Debates of Oct. 22nd, 2002

Canada Pension Plan

[Pierre Paquette, Bloc, Joliette, QC]

Mr. Speaker, it is a pleasure to rise to speak on Bill C-3. This bill to amend the Canada Pension Plan and the Canada Pension Plan Investment Board Act establishes the Canada Pension Plan Investment Board. This board will be an investment corporation similar to the Caisse de dépôt et placement, which has been operating in Quebec since the mid-1960s.

The mandate of the board will be to invest funds received from the Canada Pension Plan so as to generate maximum return. The income derived from investment will enable the plan to pay pensions to Canadian workers.

As I indicated, this bill is warranted as it permits the transfer of all funds from the pension plan to the board. As I said, in this instance, the federal government keeps modeling its board on the Caisse de dépôt et placement, Quebec's success story.

This also provides me with an opportunity to address a bleaker moment in Canadian parliamentary history, namely the introduction in the Senate of Bill S-31 seeking to—

[The Deputy Speaker]

Order, please. I am sorry to interrupt the hon. member for Joliette, but I must inform the House of the following before 5 o'clock.

Pursuant to Standing Order 38, it is my duty to inform the House that the question to be raised tonight at the time of adjournment is as follows: the hon. member for Winnipeg Centre, Veterans.

The hon. member for Joliette.

[Pierre Paquette, Bloc, Joliette, QC]

Mr. Speaker, as I was mentioning, this bill seems to complete the transfers that have already been made for the Canada Pension Plan assets. Therefore, we are most happy to support this bill, but this allows me to come back to a less happy page from Canada's parliamentary history, when the Senate was considering Bill S-31, in 1982.

The purpose of that bill was to regulate the activities of the Caisse de dépôt et placement. This allows me, as I mentioned, to come back to this part of our history. I consulted a fairly recent book, written by Pierre Duschene. It is a biography of Jacques Parizeau, in which the events surrounding Bill S-31 are related.

Allow me to read an extract from the book.

In March 1982, the Caisse de dépôt et placement increased its holdings in shares of Canadian Pacific. The Quebec institution came within a few decimal points of the 10% mark in controlling shares. It posed a dangerous threat of breaking the ceiling set for Paul Desmarais, who is, as everyone knows, the president of Power Corporation, by the company's board of directors. CP panicked and sounded the alarm. The Anglo-Saxon establishment mobilized and readied to launch an offensive against the caisse. The president of CP first obtained the support of the following companies: Bell Canada, Steelco, the Bank of Montreal, the Royal Bank, Dominion Textile, Nova, Inco, Hiram Walker, Consumers and still others. Then, he called on Pierre Elliott Trudeau, the Prime Minister of Canada, and asked him to stop the Caisse de dépôt et placement. At the same time, the president of the Toronto Stock Exchange met with directors of three other Canadian stock exchanges, Vancouver, Montreal and Calgary, to prevent francophone shareholders from gaining control of CP. “I took this initiative because it seemed clear to me that what was happening here, what Paul Desmarais was doing, and the position of the Caisse de dépôt—”

Obviously, this is the president of the Toronto Stock Exchange talking.

—it was clear that this would become a cause of concern.

The wall erected around CP transformed it into an impregnable fortress. The English speaking establishment formed an alliance and then attacked, using the Parliament of Canada. In the night of November 2, 1982, the government of Pierre Elliott Trudeau introduced a bill in the Senate, Bill S-31, the Corporate Shareholding Limitation Act, which was specifically aimed at the Caisse de dépôt et placement du Québec, although not mentioning it by name. Bill S-31 made it impossible for any crown corporation to own more than 10% of the shares of any company involved in interprovincial transport.

Thus the caisse's hands were tied, and it could not purchase the CP shares.

In the eyes of Jacques Parizeau, the finance minister of the day under René Lévesque, this was an incredibly crude manoeuvre. At the behest of CP and Ian Sinclair, its chairman of the board, the federal government tabled a bill in the Senate.

And we must not forget that Ian Sinclair was Pierre Elliott Trudeau's father-in-law—

These are Jacques Parizeau's words here.

—a man who was the incarnation of the old guard of the corporate world.

