House of Commons Hansard #44 of the 36th Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was cpp.


PetitionsRoutine Proceedings

December 4th, 1997 / 10:20 a.m.


John McKay Liberal Scarborough East, ON

Madam, Speaker, I have the honour to present a petition on behalf of in excess of 400 people, pursuant to Standing Order 36, calling on the government to amend sections 173 and 174 of the Criminal Code with respect to indecent acts and public nudity.

I have the honour to present that.

PetitionsRoutine Proceedings

10:25 a.m.


Michelle Dockrill NDP Bras D'Or, NS

Madam Speaker, I too, pursuant to Standing Order 36, would like to on behalf of Canadians table two petitions calling on this Parliament to rescind Bill C-2 which imposes massive premium hikes and reduces benefits, and also petitioning the House for a national review on the retirement income system in Canada.

Canada Pension Plan Investment Board ActGovernment Orders

10:25 a.m.

Victoria B.C.


David Anderson Liberalfor Minister of Finance

moved that 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, be read the third time and passed.

Canada Pension Plan Investment Board ActGovernment Orders

10:25 a.m.

Stoney Creek Ontario


Tony Valeri LiberalParliamentary Secretary to Minister of Finance

Madam Speaker, I am pleased to speak today on third reading of Bill C-2, the legislation that will secure the Canada pension plan for Canadians now and in the future.

One of the most important social policy initiatives ever undertaken in this country, the Canada pension plan has been a key part of the retirement plans of every Canadians since 1966. It has also helped our most vulnerable citizens, the disabled, the widowed and the orphaned. That being said, the Canada pension plan is now under growing pressure and needs to be changed before it is too late.

The fact is that when the CPP was created, there were eight working age people in Canada for every retired person. Today there are five. In 30 years there will only be three.

The current 5.85% legislated CPP contribution rate was scheduled to rise to 10.1% by 2016. If nothing is done, CPP contribution rates will have to increase to over 14% to cover escalating costs. That is a 140% increase for future generations and certainly that would be an unacceptable fate for our children and our grandchildren.

It does not have to be that way if we act today to address the problems that we anticipate for tomorrow. As joint stewards of the Canada pension plan, the federal government and the provinces agreed last February to restore the financial sustainability of the Canada pension plan and in fact to make it fairer and more affordable for future generations.

Bill C-2 incorporates the changes proposed in that agreement and also reflects the views expressed by Canadians during last year's cross country public consultations. Some have said that these changes are being rushed but allow me to set the record straight. It is the continuing delay that threatens the CPP and in fact it is the delay in facing up to the very real challenges confronting the Canada pension plan.

In February 1995 the government tabled the fifteenth actuarial report on the Canada pension plan which showed as I just mentioned that if changes were not made to the Canada pension plan the fund would be exhausted by 2015 and the contribution rate would have to jump to over 14%.

In 1996 the federal government and the provinces released a paper on the problems facing the Canada pension plan. They held consultations with Canadians in every province and territory and released a report on those consultations.

In February 1997 we reached a landmark agreement with the provinces. There were then two draft bills released and in fact it is beyond me how anyone can say that we are rushing the Canada pension plan reforms. Clearly we have ensured that the problems that face the Canada pension plan as we move into the next millennium are being addressed and they are being addressed in consultation with all Canadians.

What I do know is that Canadians were legitimately concerned that their Canada pension plan would not be there for them when they retire. They told the federal and provincial governments to act now. They told us that they want to be able to count on their Canada pension plan now and in the future and they want it fixed, not privatized and not scrapped.

They also told us to do this in a way that does not pass on an insupportable cost burden to younger generations and they clearly told us to preserve the CPP by strengthening its financing, improving its investment practices and moderating the growing cost of benefits.

Canadians want and need the Canada pension plan but they want changes as well. We have listened and I believe that is what in fact Bill C-2 is all about.

The Canada pension plan's pay as you go financing may have been fair and appropriate back in 1966 but not in today's or in tomorrow's world. Building up a larger fund, fuller funding and earning a higher rate of return through investment in the market is now necessary to help to pay for the rapidly growing costs that will occur once baby boomers begin to retire.

Accordingly, the Canada pension plan will move from a pay as you go financing with a small contingency reserve to fuller funding to build a substantially larger reserve. Fuller funding means that the fund will grow substantially for about two years of benefits to about four or five years over the next two decades.

Until 2003, CPP contribution rates will increase in steps to 9.9% of contributory earnings and then remain steady. This steady stated rate is expected to be enough to sustain the Canada pension plan with no further increases.

During the consultations on CPP, ordinary Canadians and pension experts alike told us to improve the way CPP funds are invested and to secure the best possible return for contributors and beneficiaries.

Under the proposed new investment policy, instead of being loaned to provinces at preferential rates as they are now, Canada pension plan funds will be prudently invested in a diversified portfolio of securities in the best interests of plan members, like other pension funds.

An independent CPP investment board composed of 12 directors from a range of backgrounds will oversee investment policy for the fund. The board will in turn hire qualified investment professionals to manage the day to day investment decisions at arm's length from governments. The board will operate under broadly the same rules as other private and public sector pension funds and that means responding to market conditions, adopting investment policies and hiring qualified investment professionals.

At the same time, the board will be accountable, accountable to plan members, accountable to government and accountable to Canadians generally. I am pleased to report that the experts in pension fund management who testified before the finance committee agreed that Bill C-2's accountability provisions are in fact stringent and leading edge.

The same experts told us that the key to good investment practices and results is good management structures and that these provisions are in Bill C-2 and are extremely sound.

While this bill was before the House finance committee, a number of committee members were particularly eager to ensure that the accountability provisions of the bill were as stringent as possible. Once again, expert witnesses confirmed that the legislation was very rigorous in this area.

Moreover, two amendments for which there was support in committee were made at report stage to clarify the accountability of the board. The first one clarifies the auditor general's access to any information he considers necessary from the investment board to audit the consolidated financial statements of the Canada pension plan.

The other amendment requires that a special examination of the Canada pension plan investment board be conducted at least once every six years.

Through Bill C-2, stewardship of the Canada pension plan is also improved and its public accountability strengthened. Canadians will receive regular statements about their pensions. Federal-provincial reviews will take place every three years instead of every five years. Annual reports will be published on the fund and tabled in Parliament and regular public meetings will be held in each province.

Through consultations with Canadians, some modest changes to benefits will accompany these financing and investment policy changes, but let us be clear, some benefits will not change as well.

For example, anyone currently receiving Canada pension plan retirement pensions or disability or survivor benefits will not have their benefits affected in any way. All benefits will remain fully indexed to inflation, except the one-time death benefit. The ages of retirement will remain unchanged.

The changes that are being proposed are moderate and balanced. Indeed their impact on vulnerable Canadians has been minimized and no one group has been singled out or forced to shoulder an undue burden.

During the public consultations on the CPP, Canadians told their governments to go easy on changes to benefits. Again, we have listened.

