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.


Committees Of The House
Routine Proceedings

November 27th, 1997 / 3:05 p.m.



Peter Adams Parliamentary Secretary to Leader of the Government in the House of Commons

Mr. Speaker, I believe you would find unanimous consent for the following motion:

That the Standing Committee on Finance be permitted to make its report pursuant to Standing Order 83(1) on December 1, 1997.

Committees Of The House
Routine Proceedings

3:05 p.m.

The Deputy Speaker

Does the hon. parliamentary secretary have unanimous consent of the House to propose the motion?

Committees Of The House
Routine Proceedings

3:05 p.m.

Some hon. members


Committees Of The House
Routine Proceedings

3:05 p.m.

The Deputy Speaker

The House has heard the terms of the motion. Is it the pleasure of the House to adopt the motion.

Committees Of The House
Routine Proceedings

3:05 p.m.

Some hon. members


(Motion agreed to)

The House resumed consideration of 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, as reported (with amendment) from the committee; and of Motions Nos. 10 and 12.

Canada Pension Plan Investment Board Act
Government Orders

3:05 p.m.

The Deputy Speaker

When the House interrupted the debate to proceed with question period the hon. member for Compton—Stanstead had the floor. He has eight minutes remaining in his remarks.

Canada Pension Plan Investment Board Act
Government Orders

3:05 p.m.

Progressive Conservative

David Price Compton—Stanstead, QC

Mr. Speaker, just before we started question period I was talking about the totally unacceptable tax burden on small business.

Small business people are the real job creators in Canada. The tax burden for small business in Canada is higher than in most competing jurisdictions. Small business owners have to pay both employer and employee premiums. This makes it very difficult for Canadian businesses to survive in today's global economy, which means fewer jobs and fewer job opportunities for Canadians.

Study after study around the world have shown that high taxes kill jobs. Jurisdictions with low relative tax rates have high economic growth and strong job creation. Where the taxes are high, growth is low and there are fewer jobs. That is a Polaroid picture of Canada.

Within Canada our high payroll and corporate taxes form a barrier to jobs and growth by taxing businesses for every new job it creates. It is a job creation tax. That is unheard of. The real solution is to create the conditions under which job creation by the private sector is sustainable over the long term.

That is why it makes sense to cap increases to the Canada pension plan at 10.25%. If the government is serious when it states that changes made to Bill C-2 will prevent premiums from rising above 9.9%, there should be absolutely no problem with requiring parliament to review the changes if premiums ever approach 10.25%.

The CPP is a fundamental part of the Canadian social safety net, an obligation that the government must honour. Capping the CPP at 10.25% and reducing EI premiums are ways of returning the CPP to financial viability and protecting the investment Canadians have already made in the plan.

The Reform Party believes that the only way to deal with this challenge is to abandon our obligation to retiring Canadians and eliminate the CPP. This approach is without merit. The current government solution asks people to put even more of their paycheques into its hands every year. This approach is without merit. Canadians do not need a multibillion dollar tax hike.

Most experts agree that the best solution is to make the CPP fully self-financing. In other words, enough new money should be directed into the plan today to ensure that it can pay the benefits due to those who retire down the road.

It is possible to put more money into the fund and offset the cost by reducing EI premiums. This plan has merit and it makes sense. It would mean more money going into the plan without asking Canadians to pick up the tab and without creating more threats to job creation.

Small business is the engine of growth in the country. We should encourage this engine to grow and run smoothly instead of forcing it to run out of gas and stall. The House can and must make a difference.

Canada Pension Plan Investment Board Act
Government Orders

3:10 p.m.


Paul Szabo Mississauga South, ON

Mr. Speaker, the first motion has to do with what some have called a retroactive change. It is important for members to know the dimensions of the change.

Currently an employee pays 2.925% on their insurable earnings. The proposal in Bill C-2 would increase that to a full 3%. In terms of dollars an employee earning $20,000 a year would be required to pay another $12.71. It is important to keep the dimensions of the change in focus. For example, if an employee were making $35,000, the ceiling for insurable earnings, the increase would be marginally over $17. To keep it in perspective it is important to know the numbers.

