House of Commons Hansard #39 of the 36th Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was cpp.

Topics

Canada Pension Plan Investment Board ActGovernment Orders

12:30 p.m.

NDP

Lorne Nystrom NDP Qu'Appelle, SK

This is very unfortunate, because it is my party.

Canada Pension Plan Investment Board ActGovernment Orders

12:30 p.m.

Bloc

Maurice Dumas Bloc Argenteuil—Papineau, QC

I see that the hon. member just realized we were talking about his party.

Canada Pension Plan Investment Board ActGovernment Orders

12:30 p.m.

NDP

Lorne Nystrom NDP Qu'Appelle, SK

You are a social democrat.

Canada Pension Plan Investment Board ActGovernment Orders

12:30 p.m.

Bloc

Maurice Dumas Bloc Argenteuil—Papineau, QC

The Canada pension plan must be adjusted to have a semblance of fairness that will be accepted by all generations.

Therefore, the earlier proposal made by the Reform Party to create a super RRSP is also unacceptable.

Under a system of super RRSPs, the government would have to guarantee a basic income for retirees, either through a minimum annuity or a separate assistance plan. In both cases, major costs would be associated with such a type of guaranteed minimum income. Again, the Bloc Quebecois never advocated the end of the Canada pension plan.

In my first speech on Bill C-2, I mentioned that the United Nations had declared 1999 the international year of the elderly, to pay tribute to our seniors. The theme promotes a society for all ages by developing greater public awareness regarding the essential role played by seniors in every field of activity. The international year of the elderly should promote the principles aimed at improving our seniors' quality of life by emphasizing autonomy, participation and care.

It goes without saying that the Canada pension plan is obsolete and no longer meets the public's requirements. I hope that, as the UN international year, 1999 will be special, because the Bloc Quebecois supports the objectives of the reform.

However, we urge the government to be very vigilant and to adopt the appropriate amendments.

Canada Pension Plan Investment Board ActGovernment Orders

12:35 p.m.

Reform

Garry Breitkreuz Reform Yorkton—Melville, SK

Madam Speaker, it always intrigues me when Bloc members wax eloquent about the Canada pension plan when in fact they do not participate in it. I want to respond very briefly to the comments of the Bloc member.

The member said that there are problems with the fund. He described the demographics and so on. The point that needs to be made is that if the fund had been managed properly, demographics would not matter. I wonder if that has ever occurred to those members. Because the fund was mismanaged the money will not be available for those who are looking forward to it as some security for their retirement.

The suggestions made by the Bloc and by the NDP will not fix it. There will be more government mismanagement. They already have their greedy eyes on that money. They are telling us how we should manage it, how we should lend it out at low interest rates and so on. That is what got us into this mess in the first place. More of that will not solve the problem.

The bottom line is that the proceeds should go to those who invested the money. They should have a say in how it is done.

If people looked clearly at what we are proposing, at the whole plan and not just nit-pick at little parts of it, they would begin to realize that is the most realistic solution to our problem with the Canada pension plan. It will take many years to roll it over to the point where people have control over the funds, but that is what we need to do. That is the bottom line.

As long as it is managed by the same people in government who have been managing it up until now, and as long as those people are giving directives and appointing people to boards to manage the fund, we are still going to have the same problem.

The Bloc says there is not the appearance of justice which there should be. We do not want an appearance of justice; we want the fund managed properly so that those who expect a retirement income will get it according to the funds they invested.

I was reading some of the articles which comment on the payroll tax hike we will have. One of the commentators said to kiss 176,000 jobs goodbye. My Conservative colleagues have made the point over and over again that this increase in tax will kill jobs. The evidence is right here. We have been saying the same thing. That has to be a consideration.

For a government that claims to be compassionate, to raise taxes even further and destroy more jobs is the absolute opposite of compassion. Those people over here on the left side who are advocating this have to realize that that is going to be a tremendous job destroyer.

Seniors who retired in 1976 got over $12 for every dollar invested. Young people today who are going to retire in 2041 are going to get 59¢ for every dollar they have in the fund. It is not their fault. It is not the fault of seniors who are getting a very high return now for what they have actually put in. Nor is it the fault of the young people who are going to retire 40 years from now that they did not get a good return. It is the fault of the government that has mismanaged it. For the Bloc to say we need more of that, to only tinker with it a little bit, is not the solution. We have got to have a solution that will serve us for all time. What has been proposed here is not that solution.

I reiterate that their analysis of this is flawed because if it had been done properly in the first place, the demographics would not matter.

Canada Pension Plan Investment Board ActGovernment Orders

12:40 p.m.

The Acting Speaker (Ms. Thibeault)

Pursuant to order made November 26, all motions in Group No. 4 are deemed to have been put, recorded divisions deemed requested and deemed deferred.

The House will now proceed to the debate on the motions in Group No. 5.

Canada Pension Plan Investment Board ActGovernment Orders

12:40 p.m.

Reform

Diane Ablonczy Reform Calgary Nose Hill, AB

moved:

Motion No. 10

That Bill C-2 be amended by deleting Clause 58.

Canada Pension Plan Investment Board ActGovernment Orders

12:40 p.m.

Progressive Conservative

Jean Dubé Progressive Conservative Madawaska—Restigouche, NB

moved:

Motion No. 12

That Bill C-2, in Clause 59, be amended by adding after line 33 on page 30 the following:

“(3) Any increase in the contribution rate referred to in subsection (2) for the year 1997, 1998, 1999, or 2000 shall not come into effect unless the cumulative increase in anticipated revenues under the Canada Pension Plan resulting from the changes in the contribution rate after December 31, 1996 are offset by at least a cumulative decrease in anticipated combined employer and employee contributions under the Employment Insurance Act for the years 1998, 1999, and 2000.