The changes to the Canada pension plan keep the contribution rate from rising to the 14.2% it would have reached had we not acted.

Seventy-five per cent of the changes that will ensure the sustainability of the CPP are on the financing side and only 25% are on the benefit side. Once again, this reflects what Canadians told their governments during the public consultations.

Let me take a few moments to refute some of the myths being spread by members of the other side of this House and by some special interest groups.

Critics claim that youth gets a raw deal from these changes. Some have actually stated that young Canadians will contribute one dollar for every fifty cents they will collect. Let us be absolutely clear. Nothing could be farther from the truth. All Canada pension plan contributors, both present and future, will receive more from the Canada pension plan than they pay in.

Young people can expect to receive $1.80 for every dollar of contributions. The return can only be higher if governments were prepared to renege on the existing commitments to seniors already receiving pensions and to working Canadians expecting pensions when they retire. We will not turn our backs on these Canadians. We will not renege on these commitments.

Some hon. members have also stated that CPP contributions will increase by 73% and charge that this is the biggest tax grab in history. CPP contributions are not taxes and Bill C-2 is not a tax grab. CPP contributions are savings toward pensions. They go into a separate fund, not into government coffers, and will be invested like other pension plans.

Let us get the facts straight. Contributions will increase over the next six years to 9.9%. However, that is also the end of the increases. What the critics never mention when they criticize the increase to 9.9% is that the CPP contribution rates are already scheduled to reach 10.1% in the year 2016 and without the changes that we are proposing, the Canada pension plan would soar to 14.2% in the year 2030.

Is that what the hon. members of the opposition parties prefer, a 140% increase? It is certainly not what the government prefers. It is certainly not what Canadians have said during the consultation period. In fact, it is certainly not what is contained in Bill C-2.

Other members argue, and the hon. member from the Conservative Party continues to argue this, that the higher CPP contributions should be offset by EI premium rate reductions. I know that it takes some time to communicate and understand these facts for some hon. members.

Let me again state quite clearly that the EI program and the Canada pension plan are totally separate programs serving different purposes. Furthermore, the government has already announced EI rate reductions for 1998 that more than offset the Canada pension plan increases. We are committed to bringing down the EI rate further just as soon as we can afford to do so.

Then there are groups that contend that not only will these changes take $157 billion out of the economy but that each 1% increase in payroll taxes will mean the loss of up to 176,000 jobs. Quite clearly the allegations are wrong and I want to take this opportunity to ensure that the record states very clearly that these allegations are wrong.

I reiterate that higher CPP contributions are not payroll taxes. Canadians have viewed and will continue to view their CPP contributions as retirement savings. They can see, as members on this side of the House can see, through the transparent rhetoric of these special interest groups. The reforms that we are proposing will generate important and lasting benefits for Canadians.

Let me continue with the myths. Some hon. members continue to talk about better returns through privatized pensions. These members owe it to Canadians to explain exactly what they would do with the CPP's outstanding obligations to Canadians. There is no question that registered retirement savings plans are important and that is why they are one of the three pillars in the retirement system of Canada. But they cannot replace public pensions.

Canadians told governments during the public consultations that they want the security provided by the CPP as a public plan. They do not want all their retirement savings dependent on their ability to second guess the fluctuations of the stock market. And I am sure that members opposite have been watching the fluctuations in the stock market lately and I am sure that the recent events have reinforced the priority that Canadians give to security even though it has not reinforced anything from members opposite.

Let us look at the costs. The cost to contributors for the Canada pension plan benefits will be 6.1%. Could mandatory RRSPs really provide equivalent or better benefits at lower costs than the CPP? The answer is no. With the new investment policy the Canada pension plan fund will earn as good returns as anyone investing privately could expect to earn. Furthermore, the CPP has the added advantage of having the government stand behind the benefits.

The administrative costs of the CPP and the cost of investing the pool of CPP funds will be considerably lower than the cost associated with administering millions of individual plans. We had expert after expert come before the committee who continued to say and reinforce the point that the administrative costs associated with mandatory RRSPs and administering millions of individual accounts was far greater than the administrative costs of the Canada pension plan.

In addition, the CPP protects families when an income earner becomes disabled or dies, and it protects the pensions of parents who take time out of the workforce to care for young children. So when we add it all up the fact is a reformed CPP will cost less than a retirement saving done exclusively through a mandatory program of RRSPs, at least one percentage point less.

Let me turn to the extra cost of paying for the burden of the $600 billion unfunded liability. Members opposite have talked about scrapping the CPP and moving to mandatory RRSPs, but they have never clearly explained how they would do that. Let those who would scrap the CPP explain to Canadians whether they are going to renege on the promises to Canadians who are now retired. Let those who are still working and counting on receiving CPP when they retire have the security that is provided in Bill C-2, ensuring that the public pension plan is there for them.

Mandatory RRSPs do not do that. Reneging on the Canada pension plan liability does not do that. That is what members opposite want.

Let those who would scrap the CPP explain how they will deal with Canada pension plan's $600 billion in outstanding obligations. Are they going to deal with this within the CPP? If not, how will they raise the revenues or make spending cuts to pay for these obligations? It is time for them to stop their fiction and fantasy. It is time for them to come clean with Canadians and give Canadians the straight goods.

The problems facing our pension system are not unique to Canada. Many countries are making changes so their pension systems will also be sustainable. Some have recommended moving toward increased funding of public plans, which is exactly what we are doing with Bill C-2.

The legislation will make Canada one of the first, if not the first, major industrialized countries to ensure sustainability of the public pension system in the next century. It is forward looking and above all it is fair. I urge hon. members to give their full support to the bill.

Generations of Canadians, our children and our grandchildren, need our leadership today to protect their interests tomorrow. Bill C-2 does that. It does that after consultations with Canadians.

The Standing Committee on Finance is continuing the consultations with experts and other groups that come before the committee. They have overwhelmingly supported Bill C-2 in its balanced approach. Bill C-2 will continue to monitor the Canada pension plan. Bill C-2 will continue to provide Canadians with the security they expect and deserve from their Canada pension plan.

I ask members not to continue with their rhetoric but to deliver the facts to Canadians and ensure the bill passes third reading and becomes legislation so that Canadians have the peace of mind they deserve.

Canada Pension Plan Investment Board ActGovernment Orders

10:45 a.m.


Diane Ablonczy Reform Calgary Nose Hill, AB

Madam Speaker, today we are at third and final reading of Bill C-2, a bill to amend the Canada pension plan. I emphasize the importance to Canadians of the legislation. It will affect millions of them throughout their working lives and into retirement. It directly touches over 13 million Canadians today, millions more who have yet to enter the workforce, and even millions yet unborn.

We as parliamentarians have a tremendous responsibility when we look at such far reaching legislation. Unfortunately the Liberal dictatorship of today has allocated scant hours to debate a bill that will affect millions of Canadians and their futures.

