Mr. Speaker, this is a particularly important debate for all Canadians, particularly younger Canadians. During the course of the debate, I hope I will be able to make five points. The first point would be that the Canada pension plan, even as it has been restructured, which admittedly is better than it was, is a poor investment for all contributors but it is particularly poor for younger Canadians.
I would also like to make the point that payroll taxes are, in the words of the current Minister of Finance, a cancer on job creation. They are a cancer on job creation to the most vulnerable people in our society, the last hired and the first fired. It is a cumulative effect of payroll taxes. I do not care what name we use to disguise it, if it is a contribution or a mandatory payroll deduction it is a tax and it is a cancer on job creation. It is something that we, as members of Parliament in this legislature and all legislatures across the country, have to mitigate. It is our responsibility.
I would also like to make the point that the plan continues to be irresponsible. It continues to be a pay as you go plan. It is a defined benefit plan that defines the benefit that contributors will receive but the benefit does not have a direct relationship to the amount that is paid into it.
I would also like to make the point that unless the contributions to the Canada pension plan receive a substantially higher return, and in view of the changes to pension planning for all seniors brought about by the change to the seniors benefit, the change to OAS and GIS, old age security and the guaranteed annual income
supplement, which will now be the seniors benefit, virtually everyone will see half of their Canada pension plan taxed back.
In the year 2001 when the seniors benefit takes effect all single seniors in our country turning age 65 will receive $11,420 per year tax free. However, any additional income, including pension income and the Canada pension plan, will be taxed back at 50 per cent. That means that unless pension income over the working life of the taxpayer generates a much better return on investment, it is going to be virtually totally taxed back anyway.
The last point I want to make is there is a direct relationship between the pension plan for members of Parliament and the Canada pension plan and the increases to the Canada pension plan.
I thought long and hard before I opted out of the MP pension plan. It is a very lucrative pension plan. My being here is going to cost me and my family down the road. However, I thought we as members of Parliament were in a particularly difficult time. We all knew it and everybody in the country knew it. It was only way that we could have the moral authority to say to Canadians that it is necessary for all of us, every single Canadian, young and old, to make a sacrifice because we must leave our country in better shape for our grandchildren than we found it.
The only way that we could have the moral authority to do that would be to be the first people to take a hit. We had to demonstrate that we were not going to ask people to do as we say. We were going to demonstrate that we would ask people to do what we have done and to show leadership. That is what this is all about. It is not a question of being holier than thou and wearing a hair shirt. It is a question of having the moral authority to ask Canadians to tighten their belts because we have a responsibility in our generation to leave our country in better shape for our grandchildren than we found it.
When our children and grandchildren have the opportunity to pay a Canada pension plan tax of 10 per cent of their income, they will at the same time, as we all know, also have the opportunity to pay taxes to support a $600 billion national debt.
This is the legacy that we leave our children and our grandchildren. We leave an unfunded tax liability on the Canada pension plan of $600 billion, and the very generations of Canadians that put that responsibility on the shoulders of their children and grandchildren are also leaving future generations of Canadians with a $600 billion debt.
Unemployment in our country is at historic high levels. We have had the highest sustained levels of unemployment since the depression. At the same time we are greatly increasing payroll taxes. Payroll taxes, by every objective standard and by every commentator, are acknowledged to be killers of jobs and employment.
If we were to collapse the Canada pension plan today, current and future taxpayers would still have to pay approximately $600 billion in accrued pension benefits which we are liable for that have not yet been paid. That unfunded liability is equivalent to our $600 billion national debt. It is something that parliamentarians for the past 30 years have been very uncomfortable in addressing. Instead, we have increased the contribution rate to build up a fund over five years instead of two, while maintaining a pay as you go dimension to the plan. Pay as you go means that each succeeding generation will pay the benefits of the generation which preceded it.
Somewhere down the line, at some time, someone is going to have to make good on these pension promises.
We overlook the fact that in Canada, if the pension plan were to collapse tomorrow, annual premiums would still be required to pay for the $600 billion of accrued benefits. When we view a proposed 6 per cent premium in 1997, 6.4 per cent in 1998, 7 per cent in 1999 and 9.9 per cent in 2003, we should be aware that the promise that premiums will be frozen at 9.9 per cent must be considered suspect. After all, if full funding of the benefits of a completely collapsed plan would cost 8 per cent or 7 per cent annually, how can 9.9 per cent be viewed as stable when the unfunded liabilities will continue to increase?
During question period over the last couple of weeks I have put that question directly to cabinet ministers. Of course the question has not been answered. I have asked cabinet ministers when the CPP premiums hit 9.9 per cent, will the government guarantee that there will be no further increases in pension plan premiums or decreases in benefits. The reason that question was not answered is they cannot answer it. They have no idea. I suspect, however, that we will see that happen.
When the plan started in the mid-sixties the contribution rate was 3.5 per cent. Then it went to 5.65 per cent and it will go to 9.9 per cent. Therefore it is reasonable to assume that rates will continue to increase.
Also at issue is the timing of the increase. Is our economy sufficiently healthy that employers will be able to pay the increased premium of $1,300 and continue to increase employment? At the same time, the employment insurance fund has a great surplus. This is the link between the payroll taxes of employment insurance and the Canada pension plan premiums that kept Ontario out of the mix for so long.
I know the government says Ontario came on board because it managed to wrestle from the government a 10 cent decrease in unemployment insurance premiums for a corresponding $4 increase in Canada pension plan premiums. I doubt very much whether that is a victory people will hear the Ontario government crowing about very long.
I point out once again that this is being done at a time when one in 10 Canadians are unemployed, when many are under employed and 17 per cent of young Canadians are unemployed. They are the people who will be hurt most.
Whether people call the increase in the Canada pension plan premiums a tax or a pension contribution, it is still a compulsory cost to the employer which raises the cost of creating a job.
The government insists that the 9.9 per cent tax is not a tax but an investment. Therefore, the government believes it is not reasonable to speak of the disastrous effects the Canada pension plan rate increase will have on employment. I submit that it is a false argument.
Unless we, as members of Parliament from all sides, are able to look at the problems that face the country honestly, unless we are able to deal with things as they are and not as we would wish them to be, how can we ever make them right? How can we possibly fool ourselves into thinking that a mandatory deduction that must be taken and paid by every working Canadian is not a tax?
Only two people in the whole country believe it is not a tax. Unfortunately, those two people are the Prime Minister and the Minister of Finance. Perhaps the Parliamentary Secretary to the Minister of Finance who has worked so hard at putting the changes to this Canada pension plan together, does not believe it is a tax either. I hope history will judge him fairly and with considerable compassion.