(4) The contribution rate for self-employed persons shall not exceed 10.25 per cent even if the Chief Actuary of the Office of the Superintendent of Financial Institutions, in preparing the report under section 115, is of the opinion that a higher contribution rate is warranted.”

Madam Speaker, this amendment concerns the rate of contribution to the Canada pension plan and accordingly to the employment insurance program.

We all know that excessive payroll taxes kill job creation. Small and medium size businesses are hit hard by increases in payroll taxes. We must encourage them to expand and not force them to limit their projects because they simply lack the means to hire the staff it takes to do the job.

The first part of our amendment would tie CPP premium increases to EI premium cuts. It would require that at least for the first three years, increases in cumulative CPP revenues from the combined CPP employee and employer CPP premium increases be at least offset by cumulative EI revenue decreases from combined employee and employer EI premium decreases.

We know that the government's internal reports show that the EI premiums could be cut to less than $2 and still cover the cost of the program. This amendment would ensure that at a minimum, higher CPP premiums are at least offset with EI premium cuts over the next three years.

We are deeply concerned about EI and CPP payroll taxes. We have been talking about this since the very beginning and we are not the only ones. Business leaders and organizations from across this great country have been telling the government the same thing. If we want to create jobs, start by cutting payroll taxes. Put people back to work. Give them the opportunity to make our economy grow. The government chooses not to do that. Last Friday it announced new EI premiums for the year 1998. While it had the opportunity to give Canadians a much needed tax break, the government decided to spin a mere 20¢ reduction in EI premiums as good news.

It is not good news to Canadians who have to foot the bill for an $11 billion tax hike with CPP premium increases. That is an $11 billion tax hike.

It is not good news to a small businessperson who come the new year will have to lay off people. It is not good news for the Canadian economy. Actually it may be good news for the Canadian economy, the underground economy that is. A lot of people will be forced to lay off because the cost of having skilled workers will simply be too high.

In the last election we heard the Prime Minister say during the campaign that he could see the light. I recommend to him today to turn on his lights and bring the cuts necessary so that employment in this country can grow.

To the extent that this can be done, increases in one program should be offset with decreases in the other. The current EI premiums are now set more than 50% higher than EI benefits justify. This year alone the EI surplus is expected to be $7 billion. Hello profit, profit on the backs of Canadian workers, profit that equals deficit as far as employment growth goes.

This is a shame and I sincerely hope the government will choose this opportunity to see the light.

The levels of contributions to the Canada pension plan are of grave concern to Canadian workers. This is why I think we must amend Bill C-2 by adding another paragraph.

I would, however, like to draw your attention to a small omission in the French version as it compares to the English one. The second line of subclause (4) should read “même si” rather than just “si”. This omission is important, because, as you will agree, it radically changes the meaning of the sentence.

Thus amended, the French text of the subclause reads as follows:

Le taux de cotisation des travailleurs autonomes ne peut dépasser 10,25 p. 100 même si l'actuaire en chef du Bureau du surintendent des institutions financières est d'avis, au moment de préparer le rapport prévu à l'article 115, qu'un taux de cotisation plus élevé est justifié.

As it stands, the bill, which affects almost all Canadians, permits an increase in contributions without new legislation. If we let that go through, we will be giving the government a blank cheque essentially. This is unacceptable.

What I propose is that we preclude any increase above 10.25% without a decision by this House on the matter.

To put it plainly, any increase over 10.25% would require new legislation.

This would mean the consent of the provinces was essential for any premium increase. The CPP cannot be changed except with the agreement of at least seven provinces representing 50% of the population.

Why this amendment? The answer is very simple. By their very nature, actuarial estimates are subject to error. Even if CPP premiums were to exceed 10.25%, there would be such a discrepancy between the basic actuarial estimates and those submitted to Parliament that there would automatically have to be a review.

If the government is serious when it says that amendments to Bill C-2 will keep premiums from climbing past 9.9%, it should not be afraid to ask Parliament to review amendments if the rate were to reach 10.25%.

It should also be emphasized that the fact of making it more difficult to increase premiums beyond 10.25% is not just the result of some bloodless number crunching. On the contrary. CPP premium rates have a direct impact on the lives of millions of Canadians, whether they are employers or employees. So imagine what is like for Canadians who fall into both categories.

Self-employed workers are hard hit by higher premium rates. They must shoulder the heavy burden of a combined premium. When there is talk of a 10.25% premium rate, the self-employed worker does not need a calculator: he knows he has to turn over $10.25 of every $100 earned.

Some people will perhaps say that the self-employed represent only a small proportion of the labour force and that, on the whole, this is not an issue of concern to Canadians generally. Wrong. It is indeed of concern to Canadians generally, increasingly so.

It is precisely about the 2.5 million self-employed Canadians that members should be thinking as they consider Bill C-2 and the proposed amendment. We have an obligation not to allow premium increases until the House has examined the consequences to Canadian workers, particular those who are self-employed.

Canada Pension Plan Investment Board ActGovernment Orders

12:50 p.m.

Bloc

Paul Crête Bloc Kamouraska—Rivière-Du-Loup—Témiscouata—Les Basques, QC

Madam Speaker, I am very pleased to speak on this amendment proposal, which addresses one of the main issues of the last federal election.

On the one hand, the government considers its reform as the best in the world and is completely insensitive to the plight of the unemployed.

On the other hand, while looking to reduce payroll taxes as much as possible, the Progressive Conservative Party does not expect, with this amendment, that the system could be improved in an effort to bring the employment insurance plan back down to human proportions by meeting a number of requirements.

If we read closely, this amendment means that, in the year 2000, the premium rate will be reduced by 80 cents per $100 of earnings. Should we go for it and adopt this amendment, we would effectively close the debate on possible improvements to the system in the interests of those who, as unemployed workers, benefit from it, and the Bloc Quebecois will not stand for that.

