Debates of Dec. 1st, 1997

Canada Pension Plan Investment Board Act

[Gordon Earle, NDP, Halifax West, NS]

Thank you, Madam Speaker. I will return to Group No. 6.

I brought that forward because when my hon. colleague was speaking earlier, he made reference to the fraud element.

Moving back to Group No. 6, we are very concerned about the fact that the definitions outlined in Bill C-2 will end up reducing benefits. With the amendments we have put forward in Group No. 6 we want to counter that effect.

We do not believe that in today's society it benefits anybody to reduce the amount of benefit that someone receives. Rather, by doing that we end up paying in the long run because those people then have to seek other means to try to compensate their income. Therefore it is very important that the level and the integrity of the plan be maintained.

In conclusion, I support the motions we have put forward under Group No. 6. We feel that those motions should be adopted in order to keep the plan effective.

[The Acting Speaker (Ms. Thibeault)]

It is my duty, pursuant to Standing Order 38, to inform the House that the questions to be raised tonight at the time of adjournment are as follows: the hon. member for Frontenac—Mégantic, Dairy Industry; the hon. member for Waterloo—Wellington, The Economy; the hon. member for Hochelaga—Maisonneuve, Department of Citizenship and Immigration; the hon. member for Sarnia—Lambton, Privacy.

[Philip Mayfield, Reform, Cariboo—Chilcotin, BC]

Madam Speaker, as I listen to the debate on the report stage amendments, I do understand that the devil is in the details.

I want to discuss a little more generally some of the fundamentals as we consider these amendments, particularly those in Group No. 6 before us now. I want to talk about the fundamentals of retirement security. I am thinking primarily of RRSPs, the old age pension, the Canada pension plan and tax relief.

First of all to talk about RRSPs, company pension plans and RRSPs are the largest portion of retirement savings plans for most Canadians. Consequently the Liberals hit RRSPs hard with tax grabs over the last four years, undermining the fundamentals of retirement security.

For example, in 1995 the RRSP contribution limit was reduced from $14,500 to $13,500 for 1996-97. That is $1,000 less for people to invest for their retirement and $1,000 more for the government to tax and grab from Canadians.

As well in 1996 the government reduced the age limit for contributions to a RRSP from 71 years to 69 years. As well as giving two years less to contribute to a person's own retirement security, reducing the age limit allows retirement income to be a tax target two years sooner. It is one big tax grab after another, aimed directly at seniors.

Even worse, the government plans to erode the RRSP retirement pillar even further. During the last session of Parliament, the government members reluctantly admitted that they were looking at more ways to tax RRSPs. This is shameful. It is a shameful action of the Liberals to do this. No sooner do people try and salt some money away for their retirement than the government is right there with its hand in their pockets trying to get every last red cent. If the Liberals continue the steady calculated hacking away at RRSPs, people will lose their incentive to save for self-sufficient retirement.

The old age pension is the second pillar of retirement that the Liberals are slowly destroying. In the year 2001, the old age pension, the guaranteed income supplement, the pension income tax credit and the age tax credit will be replaced by the so-called seniors benefit. Unfortunately when the seniors benefit is implemented, the government plans to claw it right back again.

For example, pension experts estimate the seniors benefit will raise the average tax bill of a retiree from $3,000 to $7,000 a year. The government in its effort to grab every tax dollar it can, will base the amount of the clawback on family income, not individual income. This means seniors will end up paying more of their retirement income to the government. Some seniors are even considering divorcing to avoid this unfair tax grab.

Why does this government shamelessly hammer away at the family institution at every level from youth to seniors? Why do the Liberals consistently kill individual self-sufficiency, instituting more and more costly controls on citizens with its we know what is best for you attitude?

It is clear that the government invented the seniors benefit strictly for the purpose of grabbing more tax dollars from the elderly knowing this will impoverish many. By the year 2030, the seniors benefit is projected to produce $8.2 billion in additional tax back benefits. The only beneficiary in this case is the government, not the seniors.

The third pillar of Canadian retirement security is the Canada pension plan. When the Liberals established the CPP 30 years ago it was structured in a fashion similar to a pyramid scheme. Early contributors reaped attractive benefits paid for by younger entrants to the plan. The problem in the 1990s however is that there are fewer and fewer contributors paying for more and more beneficiaries. It would take $600 billion to pay all the benefits promised so far, but the CPP fund can only meet present commitments. That is the catastrophe the plan is facing.

