Mr. Speaker, I am pleased to rise this morning to take part in this initial debate on Bill C-78, an act to establish the public sector pension investment board, to amend the Public Service Superannuation Act, the Canadian Forces Superannuation Act, the Royal Canadian Mounted Police Superannuation Act, the Defence Services Pension Continuation Act, the Royal Canadian Mounted Police Pension Continuation Act, the Members of Parliament Retiring Allowances Act and the Canada Post Corporation Act, and to make a consequential amendment to another act.
I listened to the minister's comments with some interest. In his concluding remarks he mentioned that he felt this legislation was fair. I suspect it would be most fair for the government in its administration of the affairs of Canada, and perhaps least fair for the Canadian taxpayers. On that basis I would like to focus the majority of my time today speaking to several of the technical aspects of the bill before us. I am sure that a number of my Reform colleagues later today will focus on other specific aspects of the legislation.
The purpose of this bill is to establish an independent public sector pension investment board with a mandate to invest employee and employer pension contributions that were made under the public service, the Canadian forces and the Royal Canadian Mounted Police pension plans.
This bill, if passed, will become effective on April 1, 2000. It would also allow the Canada Post Corporation to establish an independent pension plan by October of next year.
This bill would amend these present plans so that the employee contribution rate under each is set independently from those under the Canada pension plan. It would de-link the CPP from these plans, as it was originally linked when the CPP was established. Employee rates under each plan would be frozen until the year 2003, but would rise from 10% to 40% of the cost of the plans in the year 2000.
While the government would pay 60% of the cost, it would also claim all of the surpluses. While the government would be responsible for all actuarial deficits, and we can expect that there will be actuarial deficits in the years ahead, the main benefit to the government would be the ability to claim the present $30 billion surplus. I will talk about that a bit later.
The three existing pension advisory committees would be changed so that employees would have some say in the design, administration and funding of the plans, and there would be employee representatives on these committees. I try to give credit where credit is due, but unfortunately this bill does not go far enough. In the balance of priorities it falls short. Employee representation is a far cry from the employees administering the funds, and that is not what we are calling for. Would the advice they offer be accepted or rejected? What influence would they really have? Is this mere window dressing?
Other proposed changes include improvements to life insurance components of the public service plan and the extension of survivor benefits. This is again on the plus side. This includes the extension of benefits to same sex partners, but it does so without any reference to gender. The convoluted wording and the ambiguity in the bill in this respect is unacceptable. When reading this section of the bill we do not really know what the government means at all with respect to who is entitled to benefits.
The cost of extending survivor benefits is not large, but rather small, amounting to a quarter of one per cent or approximately $5 million a year. However, as I am sure members are aware, these changes have been anticipated for some time now and like many of my colleagues I have received correspondence on this issue from concerned pensioners who are worried about the proposed changes. There has also been a significant amount of press coverage on this issue. I am sure that as we debate this issue over the next few weeks we will hear even more from people who are concerned about the proposed changes in Bill C-78. I invite Canadians to continue to raise their concerns with their members of parliament and with the government itself.
For those who are unaware of why this is such a volatile issue, I can sum it up in one word, “surplus”. There is a $30 billion surplus on which the government is itching to get its hands.
I recently read Paul Polango's book, The Last Guardians: The Crisis of the RCMP and Canada . He makes an interesting point. In the funding he shows that in the years 1996-97 the budgeted costs for the RCMP were $1,925,700,000. The receipts, though, which do not go to the RCMP but into general revenues, come to almost three-quarters of a billion dollars. Therefore, instead of $1.9 billion it comes out to $1.2 billion as the net cost of the RCMP to the government. This is not really reflected in the costs of the RCMP because revenue to the RCMP is not balanced off against its account but goes into general revenues.
In a sense that is what is happening here too. It is estimated that the surplus for this pension plan hovers at about $30 billion. With the way in which this pension is structured the money is more like a paper IOU rather than ready cash, but it still accounts for approximately one-fifth of the government's massive $6 billion debt.
Over the past decade the government has already raided approximately $10 billion of the surplus and used that money to help to reduce some of the huge deficit racked up during the high spending eighties and nineties while still allowing for the wasteful spending of taxpayer money on programs such as the great Canadian flag giveaway.
Like they are doing with the massive employment insurance surplus that has built up in recent years, government members are saying this money is theirs and they have a legitimate claim to take from this fund whenever they need a little extra cash because they would be responsible for shortcomings in the future. They fail to take into account, however, the burden the taxpayers have carried in helping the government overcome the difficulties it had resulting from its shortsighted and cynical attempts to decide for Canadians what is best for them.
Organized labour representatives, on the other hand, state that this is their money as their members have contributed to the plan in the past and will need the funds in the future. The money should be theirs, they say. They are calling what the Liberal government is doing legalized robbery. Some have even taken legal action or have threatened to take legal action to stop the government from taking these surplus funds. At this time I note that the existing legislation Bill C-78 would amend does not address who has any right to any surplus.