Retirement security is a key concern of all Canadians. Yet the Liberal government is making it more and more difficult for Canadians to have a secure retirement. Changes to seniors programs like the OAS program will put $7 billion to $8 billion in the pocket of the government and take it away from retirement security for Canadians. RRSPs are continually being cut back by the government. The level of CPP contributions has been frozen. The finance minister is now taxing RRSPs a full two years earlier than in the past. How are Canadians supposed to save for retirement with these shenanigans by the Liberals?

Once a person retires and is able to salvage a little income from these Liberal measures then taxes keep rising. People on fixed incomes are hit the hardest by this sort of thing. We are in a very serious situation today in terms of retirement due to Liberal measures like the bill.

We need to look closely at the bill to see exactly what it delivers to Canadians and what it does not. I believe Canadians care about four things when it comes to measures that affect them, their money and their future. They care about fairness. They want a scheme that is fair. They want value for their money. They want real security. They want things to be done with integrity.

The Liberals know how much these words mean to Canadians and that is why they use them repeatedly. The words were used over and over in the speech of the parliamentary secretary. What is the reality behind this Liberal rhetoric?

First let us talk about fairness. The Liberals use this word a lot when talking about the bill but here is the reality. Due to shockingly disastrous mismanagement by past Liberal and Tory governments the Canada pension plan has an incredible $600 billion unfunded liability. That is the reality. That is where we are today yet these people are asking us to trust them to do the right thing. For the last 30 years they have put us almost $600 billion in the hole.

The Liberals say there is no problem, that they will lay the burden on our kids, make them pay nearly twice as much and give them less in benefits. What could be simpler? However it does not fit with any definition of fairness I have ever heard. One of our members called it legalized mugging. That about sums it up.

The young people of our country have already inherited a $600 billion national debt. It has been shoved on their credit card. They face increased health and other costs due to the aging population. Is it fair to put the second CPP national debt largely on their shoulders? Most Canadians would agree the answer is no.

Interestingly enough—and this has not escaped Liberal notice—this is the same group of Canadians which is least likely to be old enough to be politically active. They are not yet old enough to vote in many cases or they have not yet been born. What this amounts to is taxation without representation. Is that fair? Only for a Liberal.

Low income Canadians are forced to pay a larger proportion of their income into the scheme than those with higher incomes. Therefore the burden of the unfunded liability will fall most heavily on lower income Canadians. It is no wonder there is a problem with child poverty. The Liberals make families poor and then ask to be elected so they can fight child poverty. Go figure. Only a Liberal could find fairness in forcing those least able to pay, to pay the most.

The new CPP scheme is unfair in at least three major ways. It places the burden of past mismanagement on those already disproportionately burdened. It places the burden of past mismanagement on those least able to object. It places the burden of past mismanagement on those least able to pay.

I have a letter written by grandparents which reads in part:

While we appreciate something has to be done about the shortfall looming ahead, we don't think this is the answer. I have always believed that we should have been able to invest our own contributions for a much greater return, perhaps as high as fourfold estimated by some.

While I am already collecting my CPP payments, and Jeanne will be in about two years, between us we have seven children, 16 grandchildren and one great-grandchild expected next week.

We have great concerns as to the potential impact this Liberal tax grab will have on them.

Furthermore, this legislation is being pushed through the House by the Liberal majority without proper and sufficient democratic debate before the Canadian people. Shame on them.

That letter is from Canadian citizens. Sadly these changes fail the test of fairness.

Let us turn to the question of value. Canadians have a heritage of thrift and of getting value for their money. They are prudent people. How wisely and well does this plan give us value for hard earned dollars contributed? In a nutshell this Liberal scheme extracts massive amounts of dollars from the young and then pays a return that is far less than the real value of their contributions.

Self-employment is the fastest growing sector in our labour market. A self-employed person entering the labour force today and earning the average industrial wage will pay over $3,200 a year into the CPP. These contributions, paid until age 65, will total between $1.6 million and $2 million over a working lifetime. Let us split the difference and say that it is $1.8 million. That assumes an inflation rate averaging about 3.5% and a very modest real return on investment of between 3% and 4%.

Assuming that this person will then draw the full CPP for 20 years, he or she would collect in total just over $900,000.

Let us review that. It cost $1.8 million and the return was $900,000. A good deal for whom, the contributor? No. For the government trying to cover its tracks? Yes, and that is the whole point of the scheme. It is little more than legalized theft from today's young.

The chief actuary for the CPP and others have looked at the investment return to contributors in another way. They have calculated the rate of return per year on the value of the contributions. The chief actuary, in his 16th report in September, showed that the return to the youngest contributors to the plan would be 1.8%. Can anyone imagine this? That is about one-half of the real rate of return offered by Canada savings bonds and about one-third of the real rate of return one could expect from long term, high quality corporate bonds.

Members opposite would have us believe this is a fair deal, that this investment represents good value for young Canadians. A graph shows that the value of these contributions for young Canadians goes beyond the break even line in about 2011, a few years from now. Yet the Liberals would have us believe that this is good value for our money. I do not think so and I do not think our young people think so.

Members opposite need to get it through their heads that this is not value for money and it will not take Canadians very long to figure that out. The impact of the bill must also strike Canadians as mean spirited and unfair in another way.

What we have is regulation that leads to disguised or hidden tax increases. Nickels and dimes to start with but eventually totalling millions and then billions. A leading social policy analyst calls it taxation by stealth. The CPP bill is a good example.

The Liberals inserted a sentence of 14 words which reads:

For each year after 1997 the amount of a year's basic exemption is $3,500.

This $3,500 exemption used to be tied to inflation and it would rise as inflation rose. No more. It will be $3,500 period. Instantly we have a small payroll tax increase on small businesses and workers in Canada without media or public recognition, let alone any debate on the increase.

Freezing the year's basic exemption at $3,500 means that each year the value of this deduction decreases by the amount of inflation. Perhaps it is only 2% or 3% a year, but over time the value of the deduction is seriously eroded. As a consequence, the amount of earnings subject to CPP increases slightly each year. Everyone, workers and employers, pay extra dollars each year in addition to the premium increases for the same pension benefit.

The burden is heaviest on those with the lowest incomes because the exempted amount accounts for less and less in real value every year. They steadily pay more of an already small income and this hits them harder than if the exemption protected a larger percentage of their total earnings. They need that protection which is why the exemption was put there in the first place. The Liberals are allowing it to be stealthfully eroded away. No wonder families are getting poorer all the time. No wonder there is growing concern about child poverty.

What is so repugnant is that the same Liberals who loudly protest that child poverty is their highest priority are creating the very poverty they claim to be so concerned about. They say they will cure child poverty. It is like hiring a mugger to get out of debt.

Another interesting letter states:

We are two young, hard working people struggling to make ends meet. One of us works two eight-hour jobs full time just so we can catch up to our bills and maybe get an apartment before December. We are living in a truck.