The position put forward by the Bloc Quebecois during the campaign, which we feel is, all in all, the most balanced, is that the employment insurance premium rates could be reduced by a reasonable yet substantial amount.

We note with interest that the government accepted the suggestion we made at the first meeting of the committee, which all party leaders attended, that the reduction should be at least equal to the amount by which contributions to the Canada pension plan increase in order to partly offset this increase.

There is something else that you should also reduce because you can afford to. There is a surplus in the EI fund, which is literally overflowing, a surplus that makes no sense and is only used to solve deficit management problems at the expense of workers and employers.

We therefore feel that premiums should be cut significantly. The Bloc thinks that premiums should be cut not only by the current 20 cents but perhaps by something like 40 cents so some money will go back into the economy and into employees' and employers' pockets. However, we should keep the option of improving the conditions of the plan open. The amendment before us would not do that. Worse, it would make it impossible to do so, because if contributions are reduced to a point where there is no more manoeuvring room, we will be asking workers to agree to live with the existing plan for the next few years when they lose their jobs.

In the latest federal election, if one message was sent to the government and to the opposition parties, it was that the people living in regions with high unemployment do not want the plan that turns workers into cheap labour. The former Minister of Human Resources Development said they profited by the system. This minister got the message from the NDP member here. The people gave the clear message that they did not want what the Liberals had done to the employment insurance plan based on the model the Conservatives had set up. They want something that will distribute wealth. The government talks about fighting poverty and giving more money to poor children, but most poor children have poor parents.

One of the best ways for the federal government to reduce poverty is to put money back into society. The unemployment insurance plan was not set up just to impress the unemployed. It was set up to avoid a repetition of the depression of the 1930s by distributing wealth among the people. The people creating the wealth—woodworkers, peat producers, fishers—all keep the economy moving. They often work in sectors offering only seasonal work.

Our society and our country must recognize the need to assure workers in these sectors of a decent living if we want to sustain these economic sectors.

The proposal on the table, which in part deals with the necessity of decreasing contributions, goes much too far in ensuring that there is money left in the system to improve the conditions of the unemployed. The Liberal Government must not, under any circumstances, be handed the perfect excuse to say that Parliament has passed an 80 cent decrease, so nothing more can be done for the people concerned.

Basically, this proposal sort of closes the circle. The Conservatives undertook unemployment insurance reform some seven or eight years ago. The Liberals came into power announcing they would change all that, but they went even further than the Conservatives.

It was very surprising, and I recall it because I was in Montreal at the time, three or four years ago, to see 30,000 people demonstrating on a day when it was 30 degrees below zero. The demonstration was attended by federal Liberal MPs then in office who marched with us to show that the Conservative reform made no sense.

The day after the Liberals came to power, they continued along that path with a vengeance. And now they are being told by the voters that there is no way they can talk out of both sides of their mouths like this.

A clear message must be given to the Liberal government: unemployment insurance must be changed so that the fund can be properly monitored, allowing premiums to be at a level that would yield a reasonable surplus so as to improve the conditions of the unemployed.

The Conservatives' proposal is along the same lines as the Mulroney government's reform, that is to level the situation of workers as much as possible so that they will be increasingly available to work as cheaply as possible. Doing so is following along the same lines as in the United States where unemployment insurance is at 50%.

In Canada, we have gone from 65 to 55 and someone affected by the rule under which for every 20 weeks used a person will lose 1% of benefits, will have the dubious pleasure of getting down to the U.S. level.

This is not a choice we want to make. I do not think it can be the choice of a society like Quebec. It cannot be the choice of a society like Canada. We must take care not to end up with our hands tied behind our backs preventing us from improving the conditions of our unemployed. The necessary leeway must be there, and that is why we are going to vote against this amendment.

Canada Pension Plan Investment Board ActGovernment Orders

1 p.m.

NDP

Yvon Godin NDP Acadie—Bathurst, NB

Madam Speaker, first, I will be voting against the amendments and I will give my reasons why.

I believe, as I said a while ago, that this started with the Conservatives and has continued under the Liberals. They still have not learned their lesson. That is not what Canadians and the working people are asking for.

They want to mix employment insurance premiums with Canada pension plan contributions so they can tell people how much money they can save on their paycheques. I have never seen workers in Canada out in the streets demanding decreased contributions. I have, however, seen employers demanding this.

We must not forget what I sincerely believe is happening in our economy, the reasons our small businesses are experiencing difficulties. In the June 2 election, no small business in our part of the country claimed that it was because they were paying too much in employment insurance premiums. What they did tell me was that there will be nobody left who can afford to buy anything from them, the way the employment insurance system is going. This is why small businesses are closing.

We have to back up and look at what really hurt Canadians and small businesses. If there is no one buying what a small business is selling, the negative effect on the system is far greater than the contributions. People working can pay their contributions. When they are not working, they cannot.

Our system in Canada is running amok, and we have not yet finished paying. We have not finished paying for what we is going on. I listen to what the people at home are saying. I can tell you that it was not only people working who voted for me. Small businesses worked for me and believe in what I say.

The change to the unemployment insurance system began with the Conservative government and was continued by the Liberals. My predecessor said, when he was in opposition, “You are going to create a mess in New Brunswick. I encourage all New Brunswickers to fight any changes to the unemployment insurance system with vigour, because they will spell disaster for New Brunswick”. That is what my predecessor Doug Young said at home. Do you know what our people said? “Mr. Young, we will show you the door, because you have done our region damage”. I say to my colleague that he should think about what he says and that it is not the rates that did the most harm.

