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.


Canada Pension Plan Investment Board Act
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3:55 p.m.

The Deputy Speaker

Is the House ready for the question?

Canada Pension Plan Investment Board Act
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3:55 p.m.

Some hon. members


Canada Pension Plan Investment Board Act
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3:55 p.m.

The Deputy Speaker

The question is on the motions in Group No. 5, which are deemed to have been demanded and deferred.

Accordingly, the question is on the motions in Group No. 6, Motions Nos. 11, 13. 14, 15. 16, 17, 18, 19 and 22. These motions have been deemed moved, seconded and read.

Canada Pension Plan Investment Board Act
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4 p.m.


Lorne Nystrom Qu'Appelle, SK


Motion No. 11

That Bill C-2 be amended by deleting Clause 59.

Motion No. 13

That Bill C-2, in Clause 61, be amended by

(a) replacing line 3 on page 31 with the following:

“20. The amount”

(b) deleting lines 8 and 9 on page 31.

Canada Pension Plan Investment Board Act
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4 p.m.

Progressive Conservative

Jean Dubé Madawaska—Restigouche, NB

Motion No. 14

That Bill C-2, in Clause 61, be amended by replacing lines 8 and 9 on page 31 with the following:

“(2) For each year beginning in 1997 and ending in 2006, the amount of a Year's Basic Exemption is $3,500.”

Canada Pension Plan Investment Board Act
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4 p.m.


Lorne Nystrom Qu'Appelle, SK


Motion No. 15

That Bill C-2, in Clause 67, be amended by adding after line 36 on page 36 the following:

“(4.2) Employer contributions for a self-employed person earning less than the prescribed threshold income shall, for the years 1999, 2000 and 2001, be calculated on a progressive scale based on annual income in accordance with the regulations.

(4.3) Every regulation made pursuant to subsection (4.2) shall be laid before both Houses of Parliament within the first fifteen days of the next session after the date it is made, and the regulation shall remain in force until the day immediately succeeding the date of prorogation of that session of Parliament and no longer unless during the session it is approved by resolution of both Houses of Parliament.”

Motion No. 16

That Bill C-2 be amended by deleting Clause 68.

Motion No. 17

That Bill C-2 be amended by deleting Clause 69.

Motion No. 18

That Bill C-2, in Clause 71, be amended by adding after line 23 on page 41 the following:

“(4) For the purposes of subsections (1) and (2), the Year's Maximum Pensionable Earnings for the years 1999, 2000, and 2001 shall be two times the amount calculated under this Act.”

Motion No. 19

That Bill C-2 be amended by deleting Clause 76.

Motion No. 22

That Bill C-2, in Clause 94, be amended by replacing lines 35 to 45 on page 73 with the following:

“year being generally constant.”

Canada Pension Plan Investment Board Act
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4 p.m.


Lorne Nystrom Qu'Appelle, SK

Mr. Speaker, we are dealing here with nine different motions, most of them in my name and one from the Conservative Party. I only have 10 minutes, so I just briefly want to touch on the motions in my name on behalf of our party.

Motion No. 11 relates to the new investment fund that is being established by the legislation. The amendment is to put other objectives into the fund in terms of where it is to be invested. Right now the only objective is to maximize the return for the contributor. That is a very laudable objective. In addition, we believe there should be some other objectives, such as investing in the Canadian economy, in industries and sectors that would create more jobs for Canada.

The model would be la Caisse de dépôt et placement.

The objectives of the Caisse de dépôt in Quebec were quite adequate for a long time; they supported job creation and economic growth. The Quebec economy grew stronger and stronger thanks to the Caisse de dépôt.

We must have similar principles and goals for the Canada pension plan.

Motion No. 11 would create some of the goals and objectives.

Motion No. 13, is extremely important to members of the NDP. This is the one that would reindex the year's basic exemption. In the Canada pension plan there is a basic exemption of $3,500 which has been indexed over the years. That indexation is now going to be eliminated.