To rectify this problem the government plans to hike the CPP payroll tax. For example, CPP premiums will be hiked from 5.85% of wages up to a maximum salary of $35,800 to 9.9% by the year 2003. Workers now paying $944 a year will see their annual contributions rise to $1,635 by the year 2003, which is an increase of 73%, the largest tax hike in Canadian history. And for all this the retired person will receive less than $8,800 per year after retirement.

This means that Canadians, especially young Canadians, will have to pay much higher premiums for much smaller benefits. For example, the Library of Parliament says a person who retired in 1976 will get $12 for every dollar contributed, but a person retiring in the year 2041 will actually get a negative return. This means that after all the years of contributing, instead of being paid interest on the money contributed, Canadians will actually be eligible to receive less than the amount they paid into the CPP fund.

Nearly doubling CPP premiums will also kill thousands of jobs, reducing the number of Canadians who can contribute to the fund. Even the finance minister admitted this fact on May 3, 1994 when he said “payroll taxes are a cancer on job creation”. Further, Department of Finance economist F. Weldon wrote in 1993 that a one percentage point increase in payroll taxes means a decline of nearly 1% in employment. That works out to 140,000 jobs lost. The Liberals want to hike premiums by four percentage points. That is 560,000 jobs sacrificed for this latest Liberal scheme. Bill C-2 will kill more than half a million jobs.

So far I have explained the three pillars of retirement security: RRSPs, old age pension and the CPP. Now if I may, I would like to read a letter that I received from one of my constituents expressing her concern about the amendment to the CPP. She writes:

I am writing in regard to the increase in CPP. I am a housewife with two small children. My husband works 12 hour days, six or seven days a week. Even with all the hours my husband works, we are only making ends meet.

We cannot afford an increase in CPP. This increase only means my husband has to work even harder which means we will see even less of him. How is this good for my two children? How is this good for our marriage?

The government borrows, or should I say steals, from the CPP fund and then increases it because they can't pay it back. Why do we have to pay for a dishonest government? They preach about how they want to save our children. They preach about broken marriages. Then they turn around and screw us again. Couples stress over money and it does affect the children. It does affect the marriage.

How can I afford to put my children in swimming lessons or baseball when any extra money we have the government takes? My oldest son is five and he said to me, “Why can't I, mommy? We can't afford it, right?” This is from a 5 year old. All his friends at school get hot lunches on Fridays but he doesn't. How are we supposed to dish out another $100 a month?

Will CPP be there when my husband retires? I doubt it. I have a friend who at 28 is having to declare bankruptcy. She has three children. I know that it could be us. Kids are in trouble today more than ever because parents aren't there. They have to work harder and longer so the kids are on their own. The future looks bleaker. Something has to be done about this CPP. Canada is on its way to ruin the way I see it.

[Hec Clouthier, Liberal, Renfrew—Nipissing—Pembroke, ON]

Madam Speaker, I rise to speak in favour of Bill C-2. I also rise to speak to the motions in Group 6.

One of the motions put forward by a party opposite indicates that the proposed amendment would remove new investigative powers and administrative penalty provisions designed to prevent fraud and to allow for remedial action outside of court processes.

We oppose this motion for the simple reason that client rights are protected by the availability of full appeal rights pertaining to all matters within this bill and arising from the imposition of an administrative penalty.

These new investigative powers align the Canada pension plan with old age security and with current provisions of the EI act.

The previous speaker spoke rather scurrilously about Bill C-2. I was reminded of something which Mark Twain once said. He said that there are lies, there are damn lies and then there are statistics. The hon. member for Cariboo—Chilcotin played fast and loose with the statistics.

He was making disparaging remarks about the CPP and endorsing RRSPs. RRSPs are not guaranteed. People can invest their money in RRSPs and lose it, but if they invest their money in the Canada pension plan it is guaranteed by the federal government. It is a pension plan.

[Philip Mayfield, Reform, Cariboo—Chilcotin, BC]

It is a guaranteed loss.

[Hec Clouthier, Liberal, Renfrew—Nipissing—Pembroke, ON]

Madam Speaker, the member opposite has a beautiful wife. She is a very good friend of my wife. I really do not know what she sees in the hon. gentleman, but I guess he does have some redeeming qualities.

