Mr. Speaker, I am very happy to have an opportunity to say a few words on Bill C-2, an act to establish the Canada pension plan investment board and to amend the Canada pension plan and the Old Age Security Act and to make consequential amendments to other acts.
That is quite a mouthful but it is important that the people who are watching Parliament recognize that we are speaking to Bill C-2, about the Canada pension plan. The soon to come new seniors' benefit package, which has major implications for future retirees, will come at a later date but today we are talking about amendments that the government is suggesting to the Canada pension plan.
To put my comments in context I have two sons in their twenties. When I chat with them and their friends I hear that they are concerned about the future and whether there will be pension plan for them. It is fair to say that for a large number, in spite of the rhetoric and the promises that they hear, they are of the mind that there probably will not be a pension plan for them.
When we talk to seniors they are concerned about the future. I think it is fair to say that there will be a Canada pension plan in the future and those people who say that there will not be are simply fearmongerers. They are trying to appeal to people who feel vulnerable at the moment. But what we are doing today as a result of these proposals is to do whatever is necessary to ensure that the Canada pension plan continues into the future and that people in the following generation will be assured of a Canada pension.
That does not say that life is going to be great for people. Already we know that if people rely on the Canada pension plan and old age security as their sole income in their retirement years, that is a very modest income. As a matter of fact it is fair to point out that thanks to the public pension plan of Canada that the number of seniors living in poverty has decreased over the last number of years and I think it is fair to say thank you to the Canada pension plan, thank you to our pension plans generally.
But it is with a great deal of sadness that we have to admit that one out of every five elderly people in our country live in poverty. One out of every five people who built this country are living in poverty. I suspect that as active members of Parliament we are in touch regularly with seniors who are having a difficult time getting by, who are have a tough time making it on the meagre pensions that they receive.
I want to ask right from the start, are these changes to the Canada pension plan going to result in more money for Canada's seniors dependent on CPP? I am reluctant to say it but the answer is no, that people will actually receive fewer benefits in the future.
When we look at the various benefits that are attached to the CPP people can expect over the next number of years to have about a 10 percent reduction in the level of benefits. That is going to impose incredible hardship on a lot of people.
The cost of living increases every year, although modestly, and for retirees who are in trouble today financially, things are going to be worse actually in the future. That is what this legislation says. It is a modest reduction but nevertheless a reduction.
I want to go back and talk a bit about the Canada pension plan and how we got into this situation. It was established in 1966 to provide all members of the paid labour force and their families with a base on which to build their retirement income as well as benefits in the event of serious disability or death.
Again, let us just pose a question rhetorically, will people receiving death benefits get a better deal in the future? With this legislation the answer unfortunately is no. Will people with a disability get a better deal in the future? The answer to that as a result of this legislation is also no. The legislation makes it more difficult for people suffering from a serious disability to apply for and receive Canada pension plan benefits.
Is this something that we actually want to do as members of Parliament? If someone is experiencing a serious disability and is unable to work, do we really want to make it more difficult for them to receive benefits? And fewer benefits at that. There seems to be something wrong with some of the basic logic.
We also have to acknowledge the fact that one out of five seniors is living in poverty. We would like to see an increase in the CPP, but in fact with this legislation we will see a marginal decrease.
We have to ask ourselves what kind of a country we have that does not care well for its elderly. I forget who it was that said a few years ago that you can tell an awful lot about a society when you see how it cares for its children and its elderly. There are 1.4 million children living in poverty. One out of five seniors is living in poverty. We have a long way to go. I regret to say that this legislation will not improve the situation significantly.
Why was this legislation required? When it was set up back in 1966 the economy was different. There were some assumptions built into the benefit levels and the premium levels. Things have changed. We were informed, accurately so, that this plan could not continue as it is without getting into serious financial difficulty. I do not think there is a single Canadian who would argue against that. Canadians were calling on the government to change the system. They do not want to do away with the system, as some would suggest. However, we have to make the necessary changes to ensure that the Canada pension plan is there in perpetuity. To be fair, this is an effort by the government to do just that. Whether it accomplishes that is another question.
There are some good points and I want to identify them before I get into some of the concerns which New Democrats have. One is the fact that transparency will be built into the system. That is a positive feature of the legislation. Another is the fact that Parliament will have an opportunity to review the system's effectiveness on a regular basis. That is also positive. Also, seniors will receive on an annual basis a statement on the state of health of the Canada pension plan. That will be helpful. The fact that it does not touch existing seniors' packages is also helpful. People who are retired today will not have to be concerned about some of the matters we will be raising in the next few minutes because they will be exempt.
Yes, there are positive features to the legislation. Perhaps most importantly, it makes a serious effort to ensure the viability of the Canada pension plan. For that we must all be pleased.
What are some of the concerns? Of course we will address these concerns when the legislation is considered in committee.
One of the concerns we have is that it would appear that this may have a very detrimental impact on job creation in the country. If we take $750 annually in additional payments out of each person's pocket, that removes a lot of disposable income from our citizens. When $700-plus is taken for every employee in a firm, that takes a lot of money from that firm. It will take a lot of dollars out of Canadian communities.
I did a calculation for one of the communities I represent, the city of Kamloops. The amount of money which will be taken out of the local Kamloops' economy as a result of individual contributions and company contributions which match them will add up to approximately $80 million annually. That money will be plucked out of that one small local economy. It will not be there to circulate time and again between businesses and so on. That will make a very major dent into the employment situation in that community.
If we take that right across the country into every community, large and small, what will that do to those seeking employment today? Will it give them a better chance? The answer is no. What about those who are in insecure job positions today? Will this give them some confidence? The answer is no.