When the Canada pension plan was formed back in 1966 the basic exemption was approximately $400. People making less than $400 would not contribute to the Canada pension plan. The government of the day and the Parliament of the day in their wisdom decided to index that $400. Now it has gone up from $400, to $500 to $1,000, to $2,500 and now up to $3,500. Low income people are not making contributions to the CPP on anything they earn up to $3,500.

Now, the government, despite the advice of a lot of people in the country, has decided to deindex that basic exemption so low income people will be paying more and more into the Canada pension plan. That is why we have put forward these amendments and that is why the changes are regressive.

Across the way there are Liberals who are ashamed of this change. I am sure that if you could speak out, Mr. Speaker, you would be ashamed that low income people in Kingston are paying more and more into the Canada pension plan. Now, that is not the tradition of Lester Pearson and Paul Martin, Sr. and the progressive Liberals of the 1960s that brought in a Canada pension plan that was progressive. That is gone.

That is why these amendments are not supported by the governments of British Columbia and Saskatchewan which have the good fortune to have NDP governments which are very enlightened and very progressive.

Motion No. 15 is of great interest to my colleague from Regina—Lumsden—Lake Centre. He spoke very eloquently on the previous motion which is very similar to this one. This deals with the problem of the self-employed who are going to be hit very hard by the changes to the CPP. The premiums are going up from 5.85% over six years to 9.9%. The self-employed person will have to pay both the employer and the employee contribution of 9.9%. That is going to be very difficult for self-employed people who are on the lower income scale.

For a wealthy accountant from the Toronto or Mississauga area who is making $200,000 or $300,00 a year as a self-employed person, it does not really matter. However, it is very difficult for the small businesswoman who is struggling along at $20,000, $30,000 or $40,000 a year, to pay 10% of her income into the CPP.

My motion will make this contribution progressive as well. The lower income people who are self-employed will pay proportionally less and a wealthy lawyer or accountant from Mississauga will pay proportionally more. Who could oppose that outside of the wealthy who come from Mississauga? And he is a Liberal.

I am sure in the days of the old progressive Liberals like Paul Martin, Sr. or Pickersgill or Pearson, they would never have dreamed of doing this to the self-employed people. I am sure they would not. That is another motion I present to the House today.

My colleague from Winnipeg North Centre is extremely interested in Motion No. 16 which would restore the benefits to where they were since there will now be a reduction in benefits. This reduction will affect women the most, especially low income women. That is very regressive. And—

Canada Pension Plan Investment Board Act
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4:05 p.m.

The Deputy Speaker

I regret that I must interrupt. The hon. member will have time in a few minutes, but I have to interrupt the proceedings at the moment because we have received a very important message.

Message From The Senate
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November 27th, 1997 / 4:05 p.m.

The Deputy Speaker

I have the honour to inform the House that a message has been received from the Senate informing this House that the Senate has passed the following bill: Bill C-22, an act to implement the Convention on the Prohibition of the Use, Stockpiling, Production and Transfer of Anti-Personnel Mines and on their Destruction.

A message was delivered by the Usher of the Black Rod as follows:

Mr. Speaker, it is the desire of the Honourable Deputy to His Excellency the Governor General that this Honourable House attend him immediately in the Senate Chamber.

Accordingly the Speaker with the House went up to the Senate chamber.

And being returned:

Message From The Senate
The Royal Assent

4:15 p.m.

The Deputy Speaker

I have the honour to inform the House that when the House did attend his honour the Deputy to His Excellency the Governor General in the Senate chamber, his honour was pleased to give, in Her Majesty's name, the royal assent to the following bill:

Bill C-13, an act to amend the Parliament of Canada Act—Chapter 32.

Bill C-22, an act to implement the Convention on the Prohibition of the Use, Stockpiling, Production and Transfer of Anti-Personnel Mines and on their Destruction—Chapter 33.

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.

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4:15 p.m.


