Mr. Speaker, it is with a degree of sadness that I rise to speak to the amendments in Group No. 3, Motions Nos. 16, 39 and 47 at report stage of Bill C-78.
The reason I am sad is that individuals who are at home watching this series of speeches will be thinking that there is serious ongoing parliamentary debate to ensure that the right thing is being done with respect to this piece of legislation, in particular with these Group No. 3 amendments. I am sad to say that again the government has resorted to closure. Again the democratically elected individuals in the House are not able to properly debate this very important issue we have at hand.
We are primarily talking about the pensions of our valued civil servants whether they be in the RCMP or other areas. The average pension of these individuals is in the neighbourhood of $9,000. The government under the guise of this legislation will say that it is managing its resources in a more prudent fashion. We know that the government may be looking at potentially garnishing the accumulated surplus in these funds.
I will revert to Group No. 3 as it is imperative that we refer to the amendments. Motions Nos. 16, 39 and 47 in Group No. 3 would give the power to set pension contributions to parliament rather than to the President of the Treasury Board. This is a small step toward restoring part of the role parliamentarians should play in Canada, but it does not address many of the more serious deficiencies in Bill C-78.
For example, this bill does not make a strong enough link between the actuary of the fund, that is, the CPP actuary, and the board that will oversee the investments of the fund. In fact, nowhere in Bill C-78 is it specified when and how often the actuary will meet with or make a report on the fund to the board or to the government.
The President of Treasury Board will have incredible powers under this legislation with the ultimate power to set contributions and benefit levels. Imagine the following situation.
The government of the day decides it will have an election in a year or two. It wants to offer the voters some election goodies in the platform. Essentially the government wants to buy the votes of Canadians. A nice quiet and discreet way of stockpiling a little dough for just this occasion would be to set a pension contribution rate slightly higher than the rate really needs to be. In a year or two the government would have hundreds of millions of dollars to throw around. The best part is that nobody would have seen the government building up this nice little slush fund.
Bill C-78 will allow the government to withdraw the current surplus of over $28 billion from the fund over a period of up to 15 years. Any future surplus can also be withdrawn from the fund, or the government may reduce employee or employer contributions. What are the chances the Liberals will do the right thing with these surpluses?
Since 1993 the Liberal government has continuously taken more from Canadians while giving less in return. Tax revenues are at a record high and government services are at a record low. From 1993 to 1998 the government took in an extra $35 billion in tax revenues but at the same time cut $20 billion from health care and education transfers, the priorities of Canadians.
There is no mechanism in Bill C-78 for parliament to hold the government accountable for these surplus withdrawals. Let us look at what is currently happening with the EI fund. The government takes in over $7 billion annually within the EI fund than the program actually consumes on an annual basis. With this track record, I am fearful for the Canadian taxpayer that Bill C-78 will permit the government to do this with another fund.
Currently pension and CPP contributions are linked and capped at 7.5% of salary for public servants, the RCMP and the Canadian forces. Bill C-78 will de-link these contributions and allow for CPP contributions to increase until 2003 while pension contributions will remain frozen at 4%.
After 2003, pension contributions are expected to increase so the employees' contributions rise to 40% of total contributions. This means that public servants, the RCMP and Canadian forces personnel could see pension and CPP contributions rise steadily over the next five to 10 years. This could seriously erode the progress the Canadian forces made in their quality of life salary increases announced recently, and I will commend the government for taking that step in the right direction.
Bill C-78 establishes a public service pension fund investment board similar to the Canada pension plan investment board. The fund will now invest in the stock and bond markets rather than the Government of Canada bonds it now invests in. In fact, maximizing returns is written into Bill C-78 which is a good idea. This will help the pension fund achieve higher returns and allow for lower contributions in the future.
The pension fund however will be subject to the current rules regarding foreign assets, that is, the fund can only invest up to 20% of the assets in foreign property. This will have two major impacts for employees and pensioners.
Their savings will not grow as fast as they otherwise could if there were less restrictive rules on foreign content. When this fund has assets in the $100 billion to $120 billion range, it could end up costing nearly $250 million in forgone wealth accumulation because historically Canadian markets have not performed as well as the American and European markets. Even most of Asia has done better than Canada despite the recent crashes and meltdowns.
The second impact of the 20% foreign content rule relates to the ultimate size of this fund. In not too many years the fund will account for a substantial portion of the stock markets in Canada. How will it be able to buy and sell companies without disrupting the markets? Managers of mutual funds in the $1 billion to $2 billion range say that they have problems buying or selling some stocks because their actions cause significant variations in the price of a stock. Imagine the effects of a fund worth over $100 billion.
Another problem not addressed in this legislation is that of the RCMP. The RCMP's pension funds will be invested in this fund as well, but the Liberals as far as I can tell have not thought about some of the problems that might arise from this fact.
What would happen if the RCMP began investigating a company that was part of its pension fund? If the officers had to choose between shutting down the firm due to illegal activities and turning a blind eye because $5 billion or $10 billion of their retirement money was at stake, what would they do?
I can think of the example of YBM Magnex. It was found to be linked to the Russian Mafia. It was delisted from the stock exchange and by some mutual companies, and individual investors lost millions of dollars in their portfolios.
The current Liberal government seems to have an insatiable appetite for money, no matter where the money comes from, taxpayers or government employees. Bill C-78 will concentrate the power of cabinet ministers and further erode the role of parliamentarians. If the government truly wanted to maximize returns for retirees, it would increase the allowable limit on foreign content in the bill and all other pension and RRSP legislation.
Given the Liberal track record to date of record levels of tax revenue, government expenditures being consistently higher than estimated, and erosion of government services, Canadians will surely pay more and get less.