We are not irresponsible. We just got suddenly relocated and brought a lot of responsibilities with us, but it is hard to catch up for those of us who are counting every penny. This would kill us. If we end up giving more money to the government it will inevitably destroy us. Besides, we would rather manage our money in our own way and in our own name than dump it into some mysterious fund that may not exist when we retire.

This is what young Canadians are saying.

If there is value in this plan, it is certainly not going to workers and businesses which pay most of the freight. If this scheme is clearly unfair and does not provide good value for money investment, does it at least have the virtue of providing security? Will the dollars being extracted from us be worth it in the end because they will go toward the good cause of guaranteeing every Canadian an $8,700 a year pension after they retire?

Will the fact that some investors will get a low return be justified because government management pools the risk and no one has to worry about not getting the $8,700 a year? It will be there for sure. No worries, count on it. Is that the situation?

First of all, the future security of this Liberal CPP scheme rests on the assumptions that the young will willingly continue to pay into the plan when they know that less than half the real value of their substantial investment will be returned to them personally.

Do we honestly believe our children and grandchildren will, let alone should, make a large investment out of their earnings and accept a small return so that the rest can be used to pay for promises made to those who came before them, promises not backed up by the money to make good on them?

The security of our expected CPP benefit rests largely on our belief that younger generations will willingly shoulder the lion's share of what amounts to a second national debt once they are old enough to take political power. I suggest we think long and hard about the likelihood of that happening.

The future security of this Liberal CPP scheme rests on the reliability of the assumptions that led to its construction. The government assumes that 9.9% in contribution rates over the next century will deliver the promised benefits. How reliable are those assumptions? Are they any more reliable than the assumption in 1967 that contribution rates would never have to rise above 5.5%? That is what we were told at that time.

Now, in less than a generation, our contribution rate has soared to nearly twice that and the benefits we were promised then have already been cut back. Benefits are being cut in this bill by Liberals who, in the same breath, are trying to maintain that promises of government are reliable while they are demonstrating that they clearly are not. This very bill is exhibit A of the fact that the CPP is not a sure thing. It reneges on the promises that were made to us when we started working and paying 30 years ago. Now we are suddenly told we will get less. Who can honestly believe this will be the last time the Liberals will say oops, we cannot give you quite as much as we said we would? Just like they said oops, we cannot get rid of the GST like we said we would.

The fact is the CPP is not a pension plan. It is a political promise backed up by only government's ability to tax from citizens the funds needed to pay for the promises. Political promises change with changes in power. They change with changing reality. They change with circumstances and with shifts in voter support.

No one disputes that political promises are not something to go to the bank with and they are certainly not something to retire on.

I have a letter from a family that says this: “We are a young family who are struggling to make it from month to month. Losing more of our earnings through an increase in CPP is only going to make it more difficult for us to meet our financial responsibilities which include repaying student loans and raising two preschool children.

“We have worked very hard to ensure that we are responsible for our decisions by paying our student loans off at a faster rate and raising our children the best we can. Things like owning our own home, contributing to an education fund for our children or taking family vacations once seemed to be attainable, but they are fast becoming more a dream than a reality.

“Young Canadians like myself are angry that we are being told to pay for our government's poor financial planning, especially when we have no hope of receiving anything from the CPP in our senior years. Governing one of the greatest countries in the world does not excuse nor give licence to making faulty decisions that adversely affect our country's citizens. Our politicians may not notice the increased CPP deduction on their paycheque, but my family certain will”.

That is how real Canadians feel about how secure this plan is.

Third, the future security of the Liberal CPP scheme rests on the assumption that the new billions of dollars that the Liberals are going to extract from Canadians with this bill will be managed to earn the best possible rate of return. Once again, the Liberals have set up in this bill a huge fund which will extract billions of dollars of our CPP contributions into it.

Who is going to manage all this loot? It is going to be 12 hand picked Liberal appointees. Once again the Liberals try to fool us by saying all the right words. It will be arm's length. It will be transparent. There will be prudent management. But the reality makes their feel good rhetoric ring hollow.

The reality is that the Liberals voted down every amendment brought forward by the opposition parties that would really make the fund management even moderately arm's length from political interference. One of the measures turned down would have the minister taking advice from an advisory committee on who would sit on it. That was turned down. The auditor is going to be appointed from year to year. There was an amendment to make that appointment for a longer period of time. That was turned down.

There was an amendment that the chairperson be elected by the majority of the members of the board. That was turned down. It will be the minister's hand picked appointee. I could go on and on. There were so many amendments brought forward that the Liberal majority just went thumbs down on.

In fact, only significant pressure even made the Liberals acknowledge that Canadians' own auditor general should have unrestricted access to fund information. Of course regular Canadians are out of luck. The fund's operations are not even subject to access to information.

Yet this fund will soon have a massive proportion of Canada's total equity pool. The implications are staggering for its impact on the total economic structure of our country. But we have 12 hand picked Liberal appointees who will wield enormous influence in our economy. The government says it will be happy if the fund earns a real rate of return of 3.8%. The potential for unfair and unintended uses of such economic clout are staggering.

In fact even before the bill passes other parties in this House are already arguing that the fund should be open to be used for political objectives. We can imagine how such pressures will mount once the fund actually contains all those lovely billions of dollars. Our retirement dollars will draw political and social engineers like a loadstone.

Canadians are by nature not risk takers. They prefer stability and security. I am sure members opposite are wanting to hear what I have to say and so I would appreciate it if they would keep their remarks for later.

Canadians by nature are not risk takers. They prefer stability and security. Yet what the Liberals are giving us in their new CPP scheme is risk and more risk. There is a risk that our children will refuse to bear so much cost for so little benefit. There is the risk that government assumptions and projections will, as usual, prove to be unreliable after only a few years.

In fact, after only two months the projected amount in the fund had to be revised downward by $41 billion. That is just how badly the assumptions are off already.

There is the risk that political considerations will compromise the returns needed to pay the promised pensions. There is the risk that further future political decisions will change what the plan last promised.

There is no security for Canadians in this scheme. Canadians recognize that. Here is a letter from a Canadian that says: “I am completely opposed to increases in CPP contributions, especially in consideration of the low level of faith I have in our past, present and future governments to manage and return the increased revenue properly. The monthly CPP `contribution' my family makes exceeds the cost of my son's education. Quite frankly, I would rather invest my earned income in his future since it is a virtual guarantee my country will not”. That is how real Canadians feel.

Does this plan deliver integrity? Is it based on honesty? Is it sound and well considered? The Liberals promised to restore integrity to government. Does this bill with the single most profound implications for the retirement security of retired, working and future generations of Canadians meet the test of integrity?

First, how can we say a piece of legislation delivers integrity when it is so cavalier about the interests of the young and the politically powerless? Is that not exploitation of the defenceless? Will Liberals be able to look their children and grandchildren in the eye 10 or 20 years from now and say we did what was right and good for you, we acted in your best interests? How will they defend forcing young workers to pay more for less?

