Madam Speaker, for a very short period of time, and I emphasize a very short period of time, we are debating Bill C-78 which was first debated last Thursday morning. We talked about it for a little while last Thursday and immediately the government introduced closure saying that we have talked enough about this on the very first day of debate. Today is the last day of debate at second reading. As far as I can tell, it is the government's desire to rush this thing right through committee, report stage, third reading and into legislation before the people of Canada and the public servants can realize what is going on. They will be presented with a fait accompli.
It is not the first time the government has done something like this and I doubt it will be the last time. Every time the Liberals do it I think it is atrocious that they would treat the democratic process this way, but they feel this is the way they want to run the democratic process in this country.
I am shocked that the government thinks that a 200 page bill with clause after clause of technical writing that is difficult to understand can be rushed through parliament in a very, very short period of time. Shame on the government for even thinking about doing something like this.
We have had a chance to take a look at some of the small points and the bigger points. We have been talking about the $30 billion surplus the Liberals are going to help themselves to, raid the piggy bank I say and help themselves to the employees' pension funds.
Right at the very beginning the government talks about privatizing the pension plan. The government will set up a board of directors to run this pension plan, which is normal. We need to have somebody to run it.
A member of a pension plan such as the Public Service Superannuation Act, the Canadian Forces Superannuation Act or the Royal Canadian Mounted Police Superannuation Act, is not entitled to participate in the management of the plan because obviously there would be a conflict of interest. We would not want anybody who participates in the plan being part of the management.
This bill also amends the Members of Parliament Retiring Allowances Act. Members of parliament are somewhat affected by this bill but they will not be precluded from sitting on the management board. This is a little omission which I think speaks volumes about who this Liberal government intends to put on the management board. Ex-Liberals collecting a pension of course are the first to come to mind. We will leave that to debate in committee, but we have to take a look at these little things in detail.
The parliamentary secretary tells us that the government feels it is entitled to the $30 billion surplus. Why? He says because the government assumes all the risks. The government of course means that the taxpayer assumes all the risks. The government does not have any money, only the money that the taxpayer gives to it. Therefore, the parliamentary secretary would have been quite clear in saying that the taxpayer is assuming the risk, not the government. There is a huge difference.
The parliamentary secretary pointed out that in the past there has been a deficit and the taxpayer, not the government, had to come up with $13 billion to offset that deficit. Now that there is a surplus the government says it should have the money. I believe that taxpayers should be protected so that they do not have to come up with another $13 billion down the road.
It gets a little bit complex here. I hope that I can make my argument clear enough for the simple minds on the other side to understand.
There is a mix between the contributions by the employees and the employer. The two add together to make the contributions. Contributions are invested and there is investment income as well. Now we have a surplus. The government says “We assume the risk and therefore we are entitled to the surplus because if there is a shortfall we will put it back in”.
The plan says that the government intends to increase the premiums of the employees. Therefore the employees are obviously accepting part of the risk of the financial health of the plan. If the employees are accepting part of the risk of the financial health of the plan, then the government does not have the right to say “We assume all the risks, therefore, we are entitled to all the surpluses”.
That logic is wrong. It is faulty. It cannot stand the test of scrutiny. That is why we are saying the government is being heavy handed. That is no doubt one of the reasons that there is closure already. The government does not want debate to continue on this bill. It knows it cannot substantiate and support its flawed logic.
Let us look at why we have the $30 billion surplus today. As the parliamentary secretary stated, it has only been accrued over the last six years. It started to build in 1991. It started to build for three reasons.
First, the government imposed a wage freeze on civil servants. Since 1991 they have not had an increase. The actuaries in the 1980s had anticipated that salaries would go up. As salaries go up the cost of benefits go up too because they are based on a percentage of salaries. If salaries are frozen, benefits are frozen. Therefore the anticipated extra costs of benefits did not materialize, hence a part of the surplus.
Second, the civil service pension plan is fully indexed for inflation. It is one of the few, if not the only one, that is fully indexed for inflation. What happened to inflation in the 1990s? It virtually disappeared. Therefore the actuarial assumptions that inflation was going to increase the cost of benefits did not materialize, hence adding to the surplus.
The third point is that the money that is in the plan is invested in 20 year government bonds. Back in the 1970s and 1980s, because of inflation the interests rates were high. Today the plan is still benefiting from these high interest rate bonds. As they mature and are reinvested in lower interest rate bonds or in the private sector, and perhaps the capital markets will not continue to do as well as they have in the past, the return on the plan is going to start going down.
Now that we no longer have a wage freeze, we can anticipate that benefits are going to start going up again because we are granting wage increases to the civil service. Thankfully the government recognized that it could not keep a lid on good employees forever. They will either walk away and get a job somewhere else or the government is going to pay them what they are worth.
Increases in salaries automatically guarantee increases in the cost of benefits. We will see a lower rate of return on the plan. We know that that increase in the surplus is going to stop. It may peak at about where it is now and potentially it may go into a decline.
If the government takes the $30 billion, massages the books and then tells us what a wonderful job it is doing, a few years from now it will turn around and tell the taxpayers “We are sorry folks, there is a deficit in the plan. You have to pay more taxes. You have to pay more cash”. I do not think that is a justifiable position. That is why I proposed on numerous occasions that the surplus stay in the plan. We know the Liberals are going to say that that is going to cost the taxpayer some money. But they have already stopped paying interest on the surplus. Therefore that does not cost the taxpayers a penny.
The money should stay in the plan to cover the shortfall. All the Liberals want to do is a simple bookkeeping entry, reduce the size of the pension plan, reduce the size of the debt and then stand back and say what a wonderful job they have done. Any bookkeeper that knows anything about debits and credits can do that but what has he accomplished? Nothing. He has just reduced the assets and the liabilities and nothing has been achieved.
Therefore this bill is only to make the Liberals look good at the next election where they can say that they have reduced the debt. But they did not do it by themselves. They did it courtesy of the pension plan of the civil service.
As I mentioned earlier about privatization, there is going to be a board. The plan is going to be privatized over a number of years. That perhaps is not a bad idea.
It is unfortunate that the capital markets are overly inflated right now. We certainly hope the Liberals can guarantee a decent return on the funds invested. If they cannot, they will be back to the taxpayer. Remember what the parliamentary secretary told us, that the taxpayer is on the hook fully and completely for this fund. I can see them coming back to the taxpayer in short order, after the election of course, saying “Oops, miscalculation, we need more money”.
We want to protect against that. We want to make sure that does not happen. That is why we are fighting vigorously for the money to stay where it is.
We are not advocating that it go to the unions. We are not advocating that it reduce the premiums paid by the civil servants. We are not advocating that we increase the benefits. All we are saying is protect the taxpayers. Protect them now, protect them next year and protect them the year after. There is nothing this government wants to do other than make itself look good.
We know the Minister of Finance is building up surpluses here, there and everywhere. I have talked about them before. He has $2.5 billion tucked in a bank account for the millennium scholarship fund. It was paid for last year but it is providing no benefit to any taxpayer today. It is sitting there waiting for the year 2000-01 which coincidentally happens to be before the next anticipated election. At that time the cash is going to flow and students are going to say “Wow, this is great, I finally got some cash”. In the meantime that money could be spent now for the benefit of students and it is not. That is why it is smoke and mirrors from that party.