Lorne Nystrom Qu'Appelle, SK

Mr. Speaker, before royal assent I was discussing Motion No. 16. I suggested that it is a very important motion because it restores the benefits to their current levels. Many people will experience a cutback to their benefits under the legislation. It will make accessibility to benefits more difficult. It is a step in the wrong direction.

Motion No. 17 has been moved by the NDP under my name. It would restore the old formula for the calculation of disability benefits under the CPP.

Unfortunately the Liberals across the way in their new conservative style have decided to make it more difficult for disabled people to collect benefits under the Canada pension plan. They are hanging their heads in shame.

Disabled people are finding it more difficult to get benefits. This is happening at a time when we are experiencing economic recovery in the country. The so-called Liberal government is taking it out on the disabled.

I would be willing to sit down if the Liberals would get up to explain why there is an attack on the disabled. I am puzzled as to why the party of Paul Martin Senior and the party of Lester Pearson would do that kind of thing. It is amazing. They are going after those who are most vulnerable in society. They are making accessibility to disability benefits more difficult.

I plead with the government to accept this reasonable amendment to return to the formula that currently exists in the Canada pension plan for the disabled to receive benefits.

Motion No. 18 is also very interesting. It is a departure from the current Canada pension plan. Currently there is a maximum of $35,800. Above that maximum people do not make any further contributions on their earnings. What actually happens is that the person who is making $35,800 pays as much into CPP as a senator, a member of Parliament, the Minister of Finance or Conrad Black, who is a friend of the Minister of Finance.

I ask again if that is fair. I ask the hon. member for Abitibi if that is fair. That member is a free spirit. He should be rising in the House and saying that it is not fair.

My motion would make it more progressive. It would ensure that people who make more money would make contributions on the money they make above $35,800 a year. Some might say this is a radical idea that could not be sustained.

The upper limit for contributions to the United States pension plan is $85,900 Canadian a year. That is over two and a half times higher than what it is in this country.

Let us make it more progressive when it comes to people who are making $50,000, $60,000, $100,000 or $150,000. As members of Parliament we should be paying a bit more of our income into the Canada pension plan to make it more progressive. It would be more progressive than the contribution rate for low income people. It would be lower. It would not be 9.9% but much lower than that.

Turning to Motion No. 19, there is a cutback in benefits to women. They want to restore the formula so that low income people receive the same kinds of benefits they are getting today.

I am not asking for too much. The economy is starting to turn around. Why penalize women? Why penalize the disabled? Why cut back on survivors benefits? The death benefit is being cut back from about $3,500 to $2,500. Again many widows are receiving that benefit. Once again it is an attack on women.

My Motion No. 22 is self-explanatory. In a nutshell those are the motions I moved. There is also one Reform motion in this grouping.

This group of amendments would restore progressivity to the Canada pension plan. I would like to see one or two progressive Liberals, one or two so-called left wing Liberals or pink Liberals, getting up in the House of Commons to offer a bit of support to a couple of these amendments.

The member for Abitibi may do that. He used to be a Conservative MP. Now he is a Liberal MP. Why does he not continue that move toward the left by getting up and supporting some of these progressive amendments. It would be good for his constituents and good for Canada.

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4:20 p.m.

Progressive Conservative

Jean Dubé Madawaska—Restigouche, NB

Mr. Speaker, I would like to correct the hon. member. This grouping contains a Conservative motion as well as his amendments.

I have the pleasure to propose an amendment to Bill C-2, based on the principle of equity for all Canadians.

As it stands, Bill C-2 freezes the basic annual exemption at the $3,500 level. I wonder on which planet the authors of this bill live, but they seem not to know the word “inflation” over there. It reminds me of the George Orwell novel 1984 . Whenever the characters in that book wanted to get rid of a reality, they would ban the use of the word depicting that reality.

However, we all know that this is not how things work in the real world. Everybody knows that it is not because Bill C-2 ignores inflation and its impact on low income workers that inflation will disappear.