Second, not all Liberals can be blind to the fact that the time bomb is still ticking. The cracks are being papered over for a few more years but the long term funding crisis has not been solved.

Where is the integrity there? The Liberals have not been honest on the issue of transparency and accountability. For all their nice words, they voted down measure after measure that would have made it so.

This plan incorporates the Liberal policy of taxation by stealth. Threshold exemption levels desperately needed by poor working families to meet their children's needs year by year are less protected as inflation creeps up.

Year by year the average industrial wage rises, capturing more CPP taxes from businesses and workers. These effective increases will never be debated or discussed and this bill says that future additional premium increases—it already acknowledges there will have to be some over 9.9%—can simply be mandated with no further legislation or debate. King John never had it so good.

A Canadian from Edmonton writes: “I am one of thousands of single mothers who are desperately trying to be self-sufficient and support myself and my daughter on my own without the aid of welfare or other government agencies. I am frustrated beyond words that the government wants to take more of my hard earned money away from the mouth of my child when I have come to the realization that by the time I reach the age to collect, there will be nothing.

“I hope the government is ready to reap the consequences that this will cause. I just may find it more beneficial and in my best interests to quit working and collect welfare because it may be the only way I can make money”.

This is an important debate and one that will be reopened every two or three years as required by legislation and as those exploited by this scheme gain political awareness and power.

It is important therefore to put a couple more points on the record. The government never considered other options or arrangements to complement or replace the CPP. It set out in its consultations to sustain the CPP in essentially the same form.

It asked Canadians to a series of limited consultations, a few general questions concerning contribution rates, changes to benefits and the investment of CPP funds. It did not ask questions that would invite consideration of other alternatives such as a defined contribution, individually owned and privately managed accounts.

It did not study or explore developments in the many countries in the world that have experienced the same difficulty we are in the pay as you go schemes and have moved to mandatory privately managed accounts. Examples are Australia, Great Britain, New Zealand, Chile, Mexico, Hungary and some 15 others.

The government did not want to consider other options. It did not want the standing committee to invite experts from outside Canada to testify about other options. Notably, the committee refused to invite the world expert on pension reform, Dr. Jose Pinera, born in Chile and educated at Harvard.

The committee developed some theory about human rights abuses despite much evidence in support of Dr. Pinera and his worldwide reputation.

At the same time, and this is Liberal hypocrisy for you, only four blocks away, a senior official from the department of finance in Chile and a good friend of Dr. Pinera was delivering a seminar on pensions. This gentleman along with two experts from Mexico was speaking on “Pension systems in crisis: What can we learn from Latin America?” Of course the Liberal committee did not want to learn anything.

When it comes to our pension reform, our international development research centre that sponsored that seminar is more creative and more open to new ideas and shows more common sense than does our finance department or the government members of the committee.

The point is just be open. If the government is unwilling to go beyond the Canadian border for advice, just say so, but do not smear the reputation of an international scholar to hide its intent.

The hypocrisy becomes even more flagrant and exposed when within a month our Prime Minister is rolling out the red carpet and wining and dining the Chinese president who is internationally labelled as responsible for massive human rights abuses in his country.

The government has not considered any other means of financing the CPP debt other than dumping the burden on the backs of young Canadians. The government must realize that a portion of this unfunded liability should be spread across all members of society. Take a few billion of the fiscal dividend for the next 40 or 50 years and see what could be done to lighten the burden on the young, the low income worker and small businesses. But no, the Liberals have big plans for the fiscal dividend. They want to buy some votes with it. They do not really care about using it for good purposes.

When the minister has been challenged about the flaws in his thinking and in the plan, he reacts with feigned outrage and extravagant fabrications. He sets up straw men and then beats away to the cheers of his backbench cronies.

He claims for example that income taxes would rise 25% should he provide support to the CPP unfunded liability. What balderdash. Net personal income taxes this year are likely to approach $70 billion and 25% of that is $17.5 billion. But the CPP premiums this year are already bringing in $14 billion. This is an example of one of the finance minister's fabrications.

Government has a duty to Canadians to look at saving and changing the CPP in more rational and secure ways to deliver better value for Canadians. It needs to give real security to Canadians. It needs to encourage thrift rather than penalize it. It needs to expand opportunities for Canadians especially those of modest means to save, rather than taxing away every spare nickel.

The government needs to ensure that public pensions move toward being a real funded asset, safe from political changes or mismanagement. It needs to make sure that there is a real safety net for needy seniors when personal resources are absent. It needs to give tax relief and safety from its continual tax increases which erode the fixed income of people who are retired. It needs to be committed to smaller, more efficient government that spends and taxes less. Instead the Liberals fight to see who can spend the most.

There needs to be liability for unfunded benefits right across society, not mostly loaded on the backs of our young. The government needs to lighten the burden on the business sector and on job producers so that people can earn incomes and can save for their retirement. It needs to give real value and allow younger Canadians to opt out of a bad plan into mandatory pension investment accounts that would deliver a fully funded individually owned pension with better investment returns and higher more secure benefits.

Other countries are doing this but not in Canada. We have to be stuck with some vague political promise from the government because only it can manage our money for us. What nonsense. We need management of a fund which is much less vulnerable to political interference. We just cannot put future generations in the position of having to pay a lot for a little or further eroding the retirement security of older Canadians.

We urge government members to make courageous spending and allocation choices now instead of fighting over some of their pet programs. Make choices now with the money we have to clean up this mess, rather than just transferring it onto our children. The government needs to take every reasonable step to make this fund management fully accountable and untainted by political interference. It needs to stop the tactic of attributing monster scenarios to the opposition and work constructively, all of us together, in the best interests of Canadians with measures we can all have confidence in.

A talk show host who is well respected in Alberta, Dave Rutherford of QR-77 in Calgary, asked Canadians to let him and the opposition in this country know what they thought about these changes to the CPP. Four thousand faxes were sent in over a period of a few weeks. I would like to have the consent of the House to table these so that all members can look through them and see what real Canadians feel about the measures that are being proposed today.

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11:20 a.m.

The Acting Speaker (Ms. Thibeault)

Does the hon. member have the unanimous consent of the House to table those papers?

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11:20 a.m.

Some hon. members


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11:20 a.m.


Diane Ablonczy Reform Calgary Nose Hill, AB

Madam Speaker, thank you and I thank my colleagues. I hope that members from all parties will take the opportunity to look at these heartfelt writings of Canadians who will be affected both now and in the future by what we are debating today. Just look at what the people we represent really think about what is happening.

In conclusion, and I know we all love that word when politicians are speaking. If we truly believed, not just we in the Reform Party but many members of this House, that these proposals we are debating today were fair, were economically sound, that they made the best use of Canadians' valuable earnings, that they delivered real security to Canadians for retirement and were in the long term best interests of Canadians, we would be happy to support them. We would be happy and relieved that something right was being done. However after careful study, after listening to expert witnesses on this, we cannot honestly conclude this to be the case and because of that we will not support this bill.