The hon. member opposite indicated that it was a payroll tax. All hon. members opposite know full well that it is not a payroll tax. It is a pension plan.

[Some hon. members]

Oh, oh.

[Hec Clouthier, Liberal, Renfrew—Nipissing—Pembroke, ON]

Madam Speaker, tell them to watch my lips. It is a pension plan. We will look after people when they decide to ride off into the sunset with their pension.

The actuaries of the Reform Party have already told them that it would be more costly initially to get into an RRSP plan than it would be to get into the CPP. They know full well that is the truth.

Another motion that was put forward, I believe it is No. 11, suggested that the new contribution rate schedule be deleted and the old unsustainable schedule remain in effect. That would be absolutely devastating. This motion would put the financial sustainability of the CPP at risk, which is the very thing our bill addresses. We want this plan to be sustainable. That is why Bill C-2 is before the House.

This motion most certainly should not be considered, as far as we are concerned. It would bankrupt the plan by the year 2015. I realize that some members opposite are bankrupt of ideas with respect to the CPP, but the plan would actually have no money in it by the year 2015 if we went along with this motion.

We are talking about money. The Greek philosopher, Sophocles, once said that there is nothing so demoralizing in the world as money or the lack thereof. I say to members opposite that if we went along with some of these motions there would certainly be a lack of money in the pension plan. Therefore we cannot endorse them.

Motion No. 22 would delete the requirement for increased contribution rates to cover the costs of new or increased benefits.

That is an important statement of principle, but the federal and provincial governments agreed that any future benefit enrichments must be paid for and that we should never ever again put the security of the CPP at risk by enriching benefits without being able to pay for them. We must have the money to pay for these benefits. We will ensure that because we want to ensure that our young people most certainly of all are not saddled with this unbearable burden.

This leads to leadership. As you well know, Madam Speaker and members opposite, leadership is not necessarily a leadership act. On many occasions it is a moral act. It is not merely the assertion of power, but the assertion of vision. It is having the moral integrity and the intellectual courage to make this vision compelling.

I know the Leader of the Opposition and I believe the leaders of some of the other parties when referring to the throne speech brought forth and quoted fairly liberally from a great Canadian. I know the hon. Leader of the Opposition most certainly did. It was Sir Wilfrid Laurier. Sir Wilfrid Laurier over a hundred years ago had this to say, and I will paraphrase it, about liberalism. Before some of the members opposite start indulging in idle rhetoric and yelling at me, it is small “l” liberalism.

“Liberalism is inherent in the very essence of our nature. It is that desire of happiness with which we are all born into the world. We constantly gravitate toward an ideal which we never attain. We dream of good but never realize the best and thus it will be as long as people are what they are. As long as their immortal soul inhabits a mortal body, their desires will always be vaster than their means”.

The means by which we are going to set a plan that is viable and is sustainable for the youth of this country is this Canada pension plan because we and I believe all members in this chamber care. We as federal members of Parliament must lead the way. We must get Canadians to look beyond the Teflon and the show biz of perhaps question period and perhaps of some of the things we do and say in this House. We must get them to look at the reality of life.

This will not be done by each and every member in this House standing up and reading a speech that has perhaps been penned by hired guns, a speech that perhaps sounds good. We need speeches that are good and sound. We do not need speeches that bring people to their feet. We need speeches that bring people to their senses.

To do this each and every one of us as parliamentarians must make sacrifices. We must give up a little bit of our self-interest. On occasion we cannot get exactly what we want. The truth of the matter is that this truth must ring loud and clear. It must not be muffled by crass manipulation.

The truth of the matter is that in order to proceed as parliamentarians, in order to proceed with this bill, our people must be more intelligent, more highly organized, our social standards more just and each and every person in this chamber, in the House of Commons, must be more united in our cause. We must not fail in our duty at this time.

As parliamentarians we must believe in a country as blessed as ours, and blessed we are with the riches of our natural resources, be they gas, oil, water or timber. The richness we really have is our human resources. All members in this House, irrespective of their race, creed, colour, religion or political affiliation, must come together and do what is best for our country Canada.