The hon. member for Calgary—Nose Hill raised the issue with regard to this change and the difficulty it may cause. All members should know the increase that took effect in 1997 was part of the consultation process. It was a change that was discussed. It was also approved by the federal government and two-thirds of the provinces representing two-thirds of the population. This change was seen as an important starting point with regard to providing fuller funding for the CPP.

The intent of Motion No. 10 was to delete that requirement. It is important for Canadians to understand that if the change is not made in 1997 the amount to be paid to get up to the full funding rate would have to increase. It is a matter of a nominal change in 1997.

For that reason, although there may be a case where temporary workers require adjustments, those businesses had consultations with the finance department as early as last spring and were advised of the change. This is not a surprise to business at all.

The second motion in this group has to do with preventing the new CPP contribution rates from coming into effect unless the increases are offset by EI premium reductions. In this area a lot of comments have been made by members which require clarification.

With respect to the EI surplus, it tends to connote that $12 billion will be sitting in some account somewhere, a surplus that is available to be spent for EI benefits or programs. That is not the case. There is a notional account, an EI account, which keeps track of the premiums received and the benefits paid out but as a requirement or a recommendation that was accepted by the government from the auditor general the EI premiums are included in operating revenues, in the general revenue account.

One would only have to ask what to do if there were a deficit in this notional account. How would that be handled? I think that is a very important question to understand. If in an economic downturn the benefits paid out exceeded the premium base of the reserve there would have to be some cross-subsidization or some underpinning by other government revenues to be able to continue to fund and pay out benefits.

I understand that the EI fund actually was in a substantial deficit position in the last downturn of the economy in about the same magnitude as the surplus is now. The amount of the surplus that is being referred to is not really out of line.

I think the Minister of Human Resources Development's announcing a $1.4 billion cut in EI premiums, from $2.90 down to $2.70 per $100, is an indication that when it is sustainable and when it can be delivered and can be counted on by business there will be reductions in the EI rate as long as it is clear that those reductions in the EI premium can be sustained.

Much of the discussion on this motion also has to do with some of the funding requirements of the CPP by taking some this notional surplus. As I explained, since there is no $12 billion surplus that will be sitting in some account somewhere to use for whatever purposes we want, actually what we are talking about is the size of the deficit.

If we were to take funds out of the notional EI account we in fact are taking moneys out of the revenues of the government and therefore increasing the deficit. I suggest that also is inconsistent with an important position of Canadians that we have to get our fiscal house in order. We have to deal with the deficit. Also, what the finance committee has heard time and time again across the country through its exhaustive prebudget consultations is that Canada must continue to deal with the national debt.

The debt, the deficit, it does not matter what we call it, the fact is we have a mortgage which we must continue to pay down on an orderly basis to have our house in order. It is the reason why we have low interest rates. It is the reason why we have one of the strongest records of economic performance and the strongest projected economic growth in the G-7. It is because we have been getting our fiscal house in order.

Members should be very careful about suggesting that somehow there is $12 billion floating around that we could somehow use.

Another very subtle point but I think salient in this regard is that one of the principles that came out from the consultations, agreed on by consensus of the witnesses and by the federal government, the provinces and the territories, is that today's seniors will be insulated from the changes to be made to the Canada pension plan in order to make it sustainable for generations to come.

If we were to somehow take moneys out of the general revenue of the government and increase the deficit what we are basically doing is asking today's seniors to pay something with regard to the CPP changes. We are asking today's seniors, who already have their pensions fixed, who already have their retirement income in place and who have absolutely no major source of other opportunity, to change their current retirement situation.

Members must remember that seniors do pay taxes. Because they retire does not mean they have opted out somehow. They continue to pay taxes on their pension income and on other investment income and other transfers from various sources. They are taxpayers. To the extent that we take money out of general revenues and increase the deficit or reduce spending on some other areas or have to increase taxes, which I doubt will happen, it would therefore be asking seniors to bear some of the burden of the changes in the CPP.