This is still Jacques Parizeau speaking. Reading on:

The very evening that the bill was tabled, Jocelyne Ouellet, the woman in charge of the Quebec bureau in Ottawa, was informed. Jacques Parizeau rallied his troops. Jean Campeau, then president of the Caisse de dépôt et placement, was on side, and the caisse, which had 9.97% of the CP shares, set up a defence strategy in conjunction with the finance minister. Despite the Conseil du patronat's support of Bill S-31, the influential Montreal chamber of commerce adopted a position clearly opposed to this federal initiative. Its director, André Vallerand, and its chairman of the board, Serge Saucier, set out to defend the Caisse. Serge Saucier recalls “the corporate world rallying round in defence of a body that was becoming a major force for the Quebec economy”.

This is perhaps the most tangible sign that can be found in the contemporary history of Quebec of a body that did something for Quebec, for its economic development, so much so that people came to its defence, saying “Listen, we have something that works well. Hands off. Leave it to run itself”.

The fight to sway public opinion had begun.

André Ouellet, the current president and chief executive officer of Canada Post, who was then the federal Minister of Consumer and Corporate Affairs, inflamed the situation once again by declaring before the Senate Committee on Bill S-31 that the fund was practising indirect socialism. For the first time, he recognized publicly that the Caisse de dépôt et placement du Québec was the main target of Bill S-31. This bill was swiftly denounced by the francophone media as a scheme by the English-speaking business establishment to defend its turf against francophone investors. For its part, the Liberal Party of Canada felt increasingly isolated.

This would be neither the first nor the last time. It also says:

Other federal parties opposed the bill. Senators who were studying the bill were informed that Jacques Parizeau would come to Ottawa to criticize the legislation before them. Since the birth of Canadian Confederation, more than 100 years ago, it could not be remembered when a provincial finance minister had ever taken such a step. On the morning of November 25, 1982, the day Jacques Parizeau was to come before the Senate, Parliament Hill was in turmoil.

If you will allow me, I would like to read the presentation of Mr. Parizeau on Bill S-31. It was delivered on December 7, 1982. I will read the comments of Mr. Jacques Parizeau, the then Finance Minister, on Bill S-31. He said:

Bill S-31 does not impact only Québécair. It affects numerous operations of the government and its crown corporations. For instance, the transport minister has already referred to the participation of the Government of Quebec in Sonamar and Les Entreprises Bussières. This bill may also have an impact on the SGF, the SDI and even SOQUIP. However, the Caisse de dépôt et placement du Québec is obviously the main target of this bill. First and foremost, this legislation aims at preventing the Caisse de dépôt et placement du Québec from acquiring acquiring major holdings, first in Canadian Pacific and eventually in numerous other companies. More specifically, this bill protects the traditional Canadian establishment against intrusions by the CDPQ and it even succeeds in providing this establishment with the means necessary to disqualify bona fide investments now being made by the Caisse de dépôt and inflict potentially significant losses on the Caisse de dépôt and pensioners in Quebec.

Of course, the Caisse de dépôt administers the Régie des rentes du Québec.

This bill introduced in such a hurry really seems to protect the management of Canadian Pacific. The Caisse de dépôt had acquired very close to 10% of the shares of that company, and as soon as that threshold was exceeded, the agreement between Canadian Pacific and Power Corporation, controlled by Paul Desmarais, under which the limit imposed on Power for the shares of Canadian Pacific was set at 15%, was changed.

Of course, the federal government had to see that Canadian Pacific would not experience the suspicious fate of being threatened in its traditional control.

The act has of course much broader consequences than just trying to create an impossible situation at Quebecair and to consolidate Canadian Pacific's management.

Any company that would want to avoid the Caisse de dépôt—or the SGF for example—taking a significant share of its capital stock could, to protect itself, try to buy an interprovincial or international transportation company, no matter how small, or create one.

By contrast, when the Caisse de dépôt wants to associate itself with a private group by holding more than 10% of the shares, that group will have to first pledge that it will not invest in transportation, for an indefinite period. In any case, the shares that the caisse could, from now on, acquire in the targeted companies, cannot be voting shares, even though the caisse were to hold less than 10%.

This voting right that can be enjoyed by any shareholder, including foreign investors, is removed in the case of any provincial Crown corporation.