We urge the government to adopt constructive alternatives which not only Reform but many other countries have proposed. On behalf of our children we appeal to the government to abandon this flawed and unfair legislation. There is a better way that would provide more personal choice and better security on retirement. Canadians deserve no less.

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11:20 a.m.


Paul Crête Bloc Kamouraska—Rivière-Du-Loup—Témiscouata—Les Basques, QC

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.

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11:50 a.m.


Lorne Nystrom NDP Qu'Appelle, SK

Madam Speaker, with your permission, I would like to split my time with the illustrious member for Palliser.

This morning we have the third reading on the debate on the Canada pension plan. This is a chance to wind up, to sum up what has been happening in the last while.

The Canada pension plan is a plan that we as a party have supported since its inception in 1966. We believe it was a great piece of social legislation that has had a profound impact on reducing the poverty of seniors in this country. Any way that you look at the statistics from 1966 to 1995, you will notice that the number of seniors living in poverty has dropped rather radically. That is the only segment where the poverty statistics have changed in the last 30 years to any significant degree.

If we look at child poverty, for example, there has not been an improvement. Conditions on Indian reserves have shown no improvement and in the inner cities there are the same problems. However, there has been a vast improvement in the living conditions and the incidence of poverty among seniors in this country. That is why we are so concerned about protecting and enhancing the Canada pension plan in future years.

It is a pay as you go scheme. In other words, people who are working today contribute to the fund so that people who are retired can draw a pension in recognition of the work they did in the past and the contributions they made. I believe this is a good plan, a good way to go.

I believe in this country and in the people of this country and I believe that we could have the strongest economy of any country in the world. If that was the case we could have a very strong and healthy Canada pension plan which would be funded for years and generations to come. When I look at this and the economy of this country, I am optimistic that we can and will do better.

My concern and the concern of our party about the changes to the Canada pension plan is that it has become more regressive. It should be more progressive and based more on the ability of people to pay and receive benefits in accordance with their needs. However, with these amendments it has been made more regressive. I will get to that in a minute or two.

In summarizing the debate of the last couple of months, the second concern I have is the position of the Reform Party. It wants to abolish the Canada pension plan, get rid of this plan, tear it apart, privatize it and bring in super RRSPs. But members of the Reform Party cannot answer the fundamental questions of how that could be done and what we would do with a $600 billion unfunded liability.

That is going to be a very important issue as they try to push this right wing, neo-conservative agenda of theirs to privatize, abolish, get rid of the Canada pension plan and set up a private scheme which would be good for the wealthy, the bankers and their friends who have money. That is a big issue, one we are going to face when this thing is reviewed again in the year 2000.

The Reform members are talking about tax grabs and all the negative things about the Canada pension plan. That does not reflect what the Canadian people want. They want a strong, public plan like the Canada pension plan, but a more progressive plan.

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11:55 a.m.

An hon. member

It is $600 billion in the hole.

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11:55 a.m.


Lorne Nystrom NDP Qu'Appelle, SK

The Reform Party wants the Chilean example, the right wing, neo-conservative, Neanderthal examples, just as they want people to opt out of the Canadian Wheat Board and destroy it. Well, that does not reflect what the people in their constituencies are saying or what the Canadian people want. The Canadian people want a strong, strong public plan, but a more progressive one.

As I said, we do have some problems with the plan. First, we believe that the contributions are going up too quickly and too steeply, 73% over the next six years. The economy of this country is not as strong as it should be. If we had a stronger economy and more people working and higher wages in this country, there would not be the need to raise the premiums so fast. That is why it is so important to concentrate on a job strategy, putting more money into research and development, more money into education and training and putting more people to work and looking at a better wage policy so that people will have a decent wage and a decent standard of living.

If that was the case, the increase in the Canada pension plan would not to be a steep as it is going to be under this bill. There will be a 73% increase in six years. In terms of our pocketbooks, it means that someone who is earning $35,800 a year or more will see an increase of $450 per year in premiums. For the self-employed it will be doubled because they will have to pay both the employee and the employer's premium which for a person in that income range would be a $900 per year increase for a self-employed person making $35,800 a year or more. Those are some of the real problems we have with the plan.

The government has taken a very pessimistic scenario in terms of income growth in the future. It has taken a very pessimistic scenario in terms of unemployment and employment growth in the future. It has based its projections on an actuary report that gives numbers which increase the premiums by 73% over six year. We maintain that we have more optimism in the future of Canada and in the economy. The increase does not have to be that steep or that regressive.

While this is happening the government is cutting back on benefits by about 10%. My main concern is that a cutback in the benefits of about 10% will hit those who can afford it the least, low income people.

A preponderance of those people are women, survivors and people obtaining the death benefit. All those things will be cut back and made more difficult to obtain. That is a real shame.

The NDP governments of B.C. and Saskatchewan are not supporting the initiative of the government as supported by the other provinces because of the cutback to low income people and because disability pensions will be more difficult to obtain and when obtained will be cutback. That is a shame. It is something that does not have to occur if we have a stronger economy and a more progressive way of paying into the Canada pension plan by raising that ceiling of $35,800 per year as a maximum.

These are some of my concerns. We should have a more progressive arrangement in terms of contributions and the reception of benefits from the Canada pension plan. If we do that there would be massive support right across the country.

That is the progressive way. That is what witnesses said before the committee. They did not want to privatize the plan. They did not want to get into super RRSPs. They did not want to go totally into the marketplace. They wanted a more progressive public pension plan. That is the argument we will make as we go into the next review in the year 2000.

There will be a partial privatization of the plan through the eventual accumulation of a fund of over $100 million and a private investment board. This will be pretty good for stock brokers, brokerage houses and banks because the fees for the fund will be about $500 million. That is being greeted with a great deal of glee by them.

We are concerned that the mandate of the pension board is only to maximize returns. It is important to maximize returns but like the Caisse de dépôt et placement du Quebec, the Quebec pension plan, there should also be a balance of maximizing returns, maximizing employment and maximizing income benefits so we have investment in accordance with public policy objectives as well. That is not part of the plan.

We are also concerned that all these changes were made before the government tabled the seniors benefits. It is difficult to consider one pension plan when we do not know when the other shoe will fall or what it will be when it does fall. The seniors benefit will end the universality of old age pensions. It is important to consider that in conjunction with the CPP.

My last comment is on the whole issue of democracy. I agree with the member of the Reform Party who said there were many amendments at committee stage. They were supported by all four opposition parties. Yet the government did not accept any of the amendments.

It is a rather sad commentary on the parliamentary system when the four opposition parties represent 62% of the Canadian people and the government represents 38% of the Canadian people but would not accept even two or three credible opposition amendments supported by all four political parties.

The next review is in the year 2000. We want a more progressive Canada pension plan. We want to maintain a public pension plan that is more progressive, with the talk now about how we make the economy stronger, how we put more people to work, and how we provide more decent wages so people can contribute to the plan and make sure it is a healthy plan.

