Madam Speaker, I rise at third reading of Bill C-2 to establish the Canada Pension Plan Investment Board.
I think it is important to remember that this bill fits into the retirement income system available to Quebeckers and Canadians, a system with three components, the Canada pension plan, the public pension plans—old age security and the guaranteed income supplement—and the tax incentives for private savings, commonly known as RRSPs. Thus, the policy at the present time focuses on three elements: private pension plans, public pension plans, and supplements.
The Canada pension plan has been much debated here, and this was legislation tabled after consultation with all the provinces. As we know, Quebec has its own pension plan, the equivalent of the Canada pension plan. The consultations held both in Quebec and in the rest of Canada led to eight provinces agreeing with the general recommendations. The two opposing provinces disagreed with a specific aspect, not the reform as a whole.
It is important, however, to assess this bill in relation to the second component, old age security and the guaranteed income supplement. The federal government announced that there would be an in-depth reform of this sector. It will be replaced by the seniors benefit. We have already known for two years what the federal government's initial parameters are for this, but extensive consultations will have to be held over the next few months on what the seniors benefit will be like, since it represents a fundamental change.
Basically, the decision has been made to do away with certain aspects, such as the principle of universality. It is being replaced by a principle under which people yet to retire, those who are 55 years old now, but also those aged 45 or 20, will see their entire retirement preparation profile changed by the seniors benefit.
Today, the legislation on the Canada pension plan does not deal with the issue of benefits to seniors, but everyone preparing for their retirement must look at it in terms of the Canada pension plan or its Quebec equivalent, the Quebec pension plan, and of the issue of old age pensions and the third pillar, which is the whole issue of private retirement plans, such as RRSPs or supplemental pension plans.
These things must be taken into account and, regarding this third pillar, the RRSPs, you will remember that the Bloc Quebecois proposed replacing the RRSP deduction with a tax credit of $268 for everyone. We think this is the only fair and equitable way to encourage all taxpayers to save for their retirement.
We should note that the bill before us today is of interest not just to those who are already retired. We must remember that the Canada pension plan was created in the 1960s in an attempt to ensure Canadians could count on an adequate retirement income. We have noted a number of shortcomings in the legislation over the years. The aim of the bill we are considering today is to correct them.
The main shortcoming of the fund was that it failed to grow sufficiently. There is a deficit, and we are faced with a choice. Either we increase contributions substantially or we have to reduce services. So we will try to find a reasonable compromise.
It is very revealing that, finally, the solution was found in Quebec. When Quebec created the Régie des rentes du Québec, the Caisse de dépôt et placement was created at the same time. This is a powerful investment fund that allowed Quebeckers to obtain a greater yield on their money than with the old Canada pension plan because, with that plan, nothing had been done to ensure maximum return on investments. Nothing was done to ensure maximum revenues and the result was that the fund was never self-sufficient.
It is interesting to note that in an area where Quebec was given adequate flexibility during the Pearson years, when two different plans were able to exist side by side, it is Quebec that was more successful. So much so that when federal government officials began developing the bill we have before us today, they came to Quebec, they met Quebec officials, and what is found in this bill under the investment component is based mostly on the model developed by the Caisse de dépôt et placement du Québec.
There is a difference—Canadians will be able to judge in due time its importance—and it is that in the case of the investment board, the only criterion to maximize return on investment is market profitability, whereas in Quebec, with the Caisse de dépôt et placement, the responsibility to contribute to the economic development of Quebec was included in its mandate. It should be noted that when this fund was created, funnelling of savings by Quebeckers had not begun, and they did not have the economic development capacity enjoyed by the English speaking provinces, and I would say also by the English speaking establishment in Canada. There was a lot of capital in a great number of companies.
At the beginning of the sixties, English Canada had almost complete ownership of the capital. So Quebec, with the Caisse de dépôt et placement, developed this investment capacity so that it could compete and so that people would stop saying that it knew nothing about business. Then, during the following 25 or 30 years, we showed that we were also capable of looking after these things. We have an institution that we can be proud of, especially in view of the fact that the federal government has decided with its bill to copy it almost completely.
The first important area to remedy is the plan's profitability, and it should be possible to partly succeed in this with the investment board.
We must understand also that when the minister iintroduced his bill in the House on September 25 last, he had two other major issues to deal with: the increase in capitalization that I mentioned, the increase in the rate of return in the plan, and tightening the requirements for certain benefits, especially disability benefits.
The auditor general stated in his report that there was some permissiveness in the application of the Canada pension plan because of the way the current legislation is framed.