I think it is important to also emphasize this aspect of insulating today's beneficiaries under the CPP from having to pay for some of the portion of funding future benefits of today's workers.

It has to do with the fact that they came through two wars and the depression of the 1930s and 1940s. Their working careers were smaller than we have enjoyed today. Their opportunities to build up a nest egg for their retirement were restricted.

In the real world there is a process of arbitrage and fairness and equity. The CPP was built on that process of fairness and equity and today's seniors will be protected by these changes.

In conclusion, they must be assured that they will not be negatively impacted by the changes being proposed under Bill C-2.

Canada Pension Plan Investment Board Act
Government Orders

3:20 p.m.

Stoney Creek


Tony Valeri Parliamentary Secretary to Minister of Finance

Mr. Speaker, I would like to spend a few moments speaking on Motions Nos. 10 and 12.

Motion 10, proposed by the member for Calgary—Nose Hill, intends to delete the requirement for workers and their employers to make extra contributions for 1997, which are the maximum of $24 each for employers and employees.

The contribution rate for employers and employees in 1997 is 2.925% and employers have been submitting their employer-employee contributions based on that rate.

Section 59 of Bill C-2 amends the existing schedule of the contribution rates to require employers and employees to pay the 3% in 1997.

Again I state that the motion deletes the mechanism for collecting the extra contributions resulting from the amended contribution rate for 1997.

The motion would require that the extra contributions be collected starting at the beginning of 1997. Since it is impossible to undo the past, the motion is in fact eternally flawed. I am sure that is not the intent of the member who has put forward this amendment.

Let me spend a few moments talking about what the departments have done to deal with the anticipated increase in the CPP premium.

Departmental officials did meet with several staffing groups concerned about the 1997 rate collections. Revenue Canada did reflect the new higher rate in the 1997 withholding tables, which it puts out each December.

Putting new tables in mid-year is quite expensive for the government and administratively cumbersome for employers. The government did try to make employers aware of the possibility that the 1997 rate could be changed during 1997 so that employers had as much notice as possible to deal with this situation and they could take appropriate action.

As I stated, Revenue Canada alerted employers in December 1996 and contained this information in the 1997 withholding tables.

The Minister of Finance indicated in his February 14 statement that the extra money for 1997 would be collected at tax filing time. Revenue Canada again informed employers in May of the procedures for collecting the 1997 premiums. Again, finance officials talked to a number of employers and their associations over the spring and summer.

There have been ample attempts by the departments and the governments to inform employers that in fact this anticipated increase is coming and tried to work with them to deal with the administrative concerns they may have had.

I just want to talk for a second on the mechanism to collect. Employers file, every February, a T-4 reconciliation statement that is used as a final year end reconciliation for EI, for Canada pension plan premiums as well as other taxes that are collected and withheld from employees.

This T-4 reconciliation form is the form that would be used to collect the 1997 premiums. There is no additional administrative burden put in place as a result of having to collect these 1997 premiums in 1998.

The changes that were made do eliminate that administrative burden and if we had made those changes mid-stream we would have caused much greater hardship on the business community.

With respect to Motion No. 12, it attempts to prevent the new CPP contribution rates from coming into effect for 1997 through 2000 unless the increases are offset by decreases in employment insurance contributions from employers and employees.

It is clear that there is no link between CPP and EI. They are separate programs that serve purposes and rates are established independently. EI premiums nevertheless have been reduced since 1994 and they will fall again from $2.90 to $2.70 which is a $1.4 billion expenditure on behalf of the government. This completely offsets the 1998 CPP rates for workers and more than offsets the increase in CPP rates for employers.

The government has committed over and over again that it will continue to lower EI premium rates as soon as it can. However, the overwhelming message from Canadians throughout the entire consultation period was that the government needs to take action now to fix the CPP so that the contribution rate does not rise above 9.9%.