I have a problem with the way these things are considered. In other words, we will have to improve our employment insurance system. The focus must really be on job creation and when it is on real job creation, the system will automatically cost less, because there will be fewer people on employment insurance, contributions will decrease and it will all happen.

I think that is what we must look at. The Canada pension plan is expensive at present, but we could perhaps consider alternatives for the Canada pension plan.

I have nothing against the fact that a person who is sick or injured will receive a disability pension, provided this person does not work for a company and the disease or injury is not work related. But I do have a problem with a person who works for a company and pays for compensation, as we call it where I come from, who, one year after having been injured, is asked to apply for the Canada pension plan. Because in that case the CPP has to pay first, when another plan should perhaps be paying for that, especially when the person in question has an employer.

Instead, benefits are paid out of the Canada pension plan for any accident that happened on the employer's premises. The compensation plan only covers the difference between the two plans. Perhaps we could take a look at this, at having employers make their businesses safer places where fewer accidents happen. It might save money.

How many Canadians are receiving CPP disability benefits today when the company that employed them should perhaps be held financially responsible, if the accident happened at the workplace. But that is not how it goes.

My point is that we should look at the whole picture and see how CPP money could be saved by making those responsible pay. Next, we should look at employment insurance and see how small business people can have enough money left to run their businesses.

Canada Pension Plan Investment Board ActGovernment Orders

1:05 p.m.

Progressive Conservative

Mark Muise Progressive Conservative West Nova, NS

Madam Speaker, there are those who think there will no longer be a government pension in a few years. The birth rate is dropping and life expectancy is increasing. As a result, the number of people receiving pension benefits is going up and the number of people paying into the plan is going down.

Our pension system is losing ground and in need of changes. We want to put it on a rock solid footing. We are working hard to ensure that all Canadians will receive a pension when they reach retirement age.

In order to understand the impact of our amendment, let us take a look at the pension system in general. There are three components. First, there is the basic income received by every resident of Canada: old age security and the guaranteed income supplement. Second, there is income based on work earnings: Canada pension plan, or CPP, and Quebec pension plan, or QPP. Third, there is income paid by an employer or drawn from RRSPs.

The Liberal government is proposing a program to improve the system. It represents, however, a large threat to the three components of the existing system.

The Liberal government is creating the seniors benefit by combining old age security and other seniors benefits. Low income seniors will thus be getting a bit more than before: a meagre annual allowance of $120 will go to the least well off; and too many retired Canadians will be living under the poverty line. In addition, middle income seniors could lose up to $7,000 annually.

The Liberals will increase contributions to the CPP by $11 billion, one of the largest tax hikes in Canadian history. No tax relief is planned by way of compensation. In short, workers will have to pay more, and young Canadians will have to foot the bill for mismanagement of the plan for years to come.

They discourage people from putting their money in RRSPs or in private pension plans. The Liberal government reduced the tax deduction available when investing in a RRSP, and it continues to impose restrictions on authorized pension plan investments.

We think we have a better idea to improve our pension system. For the time being, we must limit ourselves to amending the government's legislation. But, before amending seniors benefits, we would like all Canadians to have a reasonable period of time to examine the effects of the proposals and to express their views. We want to make sure that the pension system reflects the values dear to Canadians, rewards them for their hard work and encourages them to save for their retirement.

We want to improve the administration of the Canada pension plan. In order to do so, we want to provide a sound financial basis for the plan, to make up for the increase in contributions by lowering taxes, and to encourage people to put more money into their RRSPs.

The Canada pension plan is an essential element of our social safety net. We want to maintain it. The Canada pension plan needs another $600 million to fulfil its obligations to tomorrow's retirees. The CPP must be saved. It must be properly managed by a board whose members would come from the business and financial community and have no ties to the government.

We must increase contributions to the Canada pension plan, so as to ensure its financial viability, but we must also be cautious not to penalize young workers. The increase should be compensated by tax reductions in other areas, such as employment insurance contributions. The employment insurance fund has a $13 billion surplus. Combined with the $11 billion increase in CPP contributions proposed by the Liberals, this surplus represents a huge tax grab by the government.

Governments should encourage people to save for retirement. They should not penalize those who do it. I support policies that help Canadians get the best possible return on their investments in RRSPs and that include as few government restrictions as possible. This means a guarantee that the funds protected in RRSPs will not be taxed, as long as they remain in these RRSPs. It also means allowing a higher percentage of foreign investments in RRSPs.

We have no choice but to conclude that our pension system is in a sorry state and that something must be done. Any system, either new or improved, should be based on the following principles: long term viability; sound management free of any political interference; fair contributions regardless of income; and built-in incentives designed to encourage people to look beyond the Canada pension plan and to put more money aside for their retirement.

These amendments seek to improve the bill so that it can meet these objectives. I urge members to support our amendments.

Canada Pension Plan Investment Board ActGovernment Orders

1:10 p.m.

Bloc

René Canuel Bloc Matapédia—Matane, QC

Madam Speaker, the Bloc will obviously be voting against this amendment because, as my colleague has stated, we want to go much further.

I am surprised that such an amendment is being proposed today. I find this surprising, coming from the Conservatives. Why do we have to discuss this today, instead of discussing full employment?

The employment insurance, of course, should be protected; I agree. Contributions should be reduced, of course; I agree.

Why is it that in my area, in the riding of Matapédia—Matane, there are so many unemployed workers? It is because there are no jobs. Why is it that there are no jobs? It is because the Liberals, beginning with Mr. Trudeau, created such a debt for Canada—the Conservatives continued afterwards, but they slowed down a bit—that we have to earmark billions and billions of dollars every year to pay for that debt. Because of this, it is obvious that everyone is backed up against the wall.