Again, this is not the case with the Quebec pension plan. Our province was used as an example because, over the past 30 years, it has passed social laws that allow us to deal with disability cases through means other than the Canada pension plan or the Quebec pension plan. Thanks to these other means, Quebec did not have to twist the legislation the way the federal government did to dip into the CPP fund to pay for disability claims.
So, these are the objectives of the bill. Consultations were held. Eight provinces approved the proposed changes. British Columbia and Saskatchewan are the only ones that did not support all the proposed changes. The end result is pretty good, given the situation that had to be dealt with.
Why did we have to question certain aspects of the plan? For one thing, at the rate things were going, the fund would have been empty by the year 2015, at which time the rate would have had to jump from 6% to 14% for the Canada pension plan, and from 6% to 13% for the Quebec Pension Plan.
As I explained earlier, the Quebec government has its own plan. Some people have contributed to both plans, over the years. The Canada pension plan concerns primarily Canadians living in the nine provinces other than Quebec. Still, 12,000 Quebeckers are affected, and it is with them in mind that we carefully reviewed each clause of the bill, to make sure that it puts them in the best possible position, given the current context. A little less than 1% of Quebec's population is affected.
Quebeckers affected by this legislation are those who live in Quebec, but who worked all their lives in another province and who only contributed to the Canada pension plan. An example of this would be a Hull resident who worked in Ottawa throughout his or her active life. Therefore, the bill is of particular interest to Quebeckers who live in the national capital region.
Other Quebeckers affected are members of the Canadian armed forces and the RCMP who live in Quebec but must contribute to the Canada pension plan. Having contributed only to the CPP, those are the benefits they receive, even though they live in Quebec. This is the second category of Quebeckers affected by the CPP. And the third category consists of those receiving CPP benefits who have moved to Quebec.
So 12,000 people is not a large percentage, but this issue looms very large for each of them as they get ready to retire. That is why this bill warranted considerable attention.
The reform was intended to ensure the viability of the plan for generations to come, because intergenerational equity has to be introduced. If we did not have to take the action we are now taking, if we had not decided to raise the premium rate as we are now doing, the youngest generations would have been forced to pay an even larger share to fund the plan, to the benefit of baby boomers who will have retired and who have contributed less to the plan.
If the legislation were not changed, there would be an imbalance in the contributions made by the various generations. And it is clear that those who are now 20, 25 or 30 years old, with all the fairly widespread unemployment problems we are seeing, already have their plate full just trying to start a family, get settled, and launch their career properly. The job situation is much more difficult now than it was 15 or 20 years ago. That is obvious.
I worked for 20 years in Quebec's public sector. When my generation came on the job market, there were jobs. Today, young people beginning in the job market have to struggle. We live in a society where individual entrepreneurship is highly valued. It is not easy, and we should not further burden young people with having to fund the plan for those who date from the system's golden era, the baby boomer period. A number of members of Parliament fall into this category, in fact.
We should point out, however, that as the bill now stands this has been taken into account and there will be intergenerational equity. It is included. That does not mean it will not be painful, that there is not a very significant increase in the contribution rate.
The government has, moreover, accepted a measure proposed to it by the Bloc Quebecois on the first day in committee, namely to reduce employment insurance contributions to at least the equivalent of the Canada pension plan increase. It has done this for 1998, effective January 1, 1998, in response to our representations.
I can recall the committee work. It was the committee's first meeting. When I arrived, all the party leaders were there, as well as the two ministers responsible, Mr. Martin and Mr. Pettigrew. When the time for questions came, the Reform Party's questions were far more about why the whole thing could not be privatized and why there could not be a plan similar to what Chile has. I think it was demonstrated, in examining the entire bill, that it would be a fundamental mistake to go that route, within the Quebec system, the Canadian system, given our social values. It would create a major imbalance in society and would not respect the entire tradition we have built up. In particular, it would mean creating a system which would bring terrific pressure to bear on investment mechanisms and would not, in our opinion, be viable.
When our turn to intervene came, I asked whether the government would be prepared to decrease these contributions. We did not get any immediate response in committee, but an announcement was made later in response to a question I asked in the House of the Minister of Human Resource Development. They have indeed decided to decrease employment insurance premiums by 20 cents per $100 of income, effective January 1, 1998, in line with part of what we were asking.
What we were asking with respect to the investment board bill was to ensure that there is no increase in January 1998 in the deductions from people's paycheques. The minister has neglected to tell us that the bill contains a little bit of retroactivity for employers back to January 1, 1997. That will not be covered by the minister's decision. We would have preferred it to be covered in its entirety, but at least part of the measure is there in a satisfactory manner.