The second part of the motion deals with the steady state contribution rate. The motion intends to prevent the steady state contribution rate from exceeding 10.25% regardless of the chief actuary's calculations. Establishing a cap of 10.25% is clearly inconsistent with the CPP financing principles set out in the act. The principles require a constant contribution rate that can be sustained. The 9.9% steady state contribution rate is based on prudent assumptions and we are therefore confident that the rates will not exceed this level.

There was also some discussion earlier from the Conservative Party about the so-called tax grab. Let me be very clear that it is not a tax grab. This is a contribution of savings toward pension. When these contributions are made and collected by the government, they go into a separate fund. They do not go into consolidated revenues; taxes go into consolidated revenues. They will go into a separate fund and will be invested like other pension plans. That is what Canadians have asked us to do and that is what Bill C-2 will do.

Under the existing legislation, CPP contribution rates are already set to climb above the 9.9% rate. In fact, the rates are scheduled to reach 10.1% in 2016, so we are reducing the amount that the existing contribution rates would end up being if we did not bring forward Bill C-2.

The chief actuary has shown that if we do not move fast, the Canada pension plan will be bankrupt by 2015 and the rates will have to soar to 14.2% in 2030, which is a 140% increase. No one on this side of the House is saying that the CPP premiums are not going up. Clearly they are going up but they are going up so that we can sustain the plan. They are not going up as high as they would have if we had done nothing. For the first time in a long time the administration of this government has taken action to save the CPP plan.

The same cannot be said about the prior administration which sat there and watched the CPP go into disarray. It sat back and said it would do nothing, that it should be left to become someone else's problem. We do not want that to happen. We are reflecting what Canadians have said. We had the consultation period. Bill C-2 reflects what Canadians have told us.

The responsible thing to do to avoid bankruptcy and truly intolerable rates is to put forward Bill C-2 to ensure the Canada pension plan stays solvent and provides the security Canadians are asking for.

The hon. member from the Conservative Party continued to talk about the increases in the CPP premium. He referred to an $11 billion tax grab. Let us be very clear. He fails to mention that because of the changes that have been made in this bill, premiums would ultimately be $11.5 billion if we compared it to the existing schedule.

When we talk about doing something for future generations, when we talk about ensuring the pension plan is solid, when we talk about doing it in a very balanced manner, and when we look at the premium increase versus the changes on the benefits side, we will find on review of Bill C-2 that we have met those criteria. We have ensured that the concerns of Canadians have been reflected.

The provinces have played a very large part as joint stewards of this plan in the federal-provincial negotiations. We have an agreement that is clearly a balanced approach that will ensure the Canada pension plan will be there for Canadians well into the future.

Canada Pension Plan Investment Board Act
Government Orders

3:30 p.m.


John Solomon Regina—Lumsden—Lake Centre, SK

Mr. Speaker, I rise this afternoon in opposition to this particular amendment which is being put forward. I want to rise in opposition as the small business critic for the New Democratic Party.

I look at this proposal and I see that the amendments they are putting forward in many ways do not bode well for small business. Small businesses have a lot of challenges right now. They are faced with the pending increase in interest rates. Small business people have always had challenges with respect to capital acquisition.

We are also looking at the huge increase in profits by the banks year over year. The only conclusion one can draw from that is that not only are they receiving a huge amount of increased profits and revenues from consumers in this country, but also from the small and medium size businesses which employ the vast majority of Canadians.

Business is also faced with the challenges of the GST collection on behalf of the federal government. This is a burden the government has put on them.

Finally of course the issue that we will be dealing with this afternoon is the payroll taxes as they are called. They are basically programs which assist small business owners to provide some level of support in terms of a pension plan, or unemployment insurance plan, or disability plan for their employees. By the way, a vast number of businesses and owners of small businesses employ those who own the businesses so this is something that is very important to them.

What the amendment outlines in terms of this particular bill is it proposes that any increase in the contribution rate with respect to the CPP for the years 1997 through 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 1996 are offset by at least a cumulative decrease in anticipated combined employer and employee contributions under the Employment Insurance Act for those same years.