Today, we are being told that pensions have to be protected. But when workers have almost nothing left on their pay, how do you expect them to go out and buy things? Even small businesses, which have to pay such high contributions, often have to lay off several employees, and these receive employment insurance that I would call poverty insurance, while the owners of these businesses have to work 18 or 19 hours a day.

That is the real problem. There has been poor management for 30 years, and now, they are waking up all of sudden and saying that this is most unfortunate, that this is painful and that we have to protect the elderly and also the people who, because of circumstances, have to rely on employment insurance.

At the same time, here are the Conservatives wailing and arguing that contributions have to be reduced. But it is the Conservatives and the Liberals who put us in this mess, into this gaping hole. Today, they are waking up and saying “We have to wake up”. But the Conservatives are saying that we have to wake up because they are part of the opposition. When they are in office, they say the same thing, it is more of the same, as you know full well.

Why? I have said this before and I will say it again, today. It is because their campaign coffers are full and, when they are in office, they do not even have to ask for money; it just pours into their coffers. When the Conservatives are in office, their coffers are full too and, as a result, their hands are tied.

I can tell you, we have always said we were willing to help workers. We are willing to take to the streets with them. I went to Rivière-du-Loup, Amqui and Matane, where I took to the streets with workers in the riding of Matapédia—Matane. Now we have two new RCM, Denis-Riverin and Avignon, and they are not the richest in Canada. I will be with these people because they want to work. These people have intestinal fortitude. Quite often, they are responsible for large families and have nothing. When they start working, the premiums are so high they are already strapped for cash. They cannot put a few dollars in the bank for the few months that are difficult for them.

You know, when a father works only to get his stamps and that, quite often, they are small stamps, it means abject poverty for his children. It is not because people do not want to work, you know that very well. People want to work, but there are no jobs.

When we ask the government to help small and medium businesses, there are so many factors that come into play in handing out some money that some always end up being struck off the list, and told “No, this does not match the criteria”, “No, sir”, “No, madam”, and that is the way it goes.

So, for this amendment to be ordered, if I can put it that way, by the Conservatives, it is somewhat hypocritical, I would say. They are trying to make amends. When they were in office, they should have taken some action to create jobs.

Canada Pension Plan Investment Board ActGovernment Orders

1:20 p.m.

Reform

Diane Ablonczy Reform Calgary Nose Hill, AB

Madam Speaker, there are actually two amendments in this group. I would like to speak mostly to Motion No. 10 which was introduced by me. It would strike clause 58 of the act. I am sure that does not enlighten many people.

Essentially what clause 58 does is make the contribution rate increases retroactive. A small portion of the contribution increase to CPP will actually kick in for our 1997 obligation. Of course here we are at nearly the very end of the year talking about legislation which will make Canadians' tax bills for this year higher than they had anticipated.

In our view that is very unfair. It is taxation by stealth. It is something that will be a real hardship for Canadians to have to go back and pay something that they had never anticipated having to pay. Not only will it put their budgeting out of whack but it also will be paper work grief they do not need.

I would like to refer to one example of how clause 58 will impact on at least one sector of the economy. That is with respect to the people who provide temporary services. These temporary services are used by businesses and by government during peak work periods for special jobs or projects, when permanent employees are ill or on vacation. Some of the temporary services provided are office administration and support, data and word processing, industrial, marketing, technical, financial, professional and health care services. So there is a wide range of Canadians employed in this area of temporary employment.

In fact, it is a major entry level for recent immigrants to Canada and also for workers returning to the workforce after an absence. A lot of students are involved in these kinds of temporary employment opportunities and so are recent graduates.

Also retirees and older workers who are moving into retirement are attracted to temporary employment opportunities. So it is fair to say that companies that offer jobs and opportunities for temporary employment are major Canadian employers.

What is going to happen with this retroactive increase that the government is trying to put into place is this. The 1997 contribution rate was 5.85%. If this bill passes the contribution rate for 1997, that is from January 1, 1997, a year ago almost, will go up to 6%, a retroactive increase.

The government will argue that is just a few dollars and it really is not going to make a whole lot of difference. But if we take an increase like that and make it retroactive and put it back on employers, because they have to pay half of this, that can significantly affect their bottom line.

The case of the temporary help industry is just one example. There are other businesses affected very adversely but I will give this example. The payroll that is paid to employees by temporary service employers accounts for about 75% to 85% of the firm's revenue, and that is a lot greater than some other industries. For example, the financial services sector pays only 9% of its expenses to payroll paid to employees. For some businesses this is a significant portion of their cashflow.

Increases or decreases are usually announced in advance of the date at which the rate takes effect. That gives businesses adequate time to adjust.

However, this 1997 CPP rate is an increase, as I said, after the existing rate was confirmed a year ago. What we have is a contribution rate that is going to cost one sector of the economy millions of dollars, and this will take a big bite out of its expected profit and cashflow. These businesses refer to the rate as punitive.

What they did was enter into contracts for 1997 based on their expenses being at a rate of 5.8%, their CPP contribution rate. Now they are going to have to pay 6% and they will not be able to pass the added cost of the rate increase on to their customers. The profits these companies are making are going to be put at risk.

These are companies, as I said, that hire some of those vulnerable workers in our society. Yet what the government is doing in this retroactive tax grab is causing a real hardship to at least this sector of the economy, and it is only one example. There are others but time does not permit me to go into all of them.

There is another consideration that I will bring before the House. This retroactive rate increase is going to be a real administrative cost. What will happen is that, interestingly enough, for governments that use temporary services, companies by law are able to change their bill if there is a retroactive change to the payroll burden. What will happen is that service firms will have to go through their payroll records for every employee, for each assignment that employee had, and prepare invoices to add on this retroactive 1997 CPP rate increase. That invoice will then go to government clients. Then the government will have to go back and double check to make sure that these temporary people were hired on, to make sure that the amounts are calculated correctly and to make up cheques to send back to pay this retroactive rate increase.