Will it give consumers more confidence to go out and purchase goods and services? The answer is no.
This has to be a concern. Do we know what we are doing when we pluck that kind of money out of a local economy, about $80 million annually out of Kamloops, B.C., once the program is fully into place?
As a result of the impact particularly on small and medium size businesses where I think it is fair to say times are not great for many, an increasing amount of underground economy will be encouraged. Employers will be more inclined to hire people on a contract basis so that they do not have to make contributions to the Canada pension plan.
I am not talking about only small or medium size. Some of the larger businesses in this city that hire thousands of people use that approach already. Many of their employees are now on a contract basis to enable them to escape payroll tax. It is a payroll tax by any definition.
I remember being in the House a few years ago when the Conservatives brought in five or six increases to the Canada pension plan. Every time the Liberals in opposition would rise in a howl about the increase in payroll tax.
Now the sides have flipped a bit and the Liberals are suggesting it is not necessarily a payroll tax. It looks like a payroll tax, tastes like one, smells like one, and probably is one. I think it is fair to say this is a major payroll tax increase. What impact will it have on the ability of the country to produce jobs?
Another concern we have as New Democrats is that changing the way the fund is invested from providing funds to provinces into an investment fund will have an impact on some of the poorer provinces of the country.
If some of the more wealthy provinces were not able to get lower rates from the Canada pension plan, they will go on to the regular bond markets. The poorer provinces will have to pay more for the money they borrow, which again will pose a hardship on certain provinces of the country.
We can look at the fund. We can debate its merits and the way it is constructed. The 12 person management board will manage funds in a very diversified portfolio of stocks and bonds including provincial bonds and so on. The anticipated cost will be about $500 million.
If we are to be providing a fund perhaps as high as $126 billion in six years, that fund generated by the citizens of Canada ought to go into helping those firms that will create jobs.
If the fund is invested in the safest bet it will probably buy a lot of bank stock. Will it actually help the Canadian economy by having the fund hold bank stocks?
We can look at the Quebec government plan. It has a very clear directive to the Quebec pension plan to invest moneys that will create jobs in the province of Quebec.
This seems to be a very honourable motive. If we as parliamentarians are to use $126 billion of taxpayers' money in a fund, it would not be inappropriate for us to say we want the funds invested in secure areas. After all it is a pension fund. It should invest in areas that will result in some additions to the economy in terms of new jobs, new research, various affirmative action programs or programs to assist young entrepreneurs or young people to enter the job market.
A very clear direction should be given from the Parliament of Canada that we want the fund invested in useful ways as opposed to a fund that will perhaps buy bank stocks which will have marginal impact on assisting the Canadian economy generally. That is another concern.
What does the fact that these premiums will increase about 73 percent over the next six years mean in terms of disposable income for people?
We are not convinced that a 73 percent increase is necessary. When members look back at the reports on which the present legislation is based, they will see that the government assumed the worst case economic scenario in terms of worst case interest rates, worst case inflation rates, worst case economic growth, worst case unemployment levels and so on.
I am not suggesting we should take the glorious side, but when making projections over a 20 year period it is fair to say that we should not always take the most pessimistic scale. We should take the medium scale or a scale that will be reasonable over that length of time. Then the increase in premiums could be significantly lower.
We have some serious concerns about the legislation. I emphasize the impact on those who are disabled. It will make it more difficult for people with serious disabilities to qualify for the Canada pension. Is this really the kind of legislation we want to introduce?
I suspect that most members of Parliament working in their constituencies inevitably spend a good deal of time with people who are having difficulty qualifying for Canada pension disability. We go to bat for people and help make their cases. Almost universally they are rejected the first time they apply. Then they try again. Many months go past with people living in a marginal fashion and then being either granted or denied Canada pension disability. The legislation will result in making the process even more difficult for people and the benefits less.
Is that really what we want to do? I think not. If people are taken out of the workforce through no fault of their own, either as a result of disease or an accident, and cannot provide for their family, will we as serious, caring, compassionate people make it tougher for them to qualify under the Canada pension disability program? This legislation says we will.
I do not know if we appreciate what a person receiving Canada pension plan disability would get. It is less than $9,000 a year. I would like to see anybody raise a family on $9,000 a year. The legislation will make it more difficult for people to access it and they will receive even fewer benefits.
Obviously I could talk about a number of other items. We will have an opportunity to raise these concerns in committee.
In closing, Canada is distinguished from many other country by the way we treat each other, the way we care for each other. It is fair to say that as a result of the old age security program and other pension plans like the Canada pension plan we can take pride in that fact major steps in the past have ensured that Canada's elderly are able to live out their lives in dignity.
With the changes being proposed, will that be the case in the future? I think of my previous colleague, Stanley Knowles, and many others who have worked hard to ensure that the standard of our plans in support of seniors continue to increase and improve. I wonder if this regressive step is appropriate for the government and parliament to take at this time. I obviously think not.
Next weekend I will be sitting down with my dad who is in his late 90s and my mother who is in her late 80s. They are probably listening to me speak today. I will have to tell them that we are looking at legislation that will result in diminishing their pensions. I know how they will respond. They are very generous people who live a very modest lifestyle. They will scratch their heads and wonder if we have gone crazy. Why on earth would we as a parliament want to make the lives of seniors more difficult in the future?
We live in the richest country in the world. It seems to me that all our seniors ought to be able to live out their lives in dignity. The fact that one out of five seniors lives in poverty is immoral and we ought to change that.
I urge members to gives some thought to the concerns my colleagues and I will be raising. Let us change the Canada pension plan to make it a plan for the future that will enable people to live out their lives in dignity. For goodness' sake, let us not amend the plan so that the lives of seniors will actually be made worse in the future.