I have some information which I would like to share. The Canada pension plan has been a very helpful program for small business. If small and medium size businesses did not have such a plan, they would be forced in many ways to commit greater resources, which are limited to them, to establishing their own type of pension plan. As we know, establishing a pension plan for a small number of employees on their own would be very costly and prohibitive. There would be less pension coverage for employees who work in the small and medium size businesses.

I want to share with members in the House today some information which was provided and accumulated by Statistics Canada on self-employment. Self-employment grew rapidly both in absolute and relative terms between 1989 and 1996. During this period self-employed workers accounted for more than 75% of total job growth. Seventy-five per cent.

Throughout the period 1989 to 1996 the number of business owners increased by 25%, by a margin of 457,500 compared to an increase of 1% or 132,700 in the number of employees. In essence small business has employed more people over the years. Most of those who became self-employed during this period worked alone and did not hire other workers.

We are concerned about the rapid increase in CPP premiums. As the small business critic and spokesperson for the New Democratic Party caucus, we believe that contributions should be increased at a slower rate over a longer period of time to allow self-employed people to adjust their businesses and to allow small and medium size businesses to adjust their forecast and financial analysis to meet these increased payroll taxes.

I believe the majority of business people want to continue in the program. That is the information I have received. But the information I have also received is that they want more time to ensure that they are able to adjust their revenues.

As we know, small business cannot announce a 25 or 50 basis point increase in the charge for their services like the banks can. If they do, they just do not seem to stay in business very long. Whereby the banks are large businesses and are basically oligopolies and can do whatever they want with respect to charging these very same small and medium size businesses increased rates at the drop of a hat. They do this on a fluctuating basis without a lot of rationale, far too often costing small business and self-employed people a great deal of anxiety, anguish and concern, not to mention the fact that it jeopardizes their business and their way of doing business.

Saskatchewan registered the highest proportion of self-employed workers in 1996. Saskatchewan is the province I represent. If we exclude agriculture from these numbers, actually British Columbia had the highest incidence of self-employment in 1996.

It is extremely important to us in Saskatchewan as in other parts of the country, but more in particular because of the agricultural economy. Many farmers have incorporated and they are paying their own contributions. They are self-employed. In many cases family members work in the incorporated partnerships, farm operations or agricultural operations and they pay their Canada pension plan premiums as well.

People who are self-employed pay not just the employee share, but the employer share. It is a very big concern for Saskatchewan business people in terms of a quick increase in premiums in a short period. This underscores our position in the NDP that we should take lower increases over a longer period of time.

According to the most recent data available, average earnings among self-employed individuals in 1995 were 91% of average wages and salaries. The distribution of earnings among the self-employed is more polarized than the earnings of paid workers.

In 1995 approximately 23% or 392,800 self-employed workers earned less than $10,000. Almost one-quarter of self-employed workers earn less than $10,000 a year. That means they are very restricted in terms of discretionary revenues and discretionary income to meet these higher increases in Canada pension plan premiums.

About 45% of self-employed workers in Canada earned less than $20,000 a year. At the other end of the distribution, only 4% of self-employed workers earned in excess of $100,000. In 1995 the average earnings of self-employed women were slightly higher than one-half of their male counterparts.

Underlying the distribution and earnings of self-employed workers is the amount of time self-employed individuals work. Compared to paid workers, self-employed workers are more likely to work either short or long hour work weeks. But part of the earnings gap between male and female self-employed workers is undoubtedly attributed to the fact that male self-employed workers worked a longer work week. In 1996 male self-employed workers worked an average of 13.3 hours more per week than their female counterparts.

This particular proposal in my view is also detrimental to women, whether they are in small business or not. The increases and changes in CPP will affect women most in a very negative way.

