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.