Bill C-2 in its present form does not provide for a review of the basic exemption. How much do you think the $3,500 of today will be worth in 2017? In 2037?

In clear terms, workers who think they can manage with this exemption will gradually get smothered by inflation.

The government pretends that freezing the year's basic exemption at $3,500 accounts for as much as 1.4% of the premium decrease, but in fact such a case cannot be considered as a real premium decrease of 1.4% since they will end up paying a higher premium on higher income.

Is this what we call creative taxation?

The government should not have the power to change a fundamental and essential program such as the Canada pension plan without explaining to Canadians all the consequences of the changes.

However, that is exactly what it is doing because it does not explain the impact of this deindexation of the basic exemption and it does not specify which Canadians will be affected.

The freeze of the basic exemption in contributory earnings will have more impact on low wage earners, particularly women, students and residents of disadvantaged areas. I should say will have, again, more impact on these people. And I thought that the message sent to the government on June 2 by several regions had been received loud and clear!

The Progressive Conservative Party strongly believes in equity. If the growth of the plan is stronger than forecasted by the last actuarial report, we could have some room allowing us to restore indexation.

We believe that there should be a mechanism to allow for a review of the year's basic exemption. Bill C-2 already provides for a review of the plan every three years. What we propose is that the year's basic exemption be reviewed also in 2006.

If we manage a return on investment comparable to the return of private plans over the next ten years, it would not be necessary to freeze the basic exemption forever. This is the only way to have some equity in this bill. We should not forget that the people most affected by the freeze on the year's basic exemption are the young, women and the self-employed, 45 per cent of whom earn less than $20,000 per year.

In fact, young people are severely affected by the reform of the pension plan. In simple terms, they will pay much more than those before them and get back only a fraction of what those before them received and will be receiving. So much for intergenerational equity.

As for women, it is a secret for no one that their socio-economic profile is generally such that they will not be able to benefit from the plan as much as men. Does Bill C-2 contain anything that may help counteract this? No.

What this government chose to include for these women is a year's basic exemption, which will gradually be eaten up by inflation. The same goes for self-employed workers who, in addition, have to bear the burden of paying both the employee's and the employer's share of premiums. The same goes for people from depressed areas struggling with horrible and outrageous levels of unemployment. The same goes for all low income earners.

There is nothing, absolutely nothing, in Bill C-2 for these people. There is nothing in here to ensure that Canadians are treated equitably, nor, for that matter, in the employment insurance program, the other major social security program, which once was the pride of Canadians.

Instead of compensating working taxpayers by reducing employment insurance premiums by a fair amount, which would help consolidate existing jobs and create many new ones, the government stubbornly insists on offering symbolic reductions and mini-reforms.

Naturally, observers agree that this is a step in the right direction. The problem is that, when I leave my riding, in New Brunswick, and head west toward Vancouver on the Trans-Canada highway, I am also going in the right direction, but I am very far from my destination. At the rate premiums are going down, I will not even make it to Regina by New Year's day.

To conclude, we, in the Progressive Conservative Party, believe in equity for all Canadians. Since this quest for equity is also one of our fellow Canadians' most serious concerns, it is essential that a mechanism be provided for in Bill C-2, that will allow the amount of the year's basic exemption to be reviewed on a yearly basis.

And because equity is a value shared by the members of this House, I encourage them all to vote in favour of this motion.

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4:30 p.m.

Progressive Conservative

Elsie Wayne Saint John, NB

Mr. Speaker, I am very pleased to stand and participate in this debate on changes to the Canada pension plan. I congratulate my colleague from Madawaska—Restigouche and the other members of our Conservative Party who have mounted solid arguments and amendments to try to fix this ill conceived plan that the government has brought forward.

Also, and this is probably the only time this will ever happen, I want to commend the Minister of Finance for the amendments he brought forth yesterday. I did not get a chance to speak on them then but I was happy to see that the minister listened to our concerns about his bill and being silent on the auditor general's ability to request documentation on the CPP investment board.