We must believe that we will be able to reach out to those people, reach out to the hungry, the homeless, the sick and the destitute. How do we do that? By bringing forth a bill such as Bill C-2, a Canada pension bill that is good for all. It is time that we stood up and shaped our own Canadian identity, that we stood up and did what we have to do.

What we have to do is endorse Bill C-2 because it is a tremendous bill. By following this bill, we can and will lead the entire country into a brighter, more prosperous, more beautiful future.

[Francine Lalonde, Bloc, Mercier, QC]

Madam Speaker, I was a minister in Quebec briefly in 1985, and I remember at the time the government of René Lévesque brought down an orange paper. The colour stuck in my mind. What was it about? It was on the need to better finance the Quebec pension plan. That was in 1985. The Quebec pension plan and the Canada pension plan serve the same purpose, which is to ensure that people who have worked receive universal benefits so they can enjoy a comfortable retirement.

What I find surprising is that a number of members in this House are just discovering the problem. What I also find surprising is the fact that this government, in power since 1993, has not looked at this urgent matter before now. What I find even more surprising is that we are not hearing the Conservatives repent openly, saying “We should have looked at the viability of the Canada pension plan when we were in office”.

In Quebec, some 0.5% of people receive a pension from the Canada pension plan, while the others receive theirs from the Quebec pension plan.

The motions in Group No. 6 concern viability. I understand those colleagues who would like people not to have to pay for this collective insurance and would like them to receive more. Unfortunately, over the years, we have learned that when we pay out benefits we must ensure there is money to cover them, otherwise the plan is threatened, and with the passage of time young people are increasingly facing the prospect of no benefits.

This House must quickly go through the democratic process to approve the increased contributions proposed, even if they hurt. This is the only way to ensure that future generations can benefit from this program, which is rightly considered the jewel of the social safety net.

No other system can do the job. Some people, of course, can invest in RRSPs, but everyone agrees that it takes a certain salary level and a secure income. Only people with no problems in life, who do not have to stop working because of illness or pregnancy, for example, can afford to invest in RRSPs.

So, as a supplement, yes. But there must be a universal plan that is viable and not only for one generation, but for all generations to come. This is why this bill, which increases contributions, must be approved quickly.

The government must also further reduce unemployment insurance premiums. I think I was the first to say in this House that unemployment insurance premiums had to be cut. When we were elected, I was the human resources development critic. It was true then, but today it is outrageous. I say it as I see it. It is crazy for the government year after year to plan surpluses of $6 billion a year from the premiums paid by workers who earn up to $39,000 and then stop paying premiums. I am speaking primarily of small and medium size businesses, because capital intensive businesses pay much higher salaries and so pay proportionately less. It is the people who work, the small and medium size businesses that pay these premiums, which are not even a disguised tax but an obvious tax imposed to reduce the deficit.

We in the Bloc have been saying for some time that premiums must be reduced and that the plan must be improved. With a surplus of at least $13 billion already in the fund, we will never be in a situation—given the current plan's structure—where it could become empty.

Let us not forget that the former unemployment insurance plan incurred an annual deficit of $2 billion during the 1990-92 crisis, but it was a more generous plan and the unemployment rate was also extremely high.

It is absurd and outrageous to have such a high payroll tax. The government is in a position to lower contributions while promoting the growth of the Régime des rentes du Québec and the Canada pension plan.

To ensure the viability of the plan, the bill provides that it will be managed by a board. In my speech at second reading, I mentioned that, in Quebec, a board was set up in 1965 to not only manage the fund, but also to promote economic development. I do realize however that in Canada a board with such powers will necessarily have centralizing effects. I must say that if I thought I had to live with that board for a long time, I would be concerned about its centralizing effects. Members from other parties should look into this, because there is a lot of money involved.

We know that the Caisse de dépôt et placement now has assets—and I am quoting from memory—of at least $62 billion. It has investments in all large corporations and also in small and medium size businesses. It plays an important economic role, and Quebec is a mixed economy, partly thanks to the Caisse de dépôt et placement. We are very proud that, in 1965, the government of the day, whose motto was “masters in our own house”, decided to co-ordinate management of the premiums paid by workers and employers.

The bill is not perfect, and nor is the Régie des rentes du Québec. Personally, I would like to see some conditions changed but, generally speaking, if we are serious in our commitment to younger people, we must quickly ensure adequate financing of the Régie des rentes du Québec and the Canada pension plan. The RRQ must continue to serve as economic leverage.

