Mr. Speaker, it is a pleasure, speaking on behalf of my colleagues and the Bloc Quebecois, to respond today to the draft legislation to amend the Canada pension plan that was just introduced by the minister.
On the whole,, we welcome this announcement although, as usual, there are some aspects that give us cause for concern. We are very much aware, as the chief actuary of the plan has said, that the problems facing the CPP are fundamental and that without changes, the CPP fund will run out of money in less than 20 years. Without changes, contribution rates would have to increase from 6 per cent to 14 per cent.
I would like to go over briefly most of the measures contained in this draft legislation and comment accordingly.
One of the measures being proposed, the first one, is that anyone currently receiving survivor, disability or combined benefits and anyone over the age of 65 as of December 31 is not affected by the proposed changes. This is, of course, a pre-election measure, and we realize the minister does not want to give anyone the impression they will be affected immediately. However, those in the plan later on will be affected.
The second measure is that all benefits under the CPP will remain fully indexed to inflation. This is very good news. In this respect, the federal government is following Quebec's example. In fact, Quebec agrees with the federal government on this score. Only two provinces do not.
Every time Quebec has managed to defend its interests satisfactorily-we saw this in the harmonization of the GST, and we see it again today in this draft legislation-Quebec has always been among the first to agree with measures that support the interests of our citizens.
Measure number three is that the ages of retirement-normal, early or late-remain unchanged. There is no problem here, of course. The fund now is equivalent in value to about two years of benefits. With fuller funding, it will grow to about five years of benefits, and we agree with the minister that this will guarantee the system's viability.
Contribution rates will rise over the next six years to 9.9 per cent in 2003 and remain steady thereafter. This is another measure which, we believe, guarantees the system's viability in the long term. The basic exemption, the first $3,500 of earnings on which no CPP contributions are paid, will remain at the current level. There is no problem here either.
Retirement pensions will be calculated on the five-year average of the year's maximum pensionable earnings instead of the three-year average. Some criticism here. This represents a small loss for beneficiaries, since the five-year average will usually be slightly less than the three-year average.
Another measure is the improvement of the administration of disability benefits. In a recent report, the auditor general was critical of the way these benefits were administered and pointed to Quebec as an example of what should be done. Quebec was right again. We applaud the decision of the Minister of Finance to do things the right way. However, we will have to wait and see how this works out in the bill.
Another measure is that disability benefits will be indexed by prices instead of wages. Here again, we have a complaint. This penalizes beneficiaries to some extent, because prices tend not to change as quickly as wages.
New rules will be used to calculate combined pensions for people receiving both disability and survivor benefits or retirement and survivor benefits. This is very bad news.
Let us take the example of a woman receiving benefits after the death of her husband and who then becomes disabled. She is therefore entitled to disability benefits. Under the current plan, she receives both benefits. Under the new rules, there will be a limit on the amount she can receive. In real terms, it could mean she would receive $800 a month instead of $1,200. It seems unfair to penalize people who are in such unfortunate situations this way.
Death benefits will be equivalent to six months of pension or $2,500, whichever is less. At first glance, that does not seem to pose a problem.
More active participation will also be required. Eligibility for disability benefits will require a person to have contributed during four of the six years preceding an application for benefits. Another downer. We will have to see what the witnesses before the Standing Committee on Finance have to say about the consequences of this measure. At first glance, it looks like a good number of contributors will be dropped from the plan and will thus have paid for naught.
Canadians will also be receiving an annual statement from the Canada Pension Plan. This of course is a good idea. Canadians and Quebecers should always be given a statement of what happens in their files.
A federal-provincial examination will be conducted every three years instead of every five. We also agree with this measure.
As the minister pointed out, there are three pillars to the Canadian retirement income system: the Canada Pension Plan, the Old Age Security together with the Guaranteed Income Supplement, and the tax incentives for retirement savings, namely RRSPs.
Where the rub lies is with the second pillar. The Bloc Quebecois will vigorously oppose the proposal to replace these two benefits with a single benefit for seniors in 2001.
The finance minister's proposal discourages saving by penalizing Quebecers and Canadians who have put money away for their old age, because the benefit will be reduced by an amount proportionate to their retirement income.
The Bloc Quebecois promised to battle the federal government on this every inch of the way, provided of course that Quebec is still part of Canada in 2002.
The Bloc Quebecois' position on the third pillar, RRSPs, is outlined in the analysis of personal tax expenditures released by the Bloc in early February. We think it is not fair to Quebecers and Canadians for a $1,000 investment in an RRSP to generate $313 in
federal tax savings for those who earn more than $100,000, while the same $1,000 investment in an RRSP will only generate a $175 tax saving for someone earning $30,000 or less.
As an alternative to the RRSP tax deduction, we have proposed a $268 across-the-board tax credit; this is the only fair and equitable way to encourage all taxpayers to save for their retirement.
This pretty well sums up for now our reaction to the tabling of this draft bill. Naturally, we will follow it as it goes through all the different stages and will gladly offer comments along the way.