As we pointed out to the House, the auditor general himself indicated that there were no guarantees in this bill that would ensure he could request the documentation that he needed to oversee the board's operation. With the amendments he submitted, the minister clarified that situation and we were very pleased that he finally saw the light even if it was for only a brief moment.

I wanted to speak today so I could talk about Motion No. 15. This motion was introduced by one of our colleagues from the NDP. It proposes that self-employed persons pay a CPP premium rate according to their incomes. We believe this is a very good idea and a very good recommendation.

One has to remember that self-employed persons are required to pay the employee's portion and the employer's portion of the premium. When rates go up even a little, self-employed persons have to bear the brunt of the entire increase. In other words, when rates go up to 9.9% the self-employed have to pay $9.90 to the government for every $100 they make. That can be very hard, especially when we know that in 1997 more than 2.5 million Canadians were self-employed.

Consider for a moment that according to Stats Canada, 45% of the self-employed earn less than $20,000 a year. At $20,000 a year you do not have a lot of disposable income left after you give so much of your pay cheque to the government. We must help those millions of Canadians who are trying desperately to earn their livings and to have their dignity.

We can help low income Canadians by lowering payroll taxes. That is the argument we bring forward today when we say that the hike in CPP premiums should be offset by reductions in EI premiums. I was very pleased to see that the minister came forth after I rose to speak in the House and lowered it by 20 cents. However, according to the actuarial report he should have lowered it by 90 cents because he will still have $40 billion in an account by the year 2004.

We can also help self-employed workers by making them pay CPP premiums according to a sliding scale based on their yearly revenue. If you make only $20,000 a year, you could pay a lower rate than someone who makes $60,000 a year. It is a small measure but it can make a big difference in the lives and the pocketbooks of many Canadians.

For the first time in our history a whole generation of Canadians is unsure that it will be able to enjoy the same quality of life its parents did.

Many Canadians worry that some of our most fundamental institutions and values such as health care and Canada pension plan might not be there for them and their families when they need it. Canadians have every right to expect the federal government to set the right priorities and policies and to chart the right course to achieve what they need for the future.

We need an innovative, realistic plan that sets new priorities for government as part of a long term vision for our future. One of these priorities is security for retirement for all Canadians and more especially the restoration of the Canada pension plan.

In 30 years the average age of Canadians will be higher than the present average age of the population of Florida, with no corresponding adjustment in temperature. A lower birth rate and increased life expectancy, along with a sharp rise in disability claims, also put new stress on the CPP. The CPP has also been jeopardized by inadequate contribution levels and inefficient plan management as a consequence of faulty legislation.

CPP funds, for instance, have been loaned to the provinces at the rate Ottawa pays on its 20 year bonds. This is less than what the provinces pay other bond holders and it is also less than what private sector plans earn. No wonder Canadians think the government cannot add.

The liberal plan to fix the CPP is basically a $11 billion tax hike on working Canadians out there and employers over the next six years. This is coupled with already high EI levels which the Minister of Finance, as I have stated, has refused to lower, the 90 cents he should have done.

What this government is doing with these changes to the CPP is a traumatic tax grab that will have a devastating effect on job creation. If we were in power, we would increase CPP contribution rates to levels adequate to ensure the long term viability of the plan. However, these increased contributions would be offset by a substantial reduction of personal income tax rates and EI premiums. This means putting more money into the plan without asking Canadians to pick up the tab and without creating threats to job creation.

We would also make provisions to finance the extra cost per year of seniors benefits resulting from demographic changes. We would also ensure that the mandate of the Canada pension trust and its trustees would be to advise the government on required contribution levels and to select the best private managers acceptable to the industry to invest the fund's growing surplus to secure long term returns.

It is most important that we guarantee all our young people today, not just the ones who are sitting in the House, but those across the country, that there will be a retirement plan for them, a Canada pension plan for them. It is up to each and every one of us to make sure this happens. Now it is our generation's turn to become nation builders. Part of that responsibility is to ensure that Canadians of all ages and all circumstances can count on a secure retirement.