[Reed Elley, Reform, Nanaimo—Cowichan, BC]

Madam Speaker, it intrigues me that we can have such different views of Canada and such different views of what Canadians are saying to us. I will take some time to speak against Bill C-2 and somewhat to the group of amendments before us.

Before I begin that it is necessary for me to begin my remarks by touching on something that was recently written by Michael Jenkinson of the Edmonton Sun . Like many other Canadians, he is realizing that the proposed changes to the CPP are tantamount to the biggest tax rip-off in Canadian history. Mr. Jenkinson writes:

I apologize if I misled people into thinking that the CPP premium increase would be a massive tax hike instead of a freaking monstrous tax grab.

I am now satisfied that the Liberals are not ignorant, money grubbing, peons who believe the answer to every problem is to hike taxes. Instead people should correctly understand that the Liberals are actually treacherous demon spawn who would rather sell out today's younger generation for the sake of a quick political fix.

Now those are not my words. I would be a little more delicate in what I would say about people. However, it is an expression of some of the outrage we in the Reform Party are hearing about the proposed changes to the CPP.

The notion that this Liberal government is selling out future generations of Canadians is at the heart of this matter. We take the opposite viewpoint from our hon. colleagues across the way who see it as the great salvation for our young people.

Aside from the cruel intergenerational transfer of wealth that this bill proposes, this legislation will give Canadians in the upcoming generation a pathetic return once they retire.

My colleagues, for just a second I plead with you to think of what this legislation will do in conjunction with a $600 billion or more national debt. Not only has this Liberal government effectively relegated repayment of the national debt to future generations of Canadians, it has now saddled them with the $590 billion unfunded liability present within the Canada pension plan.

I wonder if Liberal members across the way have children. Do they not have grandchildren? What can they possibly say that would justify placing this heavy debt around the necks of our young? What will these future generations of working Canadians have to look forward to after decades of debt repayment? What will be their reward for the thousands they will pay into CPP contributions? A pathetic pension which will give them a negative return on their investment once they retire. I think that is downright criminal and sad.

Beyond that, when I listen to the flippancy coming from the government benches during question period and when I listen to the finance minister twist his responses on the matter of the CPP it is disgusting.

I have eight children. Some of them are old enough to vote and some are not. In either case, the proposed changes to the Canada pension plan are and will be nothing short of a national tragedy. What say do my children have right now in this matter? Actually their say will mirror that of their future pensions, nothing at all.

Right now contributions are 5.8% of every working Canadian's gross salary whether employed or self-employed. Participation is mandatory. Contributions will increase over a six year period until the year 2003 when they will reach a steady state of 9.9%.

According to the Library of Parliament, those who retire in the year 2026 will only get back 64% of what they put into the Canada pension plan. That same study also shows that people who retired in 1976 will receive nearly 12 times what they put into the scheme. Is that fair to our young people?

That is exactly what this is. It is a scheme. More precisely, it is a pyramid scheme, one which greatly benefits those who are in first and gives the shaft to those who will follow.

There is, however, a major difference between Bill C-2 and the illegal investment scams conducted in places like Albania. Yes, just like the pyramid schemes that plagued but were accepted by the Albanian government, the CPP is also sanctioned and condoned by our government in Canada, except the people of Albania at least had a choice in whether or not they wanted to participate.

Through Bill C-2 this Liberal government is not giving Canadians any choice whatsoever in the matter. In short, this state sanctioned mugging is mandatory.

By the year 2003 every worker making at least $35,800 will pay $1,635 per year and his or her employer will have to match it. Of course, self-employed people will have to pay both contributions, as much as $3,270 per year.

The maximum benefit payable under CPP is 25% of an average salary of $35,800. This works out to a top yearly payment of $8,725. If that is not obscene, what is?

The tax grab hits everyone. The only real difference is the proportional way in which it does so. In terms of low income workers and part time workers, they will feel the pinch disproportionately. The first $3,500 of income is exempt from CPP deductions. It is called the yearly basic exemption. However, Bill C-2 will freeze this deduction. So as the price index rises with inflation over the years the real level of the YBE, the yearly basic exemption, will decline. This will effectively shift the burden of contributions more heavily on to low income earners. This is a regressive feature that widens the contributory base by stealth.