Most of the growth in self-employment between 1989 and 1996 was voluntary. It is estimated by Statistics Canada that only 12% were pushed into self-employment because there was no other work available. This particular statistic means that we have a trend in our country whereby more and more people are being frustrated in terms of finding employment and therefore are going into small business. We also have a trend where more people are interested in working for themselves because they have not had a proper deal with respect to their employers.

I have a number of things I want to raise but the final thing I will talk about is this. I want to agree with the Liberal member for Mississauga South when he said that these increases are of concern to him. They are of concern to us in the NDP. We agree with him on this point, that we should not put the EI surplus into the Canada pension plan benefits. That jeopardizes the employment insurance program which was set up to insure workers who are unemployed. We feel that is not only a cross-subsidization but really a wrong way to deal with it.

In ending my remarks, I want to say on behalf of the small business community in Canada that we oppose this amendment. We would put forward lower increases in CPP benefits over a longer period of time to meet the needs of a very important program.

Canada Pension Plan Investment Board Act
The Royal Assent

3:40 p.m.

The Speaker

Order, please. I have the honour to inform the House that a communication has been received as follows:

November 27, 1997


I have the honour to inform you that the Hon. Peter de C. Cory, Puisne Judge of the Supreme Court of Canada, in his capacity as Deputy Governor General, will proceed to the Senate chamber today, the 27th day of November, 1997, at 4 p.m., for the purpose of giving Royal Assent to certain bills.

Yours sincerely,

The House resumed consideration of Bill C-2, an anct 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, as reported (with amendment) from the committee; and of Motions Nos. 10 and 12.

Canada Pension Plan Investment Board Act
Government Orders

3:40 p.m.


Stéphan Tremblay Lac-Saint-Jean, QC

Mr. Speaker, I am pleased to have this opportunity to make a few remarks on this bill, 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.

Bill C-2, which the finance minister introduced on September 25, is a reform of the Canada pension plan, among other things. This reform has three main components. The first one deals with the level of capitalization of the plan which will increase from two to five years of benefits, as suggested by the minister. The second one provides for the optimization of the plan's performance through the establishment of an investment board. And the third one is a series of changes to certain benefits, such as the disability benefits.

Implementation of these measures depends on Bill C-2 going through the parliamentary process. In order to assess this reform, I would like to give the House if I may a brief background of the CPP. The plan goes back to 1966, when nine provinces opted in, while Quebec created its own plan, the Quebec pension plan, which is also being revised.

The Canada pension plan pays benefits totalling about $17 billion a year. This includes survivor and disability benefits. Right now, the plan has enough money in reserve to pay two years worth of benefits, which amounts to some $39 billion. Of course, this reform will have a significant impact on Canada pension plan premiums.

I will now talk about the various amendments, starting with Motion No. 12 put forward by the Conservatives, which says that, for the years 1997, 1998, 1999 and 2000, any increases in the contribution rate provided for in the bill shall not come into effect unless they are offset by an equivalent decrease in employment insurance contributions.

The motion also says that the contribution rate for self-employed persons shall not exceed 10.25% except if the chief actuary is of the opinion that a higher contribution rate is warranted.

We support the idea of a decrease in employment insurance contributions to offset the increase in CPP premiums. However, the cumulative decrease proposed by the Conservatives is equivalent to a 80 cent decrease in the EI contribution rate. Such a decrease is not compatible with the Bloc's position, which calls for an enhancement of the program in addition to a significant decrease in the contribution rate, because we think that the reform went to far.

Now my mouth is watering in anticipation of what I am about to say on the other amendment, this one being proposed by the Reform Party. We thought we had seen everything, but this tops it all.

The amendment proposed by the Reform Party calls for repeal of the section of the legislation allowing retroactivity of the increase in contributions for 1997. At this time, the agreed CPP contribution level is 5.85% and the act will allow this to be retroactively raised to 6% for 1997. The Reform Party members are against this retroactivity.