It is an administrative nightmare, and it is simply because government did not have the foresight or the administrative expertise to bring in these changes in a way that was fair and reasonable and could be handled with the least disruption possible to the people it affects.

These amounts, we think, should simply be collected another way, if they have to be collected. They should not be collected in a way that is so costly, so disruptive and so unfair to the people they affect. Just because government cannot get it right does not mean that other people should scramble around and have to pick up the ball.

That is why we proposed that clause 58 which brings in this retroactive tax increase be struck and that government go back and find other ways to make up this amount if it feels it has to do it. It is not fair to people who have to pay the freight to do it this way. It is poor form. We really urge the government not to do this to people.

I hope the examples I have been able to give will be persuasive that this is not a compassionate thing to do. It is not a fair thing to do. It is a real hardship. We hope that this amendment will pass.

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1:25 p.m.

Progressive Conservative

Greg Thompson Progressive Conservative Charlotte, NB

Madam Speaker, I support the amendment just brought forward. The member is absolutely right.

Basically what we are talking about is retroactive taxation which I think most of us on all sides of this House would find most unsavoury. What it does is eat away at government's capital in the sense of confidence.

I do not think most Canadians can accept that. It means that at the end of the taxation year we are going to have to ante up more money for the government.

How many of us going into 1997 thought that was going to happen? I would submit not very many Canadians would expect the government to bring in a bill that is going to add to contributions already paid. There is something wrong with that.

The reason the government has the problem with regard to the Canada pension plan is that it simply failed to deal with that reality over the last number of years. Having failed to deal with that reality, it has to make up ground. Let us take a look at some past administrations. The person who comes to mind is a prime minister who was here long before our time, Mackenzie King.

That is what this government reminds me of, that type of leadership. I think if I could summarize how Mackenzie King operated, he operated on the basis that if someone waits long enough the problem will go away.

I think the present Prime Minister operates under that same formula. If you wait long enough, the problem will go away, so let's not touch it, let's not deal with it, because if you deal with it, it means that you would have to exercise that rare commodity that we call leadership.

When they took office in 1993, that was a problem facing them as a government. If they took a look at the numbers today, what they would have to do to fix the problem is multiply it tenfold.

Had they dealt with the problem in 1993, the exaggerated rates of payment or the premiums that all Canadians are going to pay would have been much less. They were operating on the premise that no, we do not have to deal with it today, the problem will disappear. It has not disappeared.

I think any financial analyst and anyone with any kind of thinking mind at all would have told the government then that the problem would not disappear, and they did. Canadians were warning the government what would happen.

Some of them were in this House. It could be the member standing and speaking because we all knew what was going to happen. The sad part about this horrendous increase in these premiums is that it is the young Canadians who are going to be paying the price for the present government's mistakes.

That is the tragedy in the whole equation. None of us mind paying our own way and that is the way it is supposed to be. However, the present CPP pensioners deserve what they have. None of us argue with that but the unfunded liability in the CPP amounts to $600 billion. That is spelled with a b , $600 billion.

Basically what we have now is a pay-as-you-go scheme that is quickly going broke. The demographics and the age differences and percentages in terms of the individuals who are retired now and the number of individuals working, that equation just will not support the system.

In future years that equation is going to be weighted too much on the retirement side. Again, the government knew that this was coming. It is like a freight train. It could be seen coming down the rails. The light is there. It is on the track. It is coming.

A collision can either be avoided by drawing back or by doing a number of things, but the government chose not to do it. Now we are looking at the most regressive of all legislation I think to enter this House in a number of years.

We are talking about a huge tax increase.

We can talk about it as being a premium, but anything that comes out of our pay cheques at the end of the week is a tax no matter how we want to word it. What this is is a hidden tax. It is a silent killer of jobs.

What we are suggesting as a party, and a responsible position, is that the government over the last number of years has built up this huge surplus in the unemployment insurance fund. Right now it has a surplus of about $12 billion, and that is spelled with a b as well. What is the government doing with that? The finance minister is using it to fudge the deficit numbers.

What we are suggesting is to simply reduce the unemployment insurance premiums that are paid by all Canadians. In all fairness to the government, it reduced it by a mere 20¢ last week. However, it could be reduced by at least 70¢ or 90¢ if it wanted to but it chooses not to do it because it wants to use those numbers and that fund for its own political purposes.

The finance minister is certainly not going to let the minister responsible for the unemployment insurance act or CPP use any of those funds other than for debt reduction or deficit reduction which is where the unfairness lies. If the government took those moneys today and said “Let's reduce the amount that we are paying into the EI fund, it would neutralize those increases in the Canada pension plan”. At the end of the day the workers in your constituency and the workers in my constituency are going to look at their pay cheque and it is going to be the same.

In other words, what we need is a reduction in some of those other taxes to offset the increases in the Canada pension plan. We cannot be totally naive. The government has put off the problem for five years and the problem has now compounded to the point where it has to go in there with a big hit.

I am going back to where I opened my remarks in this debate. It is like the old Mackenzie King philosophy: Wait and the problem will take care of itself. It has not taken care of itself. The government has provided no leadership at all.

In regard to the motion we are speaking on, I support that amendment in the legislation which would eliminate the retroactivity that is going to hurt every working Canadian in this country.

I am going to get off the topic a little bit. Yesterday in question period I and some of the other members had the same question for the health minister. I am going to point this out because it is the lack of leadership in solving a problem that we are talking about.

Yesterday I mentioned to the health minister the need to address the 12,000 hepatitis C sufferers in Canada as a result of the incompetence of the federal government to recognize a problem a number of years ago. The result is that we have 12,000 Canadians infected and compensation has to be paid.

Canada Pension Plan Investment Board ActGovernment Orders

1:35 p.m.