The unions are also upset that the government is not only raiding the surplus but is at the same time raising premiums. Under the bill the employee contribution would rise to 40% of the total contributions to the pension fund. The unions are supportive of their members paying their fair share of pension contributions. These changes will bring it more in line with other pension plans. They are in agreement that with more benefits the rise in their members' share of the contribution is acceptable. However, with the government's decision to take the surplus in the pension fund, the unions feel that the government has crossed the line of what is acceptable.
It is the position of the official opposition that these surpluses belong to neither the government nor outright to the unions. It is the taxpayers who are the forgotten partner in this debate. It is the taxes they have paid over the years that give the government the money it has to satisfy its 70% obligation to these pension contributions. Taxpayers have also over the past few years helped pay down the federal deficit and now the debt, with the enormous taxes the government has forced upon them. In the past taxpayers have covered $13 billion shortfalls in the pension plans and are on the hook for any future shortfalls.
The government is wrong to raid this money from the pensioners who have contributed to this fund over the years, as have Canadian taxpayers contributed to this fund. We believe that the fair and smart thing to do with the pension surplus is to leave it inside the pension plans, not only to guarantee the solvency of the plans for the members but to cushion taxpayers from any potential shortfalls in the future.
Although the current surplus is quite substantial, there still exists a strong possibility that it will be eroded so far that the pension fund will go into a deficit position. It has happened before and it will very likely happen again given the volatility of the global economic environment.
The bill would establish the public sector pension investment board, a 12 member board situated in the national capital region. It would be mandated to manage the funds in the best interest of the recipients, ensuring a maximum rate of return on the money that would be transferred to the fund, as stated in the bill, from the Canadian Forces Superannuation Act, the Public Service Superannuation Act and the Royal Canadian Mounted Police Superannuation Act. That varies from the current way plans are managed. They are currently in long term government bonds, which in reality provide very little return.
The board would manage or supervise the management of the business and affairs of the funds administrators including an annual written statement of investment policies, standards and procedures for each fund they manage; monitor the officers of the board to ensure that they meet these standards; prepare both quarterly and annual financial statements for each fund they manage; set up conflict management procedures; establish a code of conduct for officers and employees of the board; and have someone monitor both the application of this code and any conflict of interest procedures. These are all described in considerable detail in the bill.
Members of the board and the officers who are delegated by the board would have the obligation to act honestly and in good faith with a view for the best interest of the funds and to act with care and diligence. They are to bring with them any outside related knowledge, skill or education that they have and employ that in the best interest of the board in the application of their duties. The directors and officers are to abide by all the bylaws and guidelines that have been established by the board.
If a director, agent, officer, employee or auditor of the board or subsidiary makes a false statement or gives deceptive information, he or she would be guilty of an offence and could be liable on summary conviction for a jail term of less than a year and/or a fine of $100,000.
Bylaws may be made by the board if they are consistent with the act in assisting or guiding the conduct and management of the board's business and affairs. They can deal with the board's administration, management or control of their property holdings; the calling of meetings; the functions or duties of directors, employees or officers; and the establishment of committees.
Bylaws will be in effect when passed unless otherwise stated and are to be given to the respective ministers and will then be forwarded to parliament.
The act also sets up the power to delegate certain powers or duties of the board of directors. However, there are specific limits as to what cannot be amended such as the adoption, amendment or repeal of bylaws; the establishment of investment policies and standards; any vacancy; the remuneration of board members; or the approval of any financial statements of the board.
The nominating committee would be established by the President of the Treasury Board after consulting with the Minister of National Defence and the Solicitor General of Canada. It would be chaired by an independent chairperson who has not or is not entitled to pensions from either the Canadian Forces Superannuation Act, the Royal Canadian Mounted Police Superannuation Act or the Public Service Superannuation Act.
Other members of the nominating committee are to be chosen as representatives from the public service, the Canadian forces or the RCMP. Nominating committee members could be reappointed after their five year term expires and removed at any time by the minister who appointed them. Nominating committee members would have a variety of influences which would aid in the guidance of their decision including the disqualifying factors they should look for in directors.
The act also sets out a formula for the selection of directors who would be appointed by governor in council on the recommendation of the minister from a short list submitted by the nominating committee. Directors would hold their office for a renewable term of three years and could be removed by an order in council. There would be staggered terms of office so that no more than one-third of the board's term would expire in the same year.
The act also sets out the guidelines for the resignation, vacancy and remuneration of board members, as well as the structure for the appointment, duties and removal of the chairperson who is to be chosen by the responsible minister.
The act is very specific in stating who cannot be considered as board members, listing several instances in which individuals are considered disqualified persons. They include individuals who are under 18 years of age, those found to be of unsound mind by the court, an agent or employee of the government, an MP, senator or provincial politician, an individual who may receive or has received pension benefits that are covered by this act or from the consolidated revenue fund, an employee or agent of a foreign country, or a non-resident of Canada.
As we have seen so many times since the government began its mandate, the opportunity exists with this legislation for the government to use the board as a patronage reward for those who have supported the party in one way or another.