Clearly, Bill S-31 is likely to significantly hinder the operations of the Caisse de dépôt. This is not only about control operations, but about the development of businesses. Some businesses that are experiencing major growth could count on an increasingly important influx of venture capital from the Caisse de dépôt, up to the 30% stock limit provided under the act. This influx of venture capital is now seriously impeded. We are thinking, for example, of the new container company Sofati, which was just created in Montreal--

—incidentally it is doing very well—

--and whose successes are already remarkable. The bill restricts investment opportunities for the Caisse de dépôt in this type of businesses. At the same time, foreign competing corporations are allowed to control such businesses, as mentioned in November 6 edition of the daily The Gazette, which announced that the Compagnie Maritime Belge had acquired 50% of the stocks in Dart Containerline, a Montreal company.

The same influx of venture capital is also jeopardized in the case of Sonamar or any other business in which the SGF, for example, could take an interest.

No doubt the federal government will allow for exceptions, if it sees fit to do so. But it will then be the one that will decide the major operations of the Quebec government, of the Caisse de dépôt and of other Crown corporations, and if it reserves the right to allow for exceptions, it will also have the right to rescind them.

It is only by investing abroad in a significant proportion that the Caisse de dépôt can continue to fulfill its role of good manager and avoid the kind of trusteeship the federal government wants to impose on it. The diversification of investments in various activity sectors is a basic condition to the sound management of funds. The bill significantly changes the investment of Quebeckers' savings as we have known it and practised it for over 15 years. At the same time, it diminishes the performance and the return of the Caisse de dépôt, which has succeeded in getting a higher return than the Canada pension plan, ever since it was created.

And he went on:

We were already familiar with FIRA, the foreign investment screening agency, and all the problems it caused to foreign investment. A few weeks after the government announced its intention to relax its regulations with regard to FIRA—even though it has not yet followed through on that—it decided, through Bill S-31, to more or less extend the FIRA policy to provincial government corporations, particularly to the caisse. This is exactly what it is: Bill S-31 creates a control mechanism similar to FIRA, except that instead of being applied to foreigners, it is being applied to the provinces, particularly to the Caisse de dépôt, which will not even be treated as well as a foreign investor, since it will not be able to vote with any new share it acquired in the targeted sectors. Bill S-31 is another FIRA, but this time it is directed against us.

Canadian Pacific is the bigges corporation in Canada. The Caisse de dépôt is the largest portfolio in Canada. Canadian Pacific is the most fundamental expression of the traditional establishment. The Caisse de dépôt, in cooperation with a large number of Quebec business people, supports business shares in the best interests of its depositors and of Quebec as a whole.

I want to read to you a last paragraph of this presentation by Mr. Parizeau.

Instead of choosing the development of Quebec, the participation of Quebeckers in large corporations through their savings and support for Quebec business leaders, the federal government preferred to protect its establishment and to take away the freedom of government institutional investors and provincial government corporations. It is difficult to imagine what kind of intellectual gymnastics can bring one to conclude that a profitable investment (because the Caisse de dépôt does not subsidize, it invests) that is beneficial to Quebec can be regarded as disadvantageous to Canada's economy. Unless, of course, what is beneficial to the establishment is equated to what is beneficial to the economy.

Under these circumstances, we have no other choice but to call on the government to withdraw this bill immediately.

That is what the finance minister of the day had to say when Bill S-31 was introduced in the Senate in November. As I mentioned, Mr. Parizeau made this presentation in early December.

In the end, the Senate committee rejected Bill S-31. One could have expected that following the debate—in the end, senators seemed to acknowledge the discriminatory nature of the bill—that would have been the end of it all. Unfortunately, and we hear less about this development, on November 3, 1983—one year later—the federal government, through the Minister of Consumer and Corporate Affairs at the time, came back and introduced a new, reworked version of Bill S-31, in the hopes, once again, of stopping the Quebec institution known as the Caisse de dépôt et placement from purchasing shares in different Canadian companies that were controlled by the Toronto establishment that Mr. Parizeau was referring to.