The Acting Speaker (Ms. Thibeault)

The hon. member Parliamentary Secretary to Minister of Finance on a point of order.

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1:35 p.m.

Stoney Creek Ontario

Liberal

Tony Valeri LiberalParliamentary Secretary to Minister of Finance

Madam Speaker, I am sure the member does realize what I am going to say because I would expect that the member knows in fact what we are debating this morning and also understands the rules that are in effect at report stage. I would only ask the member, through you, Madam Speaker, to respect the rules of the House and continue his debate with respect to the motions that we are debating.

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1:35 p.m.

Progressive Conservative

Greg Thompson Progressive Conservative Charlotte, NB

Madam Speaker, I knew this was coming because the one thing the Liberal Party does not want to do is deal with the truth.

The point I want to make is simply that the Liberals dilly-dally on every single issue and problem in Canadian society. They are in office to deal with these problems today. It is like the hepatitis C sufferers. We need compensation for them but again they postponed that decision for five years and postponed CPP decisions for five years. These problems just compound and multiply. By the time they get ready to deal with it, it is blown completely out of proportion. That is what they have done with these CPP premiums that you and I and all Canadians are going to pay. It has been completely blown out of proportion.

I object strenuously to the type of bill that they want to introduce here to deal with the problem today.

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1:40 p.m.

NDP

Lorne Nystrom NDP Qu'Appelle, SK

Madam Speaker, I want to say a few words on the two motions before the House in the name of the Reform member from the Calgary area. I concur with much of what she said in her remarks.

The member wants to eliminate clause 58 of the bill which calls for the CPP premiums to be made retroactive to January 1, 1997. The CPP premiums now are at 5.85% and once the bill goes through they will be increased to 6%. The employer will pay 3% and the worker will also pay 3%. However, we are still on the old regime of 5.85%. When this goes through the House and the Senate has given royal assent, part of the law will make this retroactive to January 1, 1997. So it is a retroactive premium or assessment. Some would say it is a retroactive tax on both the employee and the employer. Doing this retroactively is something that I am very uncomfortable about. It is like closing the barn door after the horse has already gone.

I do not think that assessing someone retroactively has been done very often by Parliaments. There seems to be something a bit unjust about it. People plan their lives, draft their personal budgets, businesses draft budgets and make plans according to a set of rules.

In general I guess people have been notified that this is going to happen. I am sure we could go out on Wellington Street in Ottawa or on Albert Street in Regina or the big main street of Thompson, Manitoba, and ask the first ten people who go by whether or not they were notified that there is going to be a retroactive increase in the CPP. I think of those people, all would say no, they were not aware of it, despite the fact that they have a very good MP from Thompson who notifies them of absolutely everything. I think that is unjust. I am happy that the amendment is before the House.

We might say that the increase from 5.85 to 6% is not that much. In many cases it is not because it is split between the employer and the employee. However, for some families and people living on the edge with very low wages, even an increase of a few dollars a year will be meaningful.

The other problem will be on the employer's side. A group of people came before the committee to make their case about the difficulty of collecting money retroactively from temporary help agencies. They are very, very labour intensive. Most of their costs are going to salaries, to labour.

They talked about the expense and the difficulties it would create for them as employers, the red tape, the bureaucracy and the bother and how tedious and cumbersome it would be. In some ways maybe the cost of doing it would be even more than the money they would collect from the federal government.

My understanding is that the federal government would have dropped the retroactivity part of this, but at a loss of about $400 million. That may sound like a fair amount of money, but the cost of collecting the money is going to be several million dollars as well. It might be wise for the government to consider not making this retroactive.

If we are concerned about money in the CPP fund, the most important thing we should do is make sure that we have a strong economy, jobs in the country and income growth, because when people are working they are going to be paying into the CPP. That is the way to raise the money, enlarge the fund and make the Canada pension plan sustainable. I do not think we can do it by making it retroactive, which people are not anticipating.

It is fine to say that people were notified, but I am sure there is scarcely a soul out there, including a lot of businesses, who realize this has to be done on a retroactive basis. That is going to cause needless hardship for Canadians across the country.

This is an example of an amendment which should be looked at seriously by the government. If it were to move in the direction of eliminating the retroactivity, it would make good sense. It would be good politics and would restore faith in the democratic system. It would indicate that parliamentarians do indeed listen to the people.

The second amendment before us today was moved by the Conservative Party and would attach EI premiums to Canada pension plan premiums. As much as the intent is positive, I would not support this amendment as part of the statute changing the Canada pension plan.

That being said, I believe the increase in CPP premiums of 73% over the next six years is too steep. It will be a hardship on Canadians. It is not progressive; it is regressive. The very fact that the government is eliminating the indexation of the basic yearly exemption which is now some $3,500 makes it even more regressive and more difficult for low income people.

These are hardships. The premiums are going up. To attach CPP premiums to EI premiums is not the way to go.

Instead the government should have listened to what it heard in British Columbia and Saskatchewan. It should have listened to what it heard from the trade union movement, the progressive people across the country, and made the contributions more progressive. It should have continued the indexation of the yearly basic exemption.

In 1966 when the CPP originated, the yearly basic exemption was around $400. It was then indexed to the inflation rate. It has moved from $400 to about $3,500. This means that low income people have progressively been receiving a higher exemption. That has been a positive step in keeping this plan a bit more progressive. Now indexation will stop. It will remain at $3,500 for the next 5, 10, 20, 30 years and every time the inflation rate rises the plan will be a bit more regressive. It will be a bit more difficult for low income people in this country.

That is wrong. It is unfair. If I remember correctly, I believe that the Minister of Finance as much as acknowledged that in committee three or four weeks ago when he said that this should be on the agenda when the CPP is reviewed in the year 2000. I hope he does that. I hope there will be a change to once again index the basic exemption to make the premiums more progressive.