I feel that, in politics, at some point one has to see beyond the end of one's nose. I was pleased to be able to speak at the first reading of this bill. Opposition parties are always described as being there to get in the face of the government. I do not believe this is the case. The Bloc Quebecois is in favour of such a bill, except that I note that its vision is rather a long term one. If I want to receive benefits some day, at some point, we have to start realizing that there must be more money in the fund.

Yes, I am in agreement with this reform. It imposes a surcharge on taxpayers, in that people will have to contribute more. It is like another tax. I know that the people will not be delighted at that, but we have to look several years down the road. We have to be able to look at our children and tell ourselves that it would be worthwhile for them to have the same advantages we have had all our lives.

What Reform is telling us is that this is a tax increase. This makes no sense; they are playing politics with blinders on. I find this very frustrating. We in this House see our share of short-sighted policies. I need only think of the position taken by the Minister of the Environment, who, very quietly, will take a position much like that of the United States. It is true they say greenhouse gases are serious business, but what about future generations? I am not just thinking about myself. Policies being formulated now will have an effect in 20 or 30 years when I will be 40 or 50. I think they should give thought to future generations when they establish policies. Policies on sustainable development as they are called.

If I were the son of a Reformer or rather a Reform member, I would be wondering how I could look my children in the eye and say “Sorry, my education did not cost me a lot. When I finished university, I got a job and it did not take long. When I retired, I had a pension plan and one heck of a retirement. Unfortunately, you my son, will have to pay for your university education”. What is more, this morning in committee, a Reform member said he was opposed to loans and bursaries. I am not going to get into this, but as I said, the Reform approach is sort of “You are going to pay dearly for your university education. When you get out, you will not have a job, and that is no problem. When you retire there will be no pension, because the coffers will be empty”.

I do not understand. I am not into partisan politics. I do not want to divide the Bloc Quebecois, the Reform Party and the Liberal Party. I am talking much more of a generational thing. I feel sorry for the poor people my age who vote for the Reform Party in Alberta and British Columbia. Perhaps it is time they looked at their policies.

Finally, this shift to the right is of great concern to me because such policies widen the gap between rich and poor. It is like saying to young people: “Our generation was rich, but we don't care if you have to live on a shoestring”. This makes me very uncomfortable. When I talk about the gap between rich and poor, I am talking not only about long term policies, but also about things that are happening right now. My colleague from the NDP mentioned the banks. One of my Bloc colleagues will soon propose a reform package to encourage banks to become more socially involved in our communities.

I believe it is time for policies that are more concerned with social issues. This shift to the right will lead us nowhere. It only redistributes the money so the rich get richer while the poor get poorer. The poor must resort to violence to be heard, leading to total anarchy. I do not want that kind of society. I want a fair system.

Your generation enjoyed a rather fair and equitable system. My generation and that of my children deserve a system that is just as fair.

I intend to keep Reform members on their toes. As long as they keep moving such phoney amendments—I have no qualms about calling them phoney—I will rise in this House to take them to task.

Canada Pension Plan Investment Board Act
Government Orders

3:50 p.m.


David Iftody Provencher, MB

Mr. Speaker, it is my pleasure today to speak briefly on the motions before the House and the debate about the Canada pension plan in general.

Having sat on the finance committee and having heard from Canadians both on the larger question of the general finances of the country leading up to our budget and on the CPP, it has provided me with an opportunity, I believe, to speak to a number of points and to add some clarifications.

The member for the New Democratic Party, the critic for small business, referred to a number of points with respect to the Canada pension plan contributions and the effect on small business. Indeed, it is true that it will have an effect.

I think it is important to point out a number of features within the tax arrangements between the provinces and the federal government on the CPP question. That is to say, that with some of the tax measures that are currently available, there is possibly a $900 increase in the Canada pension plan between the employer and the employee. After tax it is more like around $700. I believe those features have to be brought out with respect to small business and for the assistance of small business.

Speaking about small business, the member for the Conservative Party, who spoke eloquently earlier here in the Chamber, talked about the plans of the Conservative Party with respect to unemployment contributions and tying that into the CPP. It is important to remind the House—and I am sure it is not lost on all the members here and those who were here between 1988 and 1993—that the current leader of the Progressive Conservative Party voted many times and repeatedly to raise contributions to a level of $3.30 per $100 of earnings against the small business people and employees.

