Mr. Speaker, the bill before us proposes major amendments to the Canada pension plan and the establishment of the Canada Pension Plan Investment Board.
The bill, which was tabled in the House on September 25, is an updated version of a previous bill that died on the Order Paper when the federal election was called, in April.
I am pleased to take part in the debate on Bill C-2, particularly since this new legislation is an indirect tribute to the initiative taken by the Quebec government in the mid-sixties, when Jean Lesage's team decided to create the Caisse de dépôt et placement du Québec.
To better understand the fundamentals of the proposed reform, I will try to answer a few questions regarding Bill C-2. What is the objective of the bill? Who, in Quebec, will be affected by the new legislation? What are the main changes sought and what are our objections to the amendments proposed by the various parties in this House?
What is the purpose of this legislation? The bill has three main objectives. First, to preserve the Canada pension plan and strengthen its financial foundation by accelerating the increase in contribution rates.
Second, to improve the investment practices of the Canada pension plan by establishing the Canada Pension Plan Investment Board.
Third, to reduce costs through a more rigorous administration of certain benefits, in particular disability benefits.
For the benefit of those listening, it is important to mention that any change such as this must be approved by two-thirds of the provinces representing two-thirds of the population of Canada. This requirement was met and the proposed changes were approved. Only the provinces of British Columbia and Saskatchewan opposed this proposal.
Who will this bill affect? For those Quebeckers listening, it should be mentioned that the CPP reform is of greater concern to Canadians than to Quebeckers. Less than half of 1% of Quebec residents receive CPP benefits. Last August, there were 12,882 such people. Those affected must fall into one of three categories. The first category is Quebec residents who have worked all their lives in another province, and who have therefore paid CPP premiums only. For example, a resident of Hull who has worked all his life in Ottawa could be eligible.
The amendment also applies to members of the Canadian Armed Forces and the RCMP who reside in Quebec and must pay CPP premiums. Having paid only CPP premiums, they receive CPP benefits, even though they are residents of Quebec.
The amendment also affects those receiving CPP benefits who move to Quebec.
In all other cases, the QPP will apply. It should be noted, however, that the Government of Quebec is also in the process of reforming the Quebec plan, although that plan is in better financial shape.
Quebeckers are indirectly affected by the present reform because the two levels of government have always harmonized the main features of the two plans, through a common desire to accommodate those who have paid into both plans.
What are the main changes intended with this bill? I will deal here briefly with the two main changes being considered: the establishment of the Canada pension plan investment board and the rate of contribution. I would like to state immediately that the Bloc Quebecois agrees with these two initiatives.
The design of the Canada pension plan investment board being established by the government with this bill is closely modelled on the Quebec Caisse de dépôt et placement. However, unlike the Caisse de dépôt et placement, the federal investment board has no economic mandate; it only has the mandate to achieve the best possible rate of return.
It should be remembered that, at present, the money in the Canada pension plan is not invested in financial markets, as is the case in Quebec. By placing the management of this money in the hands of an independent organization, it will be possible to increase the performance of the Canada pension plan and also to protect taxpayers against dramatic contribution increases.
This is a proactive measure Quebec implemented a long time ago; it has produced convincing results. We should therefore point out the vision and the determination of the work carried out in this area by Jean Lesage and Jacques Parizeau, among others, who gave Quebec a tool not only to maximize the pensions of its citizens, but also to provide an instrument for economic development. We feel that, in this bill, this second component has not been given enough emphasis, with the result that the investment board's mandate is too weak.
The rate of contribution is certainly an area of the bill that has raised major concerns. It should be remembered that it had become necessary to review this rate because the plan was rapidly approaching unsustainability. The way things were going, the fund would have been empty by 2015, and the rate of contribution would have had to increase then from 6 to 14% in the case of the Canada pension plan, and from 6 to 13% in the case of the Quebec pension plan.
So the bill calls for a gradual increase up to a permanent ceiling of 9.9%, to be reached in 2003.
Sustainability and affordability are the main issues in this debate. We cannot put our heads in the sand and try to avoid this reality. As we know, the population of Canada is aging rapidly. Here are some numbers. There are now 3.7 million elderly people, in 2030, it is estimated there will be 8.8 million of them.
When the Canada pension plan was established in 1965, there were, for each elderly person in Canada, eight persons of working age. In 1997, the ratio is five to one, and it is estimated that it will be three to one in 2030.
As well, with all the progress in medicine, experts feel that the average length of time people will receive Canada pension plan pensions will be 20 years, as opposed to 15 when the plan was implemented.
All of this is very informative, and is the reason we are examining this bill. These are the reasons why the increase in contribution rates earlier than expected, which will result in improved funding, will reduce generational disparities by making the baby-boomers, who generally have about twenty years left to work, pay a greater portion of contributions, which is more representative of the benefits they will be receiving.
I would like to address the question of the amendments proposed by the different parties in this House.
Without reviewing all of the proposed amendments, I will if I may touch upon two of them.
With Motions Nos. 20 and 25, the NDP is calling for deletion of the clause setting penalties for fraud or false declarations.
No one can be against virtue. We understand the NDP's preference for incentives over coercive measures. We cannot, however, subscribe to such a proposal, since it is very difficult not to be severe in cases of fraud or false declarations.
As for the Reform Party, its Motion No. 10 calls for deletion of the clause permitting the retroactive increase of 1997 contributions.
This again is an amendment to which the Bloc cannot subscribe. Let us not forget that deferring any increase in contributions will only increase the contribution rate in the long term. The problem is with us now, so deferring action that ought to have been taken long ago is irresponsible.
In conclusion, I would like to repeat that we agree with the objectives of the reform, which are to make the system more viable, affordable and equitable.
We are duty-bound to ensure the viability of the plan for the generations to come. The proposed reform ensures intergenerational equity among contributors by establishing a constant and long term contribution rate, and by doing so promptly.
I see my time is up, so I shall stop here.