I would argue that unless Bill C-2 is amended to meet the changes that our party is advocating and that the NDP is advocating as well, the Liberals will be passing the biggest tax increase this country has had in a long time and it will impact and hurt every Canadian very hard.

I urge all members of this House to consider this very seriously.

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4:35 p.m.


Antoine Dubé Lévis, QC

Mr. Speaker, I was pleased to give up my turn to the member for Saint John earlier, the reason being that there is a shipyard in her riding, as there is in my riding of Lévis. This may strike you as odd, but all parties sometimes have something in common.

When I listen to her, the old saying about not having your cake and eating it too came to mind. Basically, she is deploring the fact that the population is aging and that the CPP can be expected to cost the government more. If one were consistent, one would then admit that more money needs to be put into the fund, but that is not what she is saying.

On the contrary, she is saying that it is an unwarranted and unacceptable tax hike. We in the Bloc Quebecois feel the same way. The population is aging and there will be an increase in the needs of seniors, of those retiring in the future.

But there is worse. We must not forget those to follow, subsequent generations. Earlier, the member for Lac-Saint-Jean spoke of his concerns and fears as a young person for the future.

There must be no mistake about this. The Liberal and Conservative governments should have taken action much sooner. If we look at the demographic patterns, at the statistics, it is obvious that there will a problem to resolve. It could have been foreseen and resolved much earlier, but this was not done.

We therefore find ourselves in a situation where there is a mad rush to build up the fund, to make it more efficient, more productive, as Quebec did several years ago by setting up its Caisse de dépôt et placement. The Caisse is the pride of Quebeckers. Being a staunch sovereignist, I am delighted to see that the federal government wants to copy Quebec. This augurs well because it is also an admission that the Quebec government's solutions are sometimes good ones.

But back to the amendments. Following this line of thought, Motion No. 13 is admittedly a bit special. The New Democratic Party and the Reform Party agree on something. This worries me. What is the explanation when we see people from parties with completely different ideologies agree? Why is it that they agree on that when they are at opposite ends of the political spectrum?

They are also against it. They want to have their cake and eat it too. That is not possible. There comes a time when we have to make a choice, and this choice is now before us. The Bloc Quebecois' position is that the fund for the pension plan absolutely has to be increased. That is why we cannot support amendments designed to limit the assets going into the fund. For us, it stands to reason that it should operate this way.

The other amendments have more or less the same objective, and the motives in the case of Motion No. 14 are the same. I do not have much too say on Motion No. 15. We have to admit at times that we do not understand very well. I hope the NDP members will be providing more information because, as it now stands, this amendment serious questions.

As for Motion No. 16, it calls for the deletion of the section dealing with the new rules for calculating the benefits. These rules state that the pensionable earnings average will be determined by taking the last five years, instead of the last three years as is presently done. We are against this amendment for the reasons outlined before. This would have the effect of not ensuring the long term viability of the plan.

As for Motion No. 17, I do not have any comments. On Motion No. 18, if I understood correctly, the member for Qu'Appelle wishes to increase the contributions, so that the maximum earnings would go from $35,000 to $70,000. If that is what is meant, we can announce right now that we will be against it.

As for Motion No. 19, it calls for the deletion of the clause that provides for stricter requirements on the payment of benefits in the case of combined retirement and disability benefits. There is something I do not understand in all this. When a person is disabled, it is necessarily because he or she is sick or has a disability. I think everyone would agree that a person with a disability has a higher cost of living. Equipment and facilities that generally cost more are required.

It is the same thing in the case of people who have an incurable disease. They need medication, many types of services, and people to help them. So I think we have to accept the principle that people with a disability, when they are retired, need extra support to continue to live under conditions that are as normal as possible.

So these are the main arguments. Other colleagues from my party may also have observations on this, but that is the position of the Bloc Quebecois on Group No. 6.