This time, it was the chair of the board of the Chamber of Commerce of Montreal, Serge Saucier, who led the fight in this second battle against the newly minted version of Bill S-31, and who rallied not all, but a large number of Quebec's French-speaking business people. At the time, this business community was just beginning to operate.

For example, Mr. Parizeau set up the stock savings plan, which allowed a number of companies to develop, because they were able to gain access to capital that they were never able to access before.

So, Mr. Saucier successfully mobilized the French-speaking business community at the time and, on November 23, 1983, La Presse published the list of 21 business leaders under the headline “St. James Street Calls for Withdrawal of Bill S-31”.

When Jacques Parizeau read this headline, he was understandably very pleased because, to him, this was proof that St. James Street, now Saint-Jacques Street, was now French. During the fall 1983 parliamentary session, the bill was finally and definitely scrapped.

This page in parliamentary history shows that, in the past—and in the present as well, sometimes—the federal government has been extremely petty in its dealings with Quebec's institutions.

I view, to some extent, Bill C-3 now before us as Quebec's revenge in terms of initiatives taken by the Government of Quebec through its successive finance ministers. It was true under Jean Lesage's Liberals, under the Union Nationale with Daniel Johnson, and then under Robert Bourassa and René Lévesque.

There is a degree of revenge for these political figures who, in their days, took initiatives that benefited Quebec and now enable Canada to draw inspiration from Quebec's experience to establish an institution that will foster economic development in Canada.

Of course, we are not taking the reductionist vision Pierre Elliott Trudeau may have had at the time, thinking that what is good for Quebec is bad for Canada. Let us hope that, this time, what is good for Canada will also be good for Quebec, even though Quebec's pensions are not administered by the board.

Again, this is some kind of revenge against history, and we hope that, as I indicated, this board will not only foster the economic development of Canada and Quebec, but also ensure workers in Canada a decent pension.

In this context, we have no problem supporting the bill.

[The Deputy Speaker]

Before we move on to questions and comments, I must say I had already interrupted the member for Joliette at the beginning of his speech. Maybe I wanted to be more patient than usual.

Our standing orders say that we should not read a speech. I understand that the procedure has changed in the House recently. However, it gives me some concern when we have quotes, or when we read a text outside of our own speech, because I would not want to give the impression I approve of what the member for Joliette did during his speech. I think it is the first time such a situation occurs and I would not want to give the impression that we condone that practice.

I think we would all be better served if, we followed the House of Commons Procedure and Practice , the famous work by Messrs. Marleau and Montpetit. On page 517, under “Citation of documents”, it states:

There is no Standing Order which governs the citation of documents; the House is guided mainly by custom and precedents.

The first sentence of the second paragraph states:

A speech should not consist of a single long quotation or a series of quotations joined together with a few original sentences.

All I want to say is that we have gone as far as we could possibly go; some would even say we went a bit further than we should have. I wanted to bring this to the attention of the House so that members will not think we encourage such a practice.

It is nothing serious, just a little reminder, but such a practice left unchecked could be repeated and I want to prevent that.

[Jean-Yves Roy, Bloc, Matapédia—Matane, QC]

Mr. Speaker, I wanted to give my colleague from Joliette a chance to make up for this to a certain extent, although you did warn him about the quotes he used.

He was however successful in summarizing what happened in 1982 and 1983 and in describing how the federal government at the time, a Liberal government by the way, tried to bring the Caisse de dépôt et placement du Québec to heel. As he mentioned, it is ironic that the same government would, 36 years later, set up a similar institution for the benefit of all Canadians.

I would like my colleague from Joliette to go a bit further and tell us about the benefits Quebec has reaped from the Caisse de dépôt et placement. I would remind the House that the caisse has been in existence for 36 years now and has become a major investor in our economy. Unless I am mistaken, it is the eighth biggest company in terms of the assets it manages.

I do hope that the board being created here today by the federal government will benefit Canada as much as the Caisse de dépôt et placement has benefited Quebec.

I would like my colleague to elaborate a bit more on the Caisse de dépôt et placement and on the context in which it was set up. It was created during the Quiet Revolution, at a time when there was an increase not only in economic activity, but also in the business of all Quebec institutions. I would like the member to briefly comment on this.