What we have done in the four short years on that particular question with respect to employment contributions is lower it, indeed with the most recent changes a few days ago, to $2.70. Taken all together over the past four years, this puts $4.2 billion back into the hands of small business people in Canada and their employees. This is an important contribution. As was pointed out by the parliamentary secretary earlier in the debate, we will continue to work toward that goal.

It is really a false assumption to say that we have this large and looming surplus in the employment fund when, as members know, previously, around 1989-90, we had a deficit. Was it proper then? I would like to ask the opposition if it was immoral, as some had suggested at the committee table, to take money now from the surplus? Was it immoral at that time, for example, to ask Canadians to pay that deficit fund under the EI fund which accounted for billions of dollars?

It is prudent practice in terms of consolidating the revenues of the Government of Canada and to balance those out. Certainly in times of surplus, last week we made a $1.4 billion contribution back to the employees. If it runs into a deficit financing position again, obviously we would be prepared to back that up and to support that.

Referring to the CPP specifically, one of the things the Reform Party has not done to address this important debate is the primary antecedent or variable that shapes this whole discussion on the Canada pension plan. Thomas d'Aquino, President of the Business Council on National Issues, for example, when he came to the table of the House of Commons, specifically asked the opposition parties what they were prepared to do with the $600 billion debt that was on the table momentarily and what we are going to do with this liability over the next 25 to 30 years.

There have been no constructive proposals brought forward in this regard. Most certainly the plan of the Reform Party for this super RRSP may benefit a few but it certainly is not going to help the majority of Canadians who make contributions at an average of $3,000 a year. It certainly said nothing, absolutely nothing, about the $600 billion liability which we are trying to address in this formula.

It is very interesting that even in the province of Manitoba, recent reports from Stats Canada, and reported in the local newspaper in Manitoba The Winnipeg Free Press , that the average contribution in Manitoba for RRSPs was less than $3,000. Surely these contributions are not safe enough to provide that template, that safety net for all Canadians into their future. It is just not there.

In other words what I am saying is that the ceiling we have employed at this point in the RRSP contributions of $13,500 is exercised and enjoyed by only a few. The plan for the RRSP will not do that. This says nothing about the absence of a disability plan or some compensation for widows.

The Canada pension plan and the long term proposals we have put forth to the House and through the committee are responsible plans. It should be acknowledged that yes, the plan has fallen short of its goals and its objectives. No one could have foreseen, certainly the crafters and drafters of these documents could not have foreseen, a reasonable person could not have foreseen in 1965, 1967 and 1968 that successive generations of adults would not be having larger families than we currently have, two or three children per family. This is the central feature. Demographics cannot be lost in this debate in terms of their effect on ability to pay.

This is what we are trying to do by responding to the auditor general, to outside consultants' reports and by looking at the overall view and the long term health and prosperity of the country. What we are doing now will provide that template to make sure those people who are 60 years old now, those who are turning 50 this year and in 10 years will be thinking more acutely about their retirement, whatever their arrangements are and whatever packages are as a combination of their work benefits, family inheritances, RRSPs, are secured into the future for their retirement. Further, the younger generation, those for example between the ages of 30 to 40, can have the degree of certainty to know that they will need to have a secure pension plan into the future as well.

I want to conclude my comments by saying that over the next number of months and in the upcoming budget we are responding to the needs of small business in Canada. The recent reductions in the employment insurance, the changes in the CPP to provide a stronger stability and predictability in financial planning for small business, the reduction in interest rates as well are helping small business and keeping the economy moving and growing. This is particularly so in Manitoba where we are enjoying record growth in our exports.

I believe the amendment is wrong. I believe the motion by the Conservative party to bring these two important programs together is a misleading one. It will not be helpful to small business and ultimately will not be helpful to Canadians.