I wave a flag of warning. We must not privatize the Canada pension plan and get into the scheme of super RRSPs. They would be good for the wealthy and the privileged, the people the Reform Party speaks for. It is no wonder that party speaks for them. Its tax critic said in the House a while ago that Conrad Black and millionaires were paying too much in taxes.

That is not the way to go. The way to go is to have a public plan that is strong and healthy.

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12:05 p.m.


Paul Szabo Liberal Mississauga South, ON

Madam Speaker, I listened carefully to the hon. member's statements. I certainly agree that the alternatives proposed by the Reform Party were poorly thought out and ill conceived when the needs and wishes of Canadians were taken into account.

I refer to one of the hon. member's last statements about process, democracy and amendments that were proposed, many by the member himself. He brought one report stage motion before the House insisting that the schedule of rates proposed under Bill C-2 be eliminated.

The effect of that would be to keep the rate structure the same as it is under the current Canada pension plan system. Effectively it appears that the member decided to abandon Canadian youth and the pensioners of the future and to make them pay more rather than support a schedule which smoothes out the burden of funding the Canada pension plan for all workers without touching today's seniors.

Could the member explain to Canadians why he wants today's youth to pay more?

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12:05 p.m.


Lorne Nystrom NDP Qu'Appelle, SK

Mr. Speaker, I certainly do not. That is why I said we needed a stronger economy. If the Liberals had kept their basic promises in the red book of jobs, jobs, jobs, building a strong economy, putting Canadians to work, bringing down the unemployment rate and increasing salaries, the rates would not need to be as high as the government is proposing in Bill C-2.

That is a trick in terms of a pay as you go plan, a plan which means that workers of today pay into the fund to pay pensions to the workers of yesterday. That is what the plan is all about.

As long as unemployment is sitting at 9%, 9.5% or 10% year after year after year, fewer people are contributing to the plan and fewer people are contributing a good sum to the plan. That is the main way of getting the rates down.

We also moved an amendment to lift the ceiling of $35,800 that is there today. The reason is twofold. The first reason is that someone making $35,800 a year pays the maximum amount into the plan. A lot of people are making that kind of salary. Senators and MPs make more than that but we subject to that cap. We pay as much into that plan as somebody making $35,800, or someone making $200,000 or $300,000 pays the same amount into the Canada pension plan as someone making $35,800. That is unfair and should be changed. We are flagging that for the next review.

The Minister of Finance agreed that some of these matters would be looked at. I say to the member opposite that we should make this more progressive, along the lines we have been talking about in the debate.

He also talked about democracy. The Canadian Union of Public Employees was not allowed to make a presentation to the committee. It represents 500,000 workers. The Council of Canadians, by the way, circulated a petition and got back over 500,000 petitions which I personally brought to the office of the Minister of Finance. Its was not allowed to make a presentation to the committee. That might have been the largest petition in the history of Canada. There were 11 mail bags full. The member from Calgary was very impressive carrying 4,000 faxes. That was very positive, but 500,000 petitions is extremely progressive. Yet the council was not allowed to make a presentation before the committee.

I go back to the question the member asked about democracy. It is real democracy when committees start hearing from groups that represent Canadians in such large numbers.

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12:05 p.m.


Dick Proctor NDP Palliser, SK

Mr. Speaker, I want to pick up where the member for Qu'Appelle left off in his earlier remarks. I congratulate him at the same time for the work he has done on this important piece of legislation. The hon. member for Qu'Appelle said there should have been an overall look at pensions. Rather than that the government has endeavoured to do it with a piecemeal approach.

The government took the attitude that the sky was falling and that we had to move immediately. Our caucus would have preferred to have looked at the entire pension plan, including the old age security plan, the guaranteed income supplement and the Canada pension plan. Apparently those other reviews are being held over for another day. As a result this is a piecemeal approach which greatly concerns us.

At the end of the day the Canada pension plan will be less than what it was before. We are very concerned that when the government gets around to introducing the seniors benefit it will have a negative effect on the pension plan of seniors and their overall level of income.

Bill C-2 has failed people in just about every way imaginable. The government has failed to look at the plans overall. It has failed to allow the chief actuary to look at the projections of incomes and outflows and determine what he or she thinks will be the future of the pension plan.

As the member of Qu'Appelle said, the government failed to expand the earning base. The cutoff is $35,800. It does not matter whether one earns $100,000, $200,000 or perhaps a couple of million dollars a year. If one pays taxes in Canada the maximum cutoff on CPP is $35,800. It is clearly an unfair program contrasted with that of the United States where the cutoff works out, in Canadian dollars, to be about $88,000. It is clear what we are trying to get at. There would be a different level of fairness.

The minister is apparently saying that he will be prepared to look at the issue when it is reviewed in two or three years. We will certainly try to hold him to that commitment but one wonders why we could not have looked at it in this round of pension reform.

Bill C-2 is failing the people of Canada with the 10% cut to which my colleague referred earlier. Another area that could have been easily fixed is the dropout years for women who remained home a short number of years ago to raise their children. We see less and less of that today, but in the not so distant past families were able to survive on one income. That is not the way it is done any more. Many women took time out from the workforce to raise their families and then returned to work. These reforms, to use the polite term, will impact on those folks significantly and most unfairly.

An anomaly was pointed out to me by a lawyer in the Moose Jaw area concerned about couples who separated or divorced prior to 1978. As I was advised, after 1978 pensions were split equitably between the male and the female of a dissolved marriage but before then there was no retroactivity. Women who are reaching their retirement years are suddenly learning to their shock and chagrin that the money they thought they were entitled to is in fact not there. This is another area that could have been fixed during the CPP review but such was not the case.

Living conditions have improved significantly for seniors in the not too distant past for many different reasons. We certainly welcome that and want to see those living conditions continue to improve.

Child poverty groups which are concerned about the elimination of that unfortunate social condition have noted that seniors' conditions have benefited in the past. I think that this bill will show quite quickly that these benefits are not going to continue for very long. It is an unfortunate program and it will not enhance the living conditions of our seniors who deserve a lot better.

I will conclude my remarks by remembering the work done on social programs by the father of the current Minister of Finance. Paul Martin Sr. worked with folks like the late Stanley Knowles, Tommy Douglas and others to improve the retirement benefits so that our seniors who had worked hard all their lives for this country could retire with a degree of comfort, security and dignity. I believe that he would be appalled at what is being brought forth by the current Liberal government.

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12:15 p.m.

Stoney Creek Ontario


Tony Valeri LiberalParliamentary Secretary to Minister of Finance

Mr. Speaker, the hon. member made reference to actually doing nothing with the plan and hoping that greater economic growth would take care of the challenges which the Canada pension plan faces. I would submit that is what past governments have done. For the first time we have a government which is responding to what Canadians have said they want through consultations. Canadians want changes to be made to the plan to ensure its sustainability.

