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.