[Pierre Paquette, Bloc, Joliette, QC]

Mr. Speaker, I thank the hon. member for his question. First of all, I thought it was important to give some background, since this episode goes back to the early 1980s, and to deal more particularly with Mr. Parizeau's position, which still seems strikingly relevant today.

As a matter of fact, I think that the investment board will be a powerful instrument for the development of the regions in Canada, just as the caisse has been for the regions in Quebec. We should not forget that, obviously, the caisse's mandate is to make sure the savings of Quebec's workers are well managed and to maximize returns.

But it is also concerned with economic development, and it wants to make sure that projects that are structuring, innovative, and generate jobs but need a little financial help see the light of day. Mr. Parizeau was talking about risk capital, a concept that was not very common back in 1982.

This was the case for Quebec. It is still the case now. Certainly, variations in the stock market affect both the return of the caisse and the return of mutual funds in general. It manages well despite all, in the medium and long term, relatively better than these funds. However, we must remember one thing, and this should be a lesson for this board that is being put in place; the management of the caisse is independent of political authorities.

Of course, it is an institution that is part of Quebec's development, that has responsibilities toward the development of the Quebec economy, and this is quite understandable. It would be pointless for the caisse to get huge returns while impoverishing workers who are also contributing. This difficult balance is the responsibility of the caisse's managers.

I will add one last thing. Partners from the labour market also sit on the board of the caisse. This is also a lesson for the investment board. There are representatives of the Confédération des syndicats nationaux, the Fédération des travailleurs et des travailleuses du Québec, and of the Conseil du patronat. All these members of the board reflect Quebec's realities and are thus looking for a balance between the return on the savings put into the caisse and the return on investments made by the Caisse itself.

[Paul Szabo, Liberal, Parliamentary Secretary to the Minister of Public Works and Government Services]

Mr. Speaker, it is my pleasure to participate in the debate on Bill C-3, having been a member of the finance committee when the former Bill C-2 established the CPP Investment Board. Having spoken on it, I feel I have a little bit of background knowledge on it.

I was astounded today to hear some of the commentary by some of the members. There was one speaker, I believe from the NDP, who suggested that when the GIS increased, the CPP would automatically decrease. That is absolutely incorrect. Canada pension plan benefits are determined independently, they are not subject to an income test or a means test. Canadians get reports periodically on their prospective pension benefits so that they know exactly what they have to work with in terms of their overall retirement planning.

Bill C-3 would provide another step toward the fuller implementation of the creation of the Canada Pension Plan Investment Board which was set up under former Bill C-2 to bring the Canada pension plan into the next phase to take into account the fact that we have an aging society. That is what it comes down to.

Let me comment briefly on the investment board. I then want to get back to the Canada pension plan because it is important that we reassure Canadians exactly what the Canada pension plan system is and how it works for them.

The board established in 1998 and it is an independent arm's-length board from government. It has a mandate to invest only in the interest of plan members. It has full authority to develop and implement investment policies and has a process for choosing its own board of directors.

It now has a track record with regard to the moneys that have been transferred to it for its investment and indeed on a calendar year basis, the Canada pension plan's last reported annual return was 6.2% which outperformed many other large public sector pension plans. Canadians should understand that the board has a good track record. I wish to note some comparatives. People might be familiar with the Caisse de dépôt which over the same period had a return on its investment of negative 5%. It lost 5%. The Ontario teachers pension plan lost 2.3%. In terms of the performance measures, the Canada Pension Plan Investment Board has been doing a good job on behalf of Canadians through the management of Canadian funds.

There was a question raised by some members about a number of issues such as, why we do not invest in certain types of investments rather than others, for instance, why do we not have an ethical filter, or a health filter? For example, let us not invest in tobacco companies because tobacco is bad. There were a number of principles involved in establishing the investment board and one of those was that it was not going to be manipulated and used as an instrument of policy. It was not going to be used to direct how we were going to influence certain activities either in the marketplace or in terms of social policy.

Therefore, the thinking at the time was that given the size of the fund the investment board was going to manage the fund on behalf of Canadians. It was important that this large investment body, with this large pool of funds, was not going to be used in a way which would bring disruption to the marketplace. It meant that it was going to invest in a balanced way right across the spectrum and basically emulate the investment patterns of all other investors in the Canadian marketplace as well as foreign investment content.