Aside from the negative consequences that Bill C-2 will have on future generations of workers, this legislation also represents a huge obstacle to anyone who will be looking for a job. Why? Because the proposed premium increases are the biggest payroll taxes ever put to Canadians since the inception of the Canada pension plan, 73% over the next six years.

Madam Speaker, colleagues, Canadians, payroll taxes kill jobs. Do not take my word for it. In the House of Commons on May 3, 1994 Paul Martin said in an answer to a question by the leader of the Reform Party “payroll taxes are a cancer on job creation”. In his own presentation to the Standing Committee on Finance on October 17, 1994 finance minister Paul Martin said it even more clearly—

[Paul Szabo, Liberal, Mississauga South, ON]

Madam Speaker, on a point of order, with due respect, the rules of this place do not allow members to refer to members by their name but only by their riding.

[The Acting Speaker (Ms. Thibeault)]

That is correct.

[Reed Elley, Reform, Nanaimo—Cowichan, BC]

Madam Speaker, the finance minister said it clearly: “We believe there is nothing more ludicrous than a tax on hiring, but that is what payroll taxes are. They have grown dramatically over time. They affect lower wage earners much more than those at the high end. We took steps early in our mandate to reverse this trend in the case of UI premiums. We would hope to take further steps in the future”.

There we have it. Even the finance minister admits that payroll taxes kill jobs. Yet we now have the most hypocritical of positions before us in Bill C-2. The Liberals are not listening to themselves and they are certainly not listening to average Canadians.

Joe Italiano of the Department of Finance did a study in April 1995 on the employment implications for growth in CPP contributions. The CPP premium rate grew just seven-tenths of a percentage point between 1986 and 1993 but Italiano said it cost Canada 26,000 jobs.

The Liberals intend to increase the rate almost six times the rate increase Italiano used. Using Italiano's assumptions and projecting into the future we calculate that the phased-in increase of the higher CPP premiums will cost the Canadian economy 100,000 jobs.

In closing, I serve notion of my intention—

[The Acting Speaker (Ms. Thibeault)]

I must apologize but the time really has run over. Resuming debate, the hon. member for Brandon—Souris.

[Rick Borotsik, Progressive Conservative, Brandon—Souris, MB]

Madam Speaker, it is not necessarily with great pleasure that I rise to speak to this piece of legislation, but I certainly do have the opportunity to speak, albeit somewhat limited because of the closure that has been suggested by the Liberal government.

I find that in itself terribly damaging to this piece of legislation.

Normally when legislation is put forward by the government in power, it is done with the best interests of Canadians at heart when the legislation is proposed.

The government suggested that this legislation cannot be debated in the House and did not give the opportunity to consult Canadians about this piece of legislation which will impact them quite dramatically over the next numbers of years, not only from a premium perspective but also from the perspective of a return on those dollars that are going to be invested in the CPP program.

I take exception to the fact that Canadians were not consulted, that the people who will be paying the majority of the premium price have not had an opportunity to tell us one way or another what their views are. This government has decided in its own wisdom to stop the debate, “Let's not give anybody an opportunity to talk about the pros and cons”.

There are a number of citizens who would love to have the opportunity to speak to this. The first are obviously the seniors. We have a high proportion of seniors.

They have been talking to me. They have been calling me and asking what is going to happen to them. As well, they have a need and a desire to make sure that their children and their children's children are taken care of in the years to come.

Those seniors would like to be consulted. They are currently reaping some of the benefits of a Canadian pension plan that was put in place 30 years ago. It also behoves the government to consult with the baby boomers—I put myself in that category and you too, Madam Speaker—who are going to be affected quite dramatically by the fact that we will be faced with substantial increases in premiums and may not be able to get any return on investment.

The Canada pension plan, I believe, should be based on a very simple premise. That premise is a pension plan is a pension plan. It is not a tax. It is not an opportunity to raise money to pay for others who have gone before us.

A pension plan is a pension plan. When money is put into a pension plan, you expect to have a rate of return and certainly a return on that investment at some later date.

That is not the case here. Until the government admits that this is a tax grab, believe me, we will be debating this bill as long and as hard as we possibly can for the benefit of all Canadians.

Let us look at the legislation. I will talk to the motions before us. By the way, they are good motions in some cases and in some other cases perhaps not quite as valid.