Going further, the chief actuary has actually made the calculation that with the inclusion of 150,000 more Canadians being employed, the effect would be to reduce the steady state rate from 9.9% to 9.856%. Effectively the increase in the growth in the economy is still not sufficient to achieve the sustainability of the plan. That is why the changes were made, to ensure that the plan will be there for Canadians in the future.

The member referred to the U.S. plan and how effective it is. Is the NDP member saying that he wants to increase the age of retirement which is the case in the United States of America?

We require a made in Canada solution. We have done that by going to Canadians and ensuring that Canadians had an opportunity to be heard on the Canada pension plan. The suggestions made by Canadians in consultations are reflected in Bill C-2.

Should we mirror the U.S. plan, as the hon. member has stated in his comments?

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12:15 p.m.


Dick Proctor NDP Palliser, SK

Mr. Speaker, the hon. member for Palliser did not state what is being alleged by the parliamentary secretary.

To deal with his points, he suggests that I favour the American plan. What I was trying to get at, and I thought I had indicated, was that the American plan has a higher threshold than the Canadian plan. Under the American plan the cutoff rate would be in the neighbourhood of $88,000 Canadian as opposed to $35,800.

To suggest that I want a higher age of retirement, the answer is no. But do I want a fairer system in this country? Absolutely.

That takes me back to the first point which was made by the parliamentary secretary, which was that we are not suggesting any increases. That is obviously incorrect. We want to have a broader based amount of earnings going into the plan. If we had a cutoff rate higher than $35,800 we would have more money in the plan and it would provide a better return for people at the lower end.

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12:20 p.m.

Progressive Conservative

Jean Charest Progressive Conservative Sherbrooke, QC

Mr. Speaker, I am very pleased to take part in the debate on a bill which will have an impact not only in the coming months or years, but for a long time.

First, I want to stress how important it is for each party sitting in the House to propose clear and understandable alternatives to Canadians. This is a good example of an issue concerning which it is not enough to oppose for the sake of opposing, to merely say “I am opposed to this or that provision”. The impact of this legislation on the lives of Canadians is such that we must clearly say where we stand regarding this bill.

NDP members have expressed views which, I think, are rather clear. I do not agree with a number of their ideas, but I give them credit for being clear. The same goes for the Liberal government. Today, I will talk about our own choices and those of all the parties.

First, I want to thank two members of this House for making an exceptional contribution to this debate. They did so with great rigour and honesty. The first one is the hon. member for Markham, our finance and Treasury Board critic, whom I sincerely thank for his contribution. The second one is the hon. member for Madawaska—Restigouche, our human resources development critic, who also did an exceptional job regarding this issue.

When this piece of legislation came before the House, we consented in good faith that it go to second reading and to committee so that in committee we could have a real debate about the impact of this legislation. We did it assuming that the government would be listening. Assuming. We were wrong. Very wrong. The government did not listen. It did not listen, it did not pay attention.

It is important to point out to Canadians that this Liberal government is ramming this through Parliament now. It is the steamroller approach. There is a reason for this. It has to do with the fact that it is trying to get this done before Canadians actually find out what hit them and what has happened to them.

I see the parliamentary secretary smiling and smirking on the other side of the House. What the government is going to say is, “We concocted a deal with the provinces. We have to make this happen now”. I can hear it now. That is wrong.

We have talked to provincial governments and provincial governments have told us very clearly that there is a lot of time to get this through and there are a number of disagreements that they have with the federal government on this. But no, this has to be done now.

In this House of Commons, and the election only happened six months ago, this government has imposed closure on this bill twice. So much for democracy. So much for openness. So much for accountability. Let me speak briefly on why that is the case.

For Canadians this is an $11 billion bite out of our economy. In six years this government is literally going to go out and suck $11 billion out of the Canadian economy through nothing less than added payroll taxes by increasing premiums 73%. It is already sucking $12 billion to $13 billion out of our economy through payroll taxes and employment insurance premiums that it need not do for the purpose of bringing down the deficit. Why is the government doing it? It must be because we have 9.1% unemployment and it is not high enough. The government wants it to actually go higher. This is the choice it has made.

This is why the government is trying to ram it through. This is why this debate is happening at this point in time as opposed to having the debate we should have had so that Canadians would be allowed to know what is happening.

I mentioned a little earlier about the importance of every political party putting forward their position. I cannot allow this debate to happen without talking frankly and honestly to Canadians about the failure of the Reform Party to deal with this issue.

We would think that the Reform Party as the official opposition would have the obligation not only to oppose but to present a view. What we have instead is the $600 billion hole. The Reform Party said that it would like to have some sort of recognition bond. However, there are $600 billion worth of liabilities now taken in the CPP. The Reform Party's position is that we should just scrap it, forget it and forget those Canadians who are old and sick and although they gave money into the system let us just cut them off.

That is a pretty good example of ideology gone haywire. It is similar to the position the Reform Party took on Kyoto, the climate change debate, where there is apparently no science. We soon expect the Reform Party to announce to us that cigarette smoke is good for our health.

In that spirit, the Reform's position on the CPP is one that has weakened the debate because we would have expected the official opposition to play its role and offer a position. I think the Liberals would agree with us on that failure. I see them nodding on the other side. I think the NDP and the Bloc would agree as well.

We have a few problems with this legislation. We agree that the CPP should be made sustainable. We need to help Canadians and ensure that this fund is put on a very solid footing. In order to allow this to happen, yes, we agree that regrettably there has to be an increase in premiums.

We then take a very different position from that of the government in that this increase in premiums cannot be allowed to happen without offsetting this increase with tax reductions, in particular with reductions in other payroll taxes such as employment insurance premiums. By the way, so that we are clear on where the government stands on this, this was exactly the position taken by the Government of Ontario in regard to changes to the CPP. This is exactly the position it took.

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12:25 p.m.

An hon. member

What did your government do under Mulroney?

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12:25 p.m.

Progressive Conservative

Jean Charest Progressive Conservative Sherbrooke, QC

This is exactly the position we took.

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12:25 p.m.

An hon. member

You guys failed the Canadian people.

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12:25 p.m.

Progressive Conservative

Jean Charest Progressive Conservative Sherbrooke, QC

Mr. Speaker, I do not intend to try to talk over the members of the Reform Party and listen to the sounds from the other side. I do not know whether they intend to just stand there and heckle.

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12:25 p.m.

An hon. member

You want to see courtesy? What about during the election when someone called our leader a bigot on four occasions? That was courtesy?

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12:25 p.m.

The Acting Speaker (Mr. McClelland)

Hon. members, if we cannot comport ourselves here, how can we possibly be expected to lead the rest of the country. Let us leave this kind of thing to some other venue. Let us leave this kind of debate for another time and another place.

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12:25 p.m.

Progressive Conservative

Jean Charest Progressive Conservative Sherbrooke, QC

Thank you, Mr. Speaker. I think it has to be clear that physical threats in this place are not going to silence any of its members and certainly not me.