On the other side we have the employment insurance premiums. There was a bit of a reduction announced last Friday by the federal government. It was a small reduction. It was a step in the right direction, but the reduction should have been higher. There is now a big surplus in the EI fund and there should be a reduction in the premiums to help working people in the country. It would also help the business community in Canada, particularly small business.

I do not think we should be tying one to the other in this legislation. The government should keep both items as separate files. On the one hand the government should reduce EI premiums. That would put more money into the pockets of ordinary people. It would allow the small business community to create jobs. On the other hand the government should ensure that we have a more progressive Canada pension plan premium.

If we listened to public opinion, listened to what the people are saying, they would agree that these funds should be handled separately and that they be handled for good social reasons and for reasons of progressiveness in our income tax system and progressiveness in our social policy within Canada.

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1:50 p.m.

Bloc

Antoine Dubé Bloc Lévis, QC

Madam Speaker, I am pleased to have this opportunity to speak to this issue, especially to add to these statements we have just heard on Motions Nos. 10 and 12.

These two motions have one thing in common. The present pension plan is inadequate, it has insufficient funds for the long term. If this decision is delayed, it is the future generations that will bear the impacts. This is unacceptable.

The amendment proposed by the Conservative Party attempts to link the reduction in contributions to employment insurance. From the point of view of business, this makes sense to a certain extent, because it would offset any increase in their payroll taxes. However, going as far as the Conservatives would like us to go can perhaps jeopardize the employment insurance program and have an effect on this program and also on the positive aspects of these initiatives.

We already know that the reduction in employment insurance benefits has had an effect. Repeat claimants are affected by seasonal unemployment and have to bear a 1% reduction of their benefits. It is not their fault if there is seasonal unemployment.

We have to be careful with this because it can affect the program. I used to sit on the human resources development committee, and we in the Bloc were opposed to changes in the employment insurance system. Today, we are still constantly reminding the government that it made an error, that it went too far in its cuts to employment insurance.

I would like to come back to the Canada pension plan. The situation is a bit similar, the fund has to be sufficient to provide for the future. A Quebec success story is often mentioned, the Caisse de dépôt et placement. It has been in existence for at least 25 years, and it has had positive results for Quebec.

This bill will allow among other things to manage this money by creating a fund, and this would be more efficient. It would allow an increase in assets and ensure the future of the Canada pension plan for ordinary citizens.

People can talk about payroll taxes, but often these taxes exist for the benefit of the whole population, especially the underprivileged. As you know, it is not everyone that can have access to a pension fund through the workplace. Not everyone works for the government, for a municipality or for large companies that have pension funds. There are people who cannot benefit from these.

There are also people who, because of their family obligations, like single mothers, do not have the opportunity to contribute to RRSPs and to plan for their future, when their children will be grown up and will have finished their studies, etc. Very often these are people who have few assets, and this plan allows many people who are less fortunate to know that they will at least have a basic minimum for their retirement.

We have to be careful when we touch this. The people concerned form a very large part of the population. Very often, they are the less fortunate, the underprivileged in the system. I think that the government acted too slowly in proposing better contributions in this area.

Any amendment that proposes to slow down or reduce rates and to improve the management of this fund to better plan for the future in the interest of future generations is worth considering because such action is urgently needed. However we, in the Bloc Quebecois, oppose Motions Nos. 10 and 12, especially since Motion No. 12 has a connection with the employment insurance.

As I said, we believe that the employment insurance plan is a plan that was considerably thinned down by the Conservatives. We remember the impact of the cuts made by Minister Valcourt, who lost his seat in New Brunswick. The Conservative government was severely criticized for its lack of compassion for the unemployed. In spite of their promises, the Liberals did the same thing during their last mandate. They too got their just reward; in the maritime provinces in particular, where seasonal unemployment is widespread, election results spoke volumes. Voters made it clear first to the Conservative Party, then to the Liberal Party, that they should be careful.

We, in the Bloc Quebecois, will not be counted among those who wish to slow down efforts to improve the pension situation of ordinary people.

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1:55 p.m.

The Speaker

Questions or comments?

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1:55 p.m.

Progressive Conservative

David Price Progressive Conservative Compton—Stanstead, QC

On debate, if I may, Mr. Speaker.

Canada Pension Plan Investment Board ActGovernment Orders

1:55 p.m.

The Speaker

My colleague, you may not want to start right now, as we are only minutes away from 2 o'clock. You could begin after oral question period, since you would have the floor.

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1:55 p.m.

Progressive Conservative

David Price Progressive Conservative Compton—Stanstead, QC

I have one minute, so I would like to begin, Mr. Speaker.

Canada Pension Plan Investment Board ActGovernment Orders

1:55 p.m.

The Speaker

You have one minute. You have the floor.

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1:55 p.m.

Progressive Conservative

David Price Progressive Conservative Compton—Stanstead, QC

Mr. Speaker, we are six years into what economists are calling a recovery but it seems to be a jobless recovery.

Too many Canadians are being left behind. The unemployment rate continues to hover around 10%. There are areas in regions of the country where high chronic unemployment has become the norm for second generation Canadians. This is unacceptable.

Canadian families are working harder than ever, many needing two or three incomes just to make ends meet. Working Canadians are falling further and further behind. Canadians have not experienced a real tax pay raise since the 1980s. A person's disposable income has actually fallen by almost 6 per cent since 1990. Canadians are paying more and more in taxes but getting less and less in return. For the first time ever a generation of Canadians are at risk of leaving their children a lower standard of living than that of their parents.

The tax burden on small business is unacceptable. I know. I have run a small business for 30 years and we are hurting. That is what I want to talk about today. Small business.