That does not stop or weaken our demand that employment insurance premiums be significantly reduced, because—as the chief employment insurance actuary revealed last week—the employment insurance plan could level off and have enough surplus to permit premiums of $2 per $100 of insurable income. The figure will be $2.78 as of January 1, 1998. There is 70 cents to play with once the entire plan is balanced.
We in the Bloc Quebecois are saying there ought to be a way to do two interesting things with the 70 cents. We could significantly reduce employment insurance premiums and return the money to the pockets of employers and employees. A significant part of the money could be invested to correct the imbalances in the unemployment insurance reform. People in our regions—seasonal workers, young people, women joining the labour market—have had to deal with a lot in the past year that is unacceptable to our society with the fight against the deficit having been won with contributions by employers and employees.
The government should make more effort, and I hope there is some sensitivity there, especially since December is the month the Minister of Human Resources Development will be receiving the report of the employment insurance commission to assess what changes need to be made. I hope that the government will be sensitive to these situations and will correct them. In any case, the political message was delivered very clearly in the June 2 elections. Many of the members from the maritimes were good MPs, but they were defeated because the government did not respond to the recriminations made during consultations on the employment insurance reform.
Now, back to the Canada pension plan investment board bill. We have to increase contributions to ensure the survival of the plan and and we have to create the investment board so that we can ensure sufficient funding. That will create a fantastic investment fund in terms of dollars, and the government set itself an initial foreign investment limit of 20%.
This limit may be reasonable for the time being, particularly if it is the same as for RRSPs and other similar plans. I think that when the government is allowed, through the investment board, to exceed the 20% limit for foreign investment, the same will have to be done for other plans. We cannot allow the government to exceed this limit, but not private plans. This would create an unacceptable imbalance.
The bill includes a series of measures to ensure the plan's sustainability. It also seeks to ensure fairness for the various generations of contributors, while maintaining a contribution rate compatible with economic growth. This is why I believe it is acceptable to increase contributions to the plan. However, employers and employees must get some break regarding payroll taxes. I explained this earlier, and I hope the government will take action accordingly in other areas of activities.
I would like to make some comparisons between the Canada pension plan and the Quebec pension plan. The increase in the contribution rate will be the same for both plans, reaching 9.9% by the year 2003, and then levelling off. Indeed, Quebec will impose the same increase. We did not really have any choice.
A review of the plan will be conducted on a regular basis. This is interesting. Reviews will be conducted more often. We realize now how previous federal governments turned a blind eye on the situation. A solution had to be found and, more importantly, applied. Had reviews been done on a more regular basis in the past, that is in the last 25 or 30 years, the situation would not be as catastrophic as it is, and it would not be necessary to increase contribution rates so drastically. The basic exemption will remain the same, at its current level. This also true for the Quebec pension plan.
Then there is the disability issue. As I explained at the beginning of my speech, Quebec has some experience when it comes to using other means of financial assistance for those who, unfortunately, are disabled. These other forms of help include, for example, health insurance or other types of assistance in the case of an automobile accident. This avoids putting undue pressure on the Quebec pension plan. It is not so in the case of the Canada pension plan, since no such alternatives exist in the nine other Canadian provinces.
When disabled, people need an income. All they did was try to find a form of income that was available. The pressure was too great, because these people do need an income. However, this caused an imbalance in the plan.
This is similar to the situation with TAGS, the Atlantic groundfish strategy. The federal government implemented a program intended to promote regional economic diversification but it ended up being used as a safety net program. Everyone agrees that there is a need to ensure that people have something to live on and can eat three meals a day. But that was not the purpose of the plan.
As for the Canada pension plan, it was not designed to make up for the shortcomings in other disability plans, but nothing was being done on that front. In the other provinces, there was not the same kind of sensitivity and the Canada pension plan picked up the slack.
This reminds me of the overall social vision in Canada. The minister responsible for the Canadian social union is always going on about this. I have nothing against the nine other Canadian provinces wanting a basically standardized social program system across Canada. That is their choice. But the choices made by Quebec over the past 35 years—examples such as the Quebec pension plan and the Caisse de dépôt et placement were mentioned and we might add the separate loans and bursaries program we have for students, all these examples—clearly show that, in areas where it has full power, the Government of Quebec is closer to the people and able to implement programs that meet the needs of the public, whereas the Government of Canada was not able to achieve the same level of sophistication.
Canadians may want their government to be involved in these areas, but all we want is to have the right to opt out, the right to perform as well, in other social areas, as we did with the Régime de rentes du Québec, and in the way we ensure a return on this money. Basically, what we are saying again is “Give us a chance, trust us, in other words, show us the same attitude as was shown under Mr. Pearson”. In this way, at least, we will have the options required to act and we will be able to take original initiatives.