The government insists that the board is to be independent and at arm's length from the government. However, like we have seen time and again with the government, it does not always honour its word in this respect. I am hoping that I am being a bit cynical. However the Liberal past practice in this regard has been most disappointing. The high degree of cabinet and ministerial discretion this act allows makes it hard for me to believe that they will not take advantage of this as another patronage opportunity.
The fiscal year of this board would be the same date as that for the government. Bill C-78 would establish the procedures and parameters for the financial books and systems of the board. They are to have quarterly and annual financial statements that are to be approved by the board. There is also to be an auditor chosen annually by the board of directors to audit the financial statements of the board in accordance with acceptable accounting procedures. One wonders what the definition for acceptable accountable procedures would be considering the debate now going on between the government and the Auditor General of Canada.
The auditor of the funds could be removed at any time by the board. The bylaws are to be made public and are available at the board office. The auditor has access to any documents from current or former board directors, officers, employees or the like in the preparation of the audit.
The ease with which the board could change or dismiss auditors is a concern for me. I am concerned that the board holds the power to change auditors at its whim, which may not be in the best interest of pensioners. The manner in which it can appoint and change auditors also does little to ease my concerns about the accountability both to parliament and to the pensioners to whom the board should be ultimately responsible.
The quarterly financial statements are to go to the responsible minister, as well as to the minister of defence and the solicitor general, within 45 days of the end of that quarter. Annual reports are also to go to these ministers within 90 days after the end of that fiscal year and are to be tabled in parliament no later than 15 days thereafter.
This annual report is to include the financial statements, the auditors reports as well as the objectives of the board for the past year and for the foreseeable future. A summary of its policies, standards and procedures; its code of conduct for officers and employees; and the report of any special audit is also to be included in the annual report.
Other than the annual report there is little reporting to parliament. I have some difficulties with this especially considering the high degree of power the minister and the cabinet have with relation to the establishment and the operation of the board.
The board in effect is entrusted with the pension funds of some 300,000 retirees and 345,000 members of the federal public service. I would have liked to have seen more accountability to parliamentarians in the bill so that we could ensure the best interest of pensioners affected are indeed being looked after. With the government priority to raid surplus funds, what is the government's priority for its retirees? As I mentioned throughout my speech today I have serious concerns about the overall lack of accountability to the pensioners covered by the legislation.
Another area I would like to briefly highlight today and will elaborate on during later stages of the debate is the exemption of the legislation from the information sought through the Access to Information Act. Why is the government so afraid of public scrutiny? What is being hidden?
What is intended to be kept from public scrutiny? This secrecy is very disturbing. This does not ensure us that the board members are totally accountable. By not having access to this very important tool, the Access to Information Act, this legislation is not as transparent as it must be. I believe the government should seriously reconsider this omission and make the Access to Information Act available through this legislation.
Also in this bill, the minister may appoint an auditor to do a special audit on the board or subsidiary, or may also cause a special examination to be carried out to ensure that it has met the requirements of the act. This special examination must be carried out at least every six years, and before this takes place, the minister must consult with the minister of defence and the solicitor general. The cabinet may also make a variety of regulations respecting the application of the board and subsidiaries.
The Reform Party of Canada is opposing the bill. I would like to outline five significant reasons, among many, why I will be opposing the bill. I will summarize them.
First, the bill allows the government to raid the fund's surpluses beginning with the existing $30 billion surplus. This raid reminds me of the infamous national energy program where the federal government helped itself to an excess of $60 billion of petroleum revenues that belonged to the affected provinces, primarily the province of Alberta. Bill C-78 gives the federal government authority to claim pension money for its general revenues and, in effect, another surtax on public service employees and Canadian taxpayers who are contributing to these pension funds.
Second, the bill would give the government authority to provide new same sex benefits without debating family and same sex relationships that would be affected. I think this is a back door way of dealing with the issue, and it is not acceptable. Public policy must be changed in the open and not in the back door through a bill like this.
Third, the bill provides an open door for the government to make unchallenged patronage appointments.
Fourth, while the bill would provide parliament with after the fact reports from the minister responsible, altogether too much business will be conducted behind closed doors with no provision to use even the Access to Information Act. Such secrecy is not acceptable.
Fifth and last, why is the auditor general not the auditor given the mandate to annually audit this fund and the administration of these funds? Why is it not in the open for the auditor general to make his examination and report to parliament?
These are changes that I believe need to be made.
I would, therefore, like to move a motion at this time. I move:
That the motion be amended by deleting all the words after the word “That” and substituting the following therefor:
Bill C-78, an act to establish the Public Sector Pension Investment Board, to amend the Public Service Superannuation Act, the Canadian Forces Superannuation Act, the Royal Canadian Mounted Police Superannuation Act, the Defence Services Pension Continuation Act, the Royal Canadian Mounted Police Pension Continuation Act, the Members of Parliament Retiring Allowances Act and the Canada Post Corporation Act and to make a consequential amendment to another act, be not now read a second time but that it be read a second time this day six months hence.