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.