However, there is no such attitude, and this is another reason why Quebeckers can no longer tolerate the straightjacket that the Canadian federal system is for them, because we are different at the social level. We see things differently. We want things to be administered differently, and we especially want our social programs to reflect our social values, so that our people can have a decent standard of living.
I would like to give an example. It is true that, in the past, there have been interesting systems developed in Canada. The CCF and the NDP developed programs that were even adopted by the Liberals. But we see the prevailing social trends in Canada. We see, for example, that the Reform Party wanted to privatize the whole system, to do away with the values of equality and to implement a system based strictly on individual profitability where everyone would be responsible for providing for his or her own retirement, when we all know that in our society, people do not all have the same opportunities. People do not all start off with the same opportunities for training and education. They do not all start off with the same opportunities for employment, and, in the final analysis, we have sort of a responsibility as a government to ensure that wealth is shared.
The new trends on values in English Canada, that is in the nine other provinces, seem very dangerous to us. If there have to be Canada-wide standards in social areas, imagine if, in a few years, we were unfortunately still part of Canada and, moreover, the Reform Party was in power, you can rest assured that Quebeckers would no longer feel at all welcome in Canada. We do not want to go through that and we have the solution. But in the meantime, we want to ensure that the system that we presently have will offer the best possible conditions for the people concerned.
So the act to establish the investment board in order to modernize the Canada pension plan based on the lessons learned in the past is basically a good bill and the Bloc supports the general objective of this reform, which is to ensure the sustainability of a public pension system.
This bill has gone through several stages. There have been consultations at all levels, and, today, we are at the final stage for its passage. I hope that it will not meet with problems in the Senate. Although the senators can perhaps provide a different outlook on these issues, they are not in exactly the same financial circumstances as the majority of Quebeckers and Canadians. There are senators who can live both in Mexico and in Canada at the same time. It is rather singular. It is a very revealing example of how politics are in Canada. I am strongly against such a situation. So let us hope that this bill will not meet with any major hurdles in the Senate and that it can be passed, because we have to act now.
The new system has to be operational in January 1998, and by then we have to have taken steps to ensure that in 2010, 2015, 2020, we will not be faced with a system that is no longer sustainable. This bill provides for the proper control mechanisms.
There was much debate on who should be auditing the system. It was decided that the board would have an external auditor to ensure its efficiency, but there were a number of amendments to require that certain situations be reported to the House.
We will have to watch very closely what happens, because the objectives of the board's directors are purely financial. Amendments that would have enabled people from the unions, for example, to make a social contribution were rejected. They will have to do it some other way. The role of watchdog will have to be established some other way.
Even if it is not in the legislation as a specific mandate, I think Parliament will, at regular intervals, have to ensure that the plan meets its objectives by ensuring that private audits or special, as well as audits by the auditor general, are done at the request of the minister.
Today, finally, we are making commitments for future generations of Canadians, for the next 20, 30, 40 and 50 years. In assessing the bill, I wondered whether, if my children were covered by the Canada pension plan today, I would want them to live in this environment in the future. Would I want them to contribute the same way to the plan and would I want them to have the same type of benefits?
I think that they have done the best they could with a situation that had deteriorated over a number of years, and we can tell our young people there is at least an intergenerational balance in it. We have tried to make their contribution lower than it would have been if we had waited for the catastrophe to worsen. We can, I think, reassure our seniors, the people who are already in the plan, that they can keep the previous one. So there is some protection on that side.
However, and this will be my concluding point, we will have to give the same attention and show particular sensitivity to what is coming with the senior benefit. In this connection, the government does not seem to have done its homework as well as for the investment board.
As things stand now, only those aged 59 or over will be able to choose between the two plans replacing old age security. This means that people aged 52, 53, 54 or 55, who have planned their entire careers and their retirements according to known standards and rules, will see their entire futures turned topsy turvey. I think that some thought will have to be given to allowing opting for the seniors benefit at a much younger age. We might consider something around age 50 to ensure that people have the opportunity to plan their choices for later.
It will also have to be accepted that consultation will need to be very open, and not just involve today's seniors. They are protected. The ones who already have old age pensions will be keeping the same program. But the ones who have to be asked are the 50 and 40 years olds, and the young people, in order to see which plan they want for themselves and for future generations.
I ask the government to focus the same attention on old age pension reform as they have on the Canada pension plan and to have more empathy for the situation these people are experiencing because during 1997-98 we, as lawmakers here in Parliament, are going to define the frame of reference for social programs for all those who will retire in the next 10, 15 or 25 years, and I believe we cannot afford to make a mistake.