This is just one attack on what is happening with our pension structure in Canada. Other effects are going to be on the OAS, the old age security, and on RRSP contributions as was mentioned earlier by a speaker from another party.

Make no mistake about it. The Progressive Conservative Party wishes to have a sustainable, stable Canada pension plan, but a pension plan, not a tax. We believe in sustainability. In fact, we believe that premiums have to be increased in order to make the plan sustainable.

We have said all along that in order to do that, we would like to offset these regressive payroll taxes that are being proposed now with the huge, intolerable increases, excessive increases in the CPP premium.

That can be offset quite simply by taking the EI premiums that are currently in place and generating substantial revenues that are going to offset the deficit. This government in a self-congratulatory fashion is saying that those dollars are going to the deficit.

There are other methods to reduce the deficit. The huge resources that are being generated from EI premiums should go into the CPP. Those are payroll taxes. Payroll taxes destroy jobs. I am sure that everybody recognizes that the change in premiums to $1,635 in the year 2003 is a premium matched by the employer.

An employer will have few options to fund the premium increase; reduce the salaries of their employees which would give them less disposable income; do not give increases in the following years because of the excessive changes to the CPP premium level or lay people off. In fact, at that time nobody would be contributing, not to society and tax revenues but also to the CPP. The final and worst option is to lose money in the business and not have a business in the future. That does not help anybody. That is what happens when there are regressive payroll taxes.

Our plan is simple. Have a sustainable fund and make sure that the offset of the CPP premiums come from EI. The Reform plan, unfortunately, is very simplistic. It does not have a plan. We should simply throw up our arms and say every man, woman and child for themselves. Let us simply say that a $600 billion unfunded liability does not exist. It does not work and it never has worked. However, these are very simple solutions for complex issues.

I would also like to say that it is not only seniors and the baby-boomers that I am concerned about, but the people who come after. I too have children, ages 22 and 18. They are going to join the job market as soon as I have paid for their university education. They will be in the job market and be contributing members of this society. In fact, they will be contributing a substantial amount of money to a plan that may well, for all intents and purposes, not be available to them when they are depending on it.

Remember the simple premise? A pension is a pension. CPP is a pension. When we contribute to it, we should get a return back on the investment. If we are not going to do that, then call it what it really is, a tax.

I hate looking at the term benefit. There are benefits that are paid. No, there is a return on the investment that is being paid. The return on that investment is proposed to be decreased on an annual basis. However, in fact, the premiums are being increased on annual basis.

We have heard the numbers and they are not refutable. Contributors will be getting no return on their investment when they want to collect CPP in the not too distant future.

Motion No. 11 from the NDP, unfortunately we cannot support it. It is a proposal to eliminate the premium table. We have always said that we believe in the CPP. There has to be funding in order to have a sustainable fund. There has to be a premium table. Premiums have to be paid and certainly premiums have to be increased, but with a decrease in the EI premium as well. That is sustainability. That is not regressive payroll taxes.

[An hon. member]

We have reduced it four times.

[Rick Borotsik, Progressive Conservative, Brandon—Souris, MB]

Not enough. The comment was made that EI premiums have been reduced four times. It is our very valid opinion that they can be reduced dramatically to offset this CPP contribution.

Motion No. 14 is to freeze the yearly basic exemption for ten years. We believe that there should be a freeze on the YBE, but it should be for a ten year period, not in perpetuity for the simple reason that there are changes in our inflationary factors in Canada. Let us put it in place for the first ten years and review it after a ten year period.

I appreciate the opportunity to speak to this very, very important piece of legislation. I hope that the government will look at the ramifications that this legislation will have on the Canadian public, the Canadian employees and employers of this country. This legislation will have serious, negative ramifications.

[Karen Redman, Liberal, Kitchener Centre, ON]

Madam Speaker, I would like to express why I am so supportive of the government's Bill C-2.

It is a demonstration that we are willing to restore Canada's faith in its pension plan. We are dealing with this pension plan in a businesslike manner. It is one of the things that we hear more and more lately: The community is asking the government to operate as a business.

There were extensive hearings in partnership with the provinces from April 1996 to June. It was a David Walker committee. The reforms that this government is suggesting reflect the wishes of those people who were consulted.

