Madam Speaker, it is probably a little late to say it but I should mention that I am splitting my time with the hon. member for Surrey Central.
I want to point out that the World Bank in 1994 told us that pay as you go systems have a predictable three stage life cycle. The systems begin in young countries where the proportion of retired people is small. They go through the windfall stage where people who are just getting into the system get far more out of it than they put in. There is the expanding coverage stage where the population is aging and the founding generation receives even higher benefits and more groups are covered. Then there is the final stage, which is the stage we are in in this country, which is where the system starts to collapse.
That is why there are 20 countries in the world which have already gone to a mandatory private savings plan. Chile is one of them. The U.S. is moving in that direction. The U.K. is now doing it. Australia is now doing it. Switzerland, Finland, Greece and Japan all have variations on the theme. Let us not let the hon. member opposite suggest there are no other countries going to this plan.
The hon. member asked me about the liability. We know that the government's plan is to raise CPP premiums by 73%. That is the one option which Canadians have. We say that one of the better options is to get a better rate of return. It is so simple that it has eluded our friends across the way. They think that by giving the money to the provinces at below market rates of interest that somehow we have done seniors a great favour. Obviously we have not.
The government plan until now has earned 2.5%. That is ridiculous. We say it is time to start investing that money in the stock market and allow people to get the returns they can. Over the last 30 years I think the real rate of return is pretty close to 6%. If people get better rates of return, rather obviously the premiums do not have to be as high and the liability actually begins to come down. That is the answer to my friend.
With respect to old age security, I would also point out that when the member talks about the one in ten, which I think is a little hyperbole, he should really point out that it is not low income people who end up $120 better off under the government's plan. The ultimate result of the plan is that it is able to save $6 billion in payouts to seniors.
The people who get it right in the neck are the middle income earners. High income people will not feel any pain because they already have the money clawed back anyway. It is middle income seniors who will be taking it in the neck by the government's plan. Out of fairness, that should be pointed out.