleased to know that the issue of sharing pension credits between two partners in a household will be on the agenda two years from now when the CPP is revisited.
When federal and provincial governments conducted their cross-country consultations on the future of the CPP, Canadians were unequivocal. They asked us to preserve the CPP. They asked us to strengthen its financing. They asked us to improve its investment practice. They asked us to moderate the growing costs of benefits. They asked us to to keep it fully indexed.
I want to assure my constituents and all Canadians that this is not simply a cost saving measure. Our purpose is to ensure that Canadians have what they have enjoyed for 30 years, a publicly funded pension plan that allows everyone earning income—