I have heard hon. members opposite talk about a contribution to the Canada pension plan as a job-killing payroll tax. When I consult with the small business people in my area, they say that contributions to the Canada pension plan are merely the costs of doing business and that if your bottom line indicates you can hire more people, you will.

The Canada pension plan has aspects of it that I think demonstrate the kind of country Canada is. We have insurance benefits. We have disability pension and survivor benefits. They, too, reflect the kind of character that we heard Canada wanted in its pension plan.

The Canada pension plan is not a wealth redistribution plan. It is a plan that will be there for all Canadians. That is why I feel that it will restore the Canadian belief that a pension plan will be there for our children and our grandchildren.

I would like to speak to Group 6. Motion No. 11 speaks about deleting the new contribution schedule rate. One of the things that the reform to the Canada pension is doing is establishing a sustainable rate that Canadians can rely on. The suggestion that we do not deal with the increases both on the part of the employer and the employee would put the sustainability of the Canada pension plan at risk. That is the very issue that this bill addresses.

The suggestion by the hon. member opposite that we not raise the contribution rates would mean that the plan would be bankrupt by the year 2015. The Canada pension plan has an unfunded liability that these reforms will deal with, again in a businesslike manner.

Motion No. 13 by the member opposite talks about removing the year's basic exemption and freezing it. The year's basic exemption is the portion of earnings on which contributors do not pay premiums but receive benefits. Under the proposed changes, the year's basic exemption will continue at its current level of $3,500 rather than growing on the line with average wages. By freezing the year's basic exemption at $3,500, more and more very low earning workers will be eligible to contribute to CPP and receive benefits from the plan.

Earlier the member opposite talked about a very compelling letter by a constituent whose husband works six days a week. I believe there was real angst in that letter. Those kinds of people do not have the kind of money that they can contribute to the super RRSP plans that have been suggested by the Reform. That is why it is fundamental that the Canada pension plan be there for all Canadians in their retirement.

Motion No. 22 speaks about deleting the requirement for increased contribution rates to cover the cost for new or increased benefits. When we had hearings with the provinces and Canadians in the communities we visited across Canada, one thing we heard about was the fact that they did not want current recipients to be impacted and they wanted it to be there, to be sustainable.

Of the 9.9% that we will go to and stay with, 4.3% goes to pension contribution, 1.7% would go to the insurance component. Again I would underline that that is something Canadians said that they wanted to see in their Canada pension plan. .1% goes to administration, which is a very low percentage when you look at private pension plans and how they are administered, and 3.8% would go to the unfunded liability, which is the very point this government needs to wrestle with in order that this plan be sustainable.

This is the first step of many. We are going to look at track 2 in dealing with other issues that we heard Canadians were concerned with. Bill C-2 is a step forward and something that all Canadians need for their future.

[The Acting Speaker (Ms. Thibeault)]

It being 5.15 p.m., pursuant to order made earlier today, it is my duty to interrupt the proceedings and put forthwith every question necessary to dispose of the report stage of the bill now before the House.

Pursuant to the order made Wednesday, November 26, all motions in Group No. 6 are deemed to have been put to the House and the recorded divisions are deemed to have been requested and deferred.

[The Acting Speaker (Ms. Thibeault)]

The House will now proceed to consideration of the motions in Group No. 7.

Pursuant to the same order, all motions in Group No. 7 are deemed to have been put to the House and the recorded divisions are deemed to have been requested and deferred.

[Lorne Nystrom, NDP, Qu'Appelle, SK]

moved:

Motion No. 20

That Bill C-2 be amended by deleting Clause 87.

Motion No. 25

That Bill C-2 be amended by deleting Clause 107.

[The Acting Speaker (Ms. Thibeault)]

The House will now proceed to the taking of the deferred divisions at the report stage of the bill now before the House.

Call in the members.

Before the taking of the vote:

[The Speaker]

The House will now proceed to the taking of the deferred recorded divisions at the report stage of Bill C-2. The first question is on Motion No. 1.

(The House divided on Motion No. 1, which was negatived on the following division:)

Division No. 34

[The Speaker]

I declare Motion No. 1 lost.

[Bob Kilger, Liberal, Stormont—Dundas, ON]

Mr. Speaker, on a point of order, I believe you will find consent to apply the results of the vote just taken to Motion No. 3.