Mr. Speaker, I am pleased to participate in this debate. We are discussing the future of our national retirement plan, the Canada pension plan.
The legislation was introduced after talking to Canadians. We asked them about their future and they responded. They asked us to preserve the Canada pension plan. They told us that they needed to know it would be there when they retired or if they became disabled. They also told us they wanted to see some changes. They asked for better financing of the plan. They asked for improved investment practices. They asked that the growing costs of benefits be slowed to ensure the long term stability of the plan.
The government has addressed those concerns. We have put forward a bill that has the support of each provincial government representing two-thirds of our population and three political parties.
I remind members opposite that the bill was first introduced in February 1997 and was a result of joint provincial consultations. It is a first class example of participatory democracy. I cannot think of a better testament to the government's determination to find a solution with broad based support. It goes to our commitment to building and working in partnerships as we confront the challenges facing us on a daily basis.
It is a shame that the governments of Saskatchewan and British Columbia could not see it as the only viable way to guarantee the future of the Canada pension plan, a program I know they value as much as I do.
The CPP is a public plan funded by employer and employee contributions. It is jointly managed by federal and provincial governments. The plan provides retirement pensions and a range of survivor benefits for a family in the event of death.
The Canada pension plan provides a fully indexed pension system. It provides replacement of a quarter of insurable earnings. It provides benefits that are portable and universal. It provides protection against periods of low or no earnings including years spent raising children. It provides benefits to workers who are unable to work due to disability, and death and survivor benefits including benefits for dependants.
Canadians told us they wanted their plan fixed now, not scrapped, not privatized. We have come up with a solution that is fair, equitable and balanced. I am proud to stand here in support of it today.
Our loudest critics are the members across the way. They claim we are ripping off the taxpayer, but the funds generated by this premium increase will not be put into a general revenue fund. They will be held for the sole purpose of providing future CPP payouts. While the fearmongers among us would have us believe this is a sinister tax grab, I remind them that these premiums are no less than a prudent investment in the future of retiring Canadians who are most in the need of this portion of their retirement income.
The critics say they have an alternative. Let us look at their alternative for a moment. Their super RRSP is a fully indexed tax deferred trust fund similar to the conventional RRSPs that promise to pay more with lower contributions, but their scheme does not take into consideration any volatility in the market. It assumes that all investors will make wise investments. It puts all the risks on the worker. It does not provide benefits for children. It does not provide a child rearing drop out provision and it will not provide indexation.
Reform has not indicated a clear plan of how it would implement the system. For example, what contribution would the employers have to pay, if any? How would they deal with seniors who are already benefiting from the CPP? Who would pick up the tab to provide protection for these pensioners?
Reform says it will guarantee benefits for current seniors, but it does not say how it will provide funding for it. Obviously workers will have to pay twice: once for their RRSP and once again to guarantee the benefit for current seniors. The estimate of the funding that would be required is $18 billion a year.
It has been suggested under their proposal that a retiree might collect $117,000 more over the course of 30 or 40 years, or about $25 a week. This scenario is only correct if they do not drop out, if they do not get disabled and if they actually make their contributions. Let us consider how many actually make RRSP contributions now. It assumes they invest wisely. It assumes they will not be ripped off by a disreputable financial adviser.
The cost to administer over 10 million individual RRSPs and insurance plans would be greater than the administrative costs of the CPP. In 1994 administrative costs of the CPP were $20 per contributor while the administrative cost of an RRSP plan are between $125 and $175. The administrative cost of the Chilean system the Reform holds out as being the model actually costs 10% compared with 2% for the Canada pension plan.
Reform would create jobs to profit the insurance industry and RRSP sellers, but it would not provide a better deal for workers. Under the Reform proposal workers would be asked to put all their eggs in one basket, one RRSP account. We support a mixed system where workers receive a basic benefit from the public plan. Under the CPP individual workers can add RRSPs for extra retirement income if they wish.
The Reform plan would require families to purchase separate insurance to cover disability and death benefits already provided under the CPP. This insurance would be expensive. Reformers do not tell us about that when they tout the effectiveness of their RRSP plan.
The Canadian pension plan is family friendly, something I thought the Reform Party cared about. Our plan covers people who leave the workforce temporarily to look after their children. It is a good example of how Canadians help each with special needs. Under the Reform Party everybody looks after themselves. The Reform Party stand on this issue contradicts its commitment to represent its constituents.