The House has dealt many times with foreign content in registered retirement savings plans, et cetera. Certainly it continues to be a matter which the finance committee has looked at.

It is another element of a good investment strategy to ensure that there is an opportunity to have a balance in a portfolio and that Canadians can earn a fair and equitable return relative to other investment opportunities. However with a restriction on foreign investments, it could be argued that those who have a different investment strategy and utilize investment funds outside of their RRSPs have no limitations on how much they can invest abroad.

They do have options if in fact the returns were that much greater, but in this volatile marketplace the CPP Investment Board is not meant to be an instrument of high risk or volatility. It has to support the marketplace to the extent necessary not to impair the availability of capital for Canadian capital markets. At the same time it should be supportive of Canadian businesses through equity investments that reflect the broad base of listed equity investments as well as debt instruments that are available to all investors.

The issue regarding foreign investment is always under discussion and it is useful to have. I know that the CPP Investment Board is made up of some of the best experts in the industry and those kinds of questions come up. As members will know, the Canada Pension Plan system is a collaboration of federal and provincial governments and there is a tri-annual review, I believe there is a review this fall, at which time the provinces and the federal government get together to look at some of the matters which have come to their attention, and where they may want to review policy positions.

I would encourage all members who are interested in the process to make suggestions to the Government of Canada, to the Minister of Finance, maybe through the parliamentary secretary, about items they would like to see discussed with regard to the future of the Canada pension plan and how it operates. It is constructive to get those items on the agenda so that when the provinces and the federal government get together and sit down and talk about the CPP, they have the benefit of the ideas we have from Canadians and from our own work, whether it be through the finance committee or otherwise. Their deliberations will determine how the Canada pension plan can better serve Canadians over the longer term.

I was a concerned about one speaker from the Canadian Alliance, the member for Peace River. It reminded me of the discussions that were taking place in the House about the future viability of the Canada pension plan system. The then Reform Party, now the Canadian Alliance, came up with a view that the Canada pension plan system should be replaced by another system which was described as a mandatory pension contribution by Canadians. It is almost a mandatory retirement plan.

This was the solution to the problems of the Canada pension plan system because it has higher premiums than it used to, and it has an unfunded liability. According to the Canadian Alliance we should take that system, put it over here, and the best thing we can do for Canadians is have a mandatory contributory plan to pensions.

I have never, ever thought that this idea was well thought out. I was concerned that someone actually would suggest that somehow retirement contributions would be mandated, knowing that in a volatile world, more often than not people are not only living from paycheque to paycheque, they are actually borrowing to live. How does a Canadian make a mandatory contribution to a pension plan, to a pension program, when cash flow is not available? How does he or she provide for those pension benefits? It makes no sense. I have not heard the explanation and I hope that the members who are suggesting that would explain that point.

There is another aspect. Let us look at the Canada pension plan system and what it does today. It provides pension benefits to Canadians when they reach retirement age. Canadians have the opportunity to retire early, up to age 60 instead of 65, by taking a slightly reduced pension. They also have the opportunity to extend or defer the collection of Canada pension plan benefits and earn even a greater benefit. So there is a little bit of latitude here, depending on personal circumstances. Canadians have this opportunity either to take pension benefits early or to defer them.

The Canada pension plan also provides survivor benefits to the spouse of a pensioner who passes away. It is very important that there be this continuity of the benefits for a family or a part thereof because they have responsibilities.

There are also death benefits. I am not sure if Canadians are aware but under the Canada pension plan system a person does have a death benefit. Should a pensioner die, a death benefit is there for the surviving spouse and for any surviving children. I think the amount was $2,000 but I believe it is now just $1,000. It went down but the benefit is there.

Then there is the disability benefit, which most Canadians probably have not figured out why it is in the Canada pension plan system. Under the Canada pension plan system Canadians who become disabled and are contributors to the Canada pension plan system qualify for disability benefits.

We have talked quite a bit in recent days about the importance of disability benefits and to make sure that people who are entitled to those disability benefits get them. There is some controversy now about whether the rules have been changed and maybe some people who should get disability benefits are not getting benefits. I think members know, through our work in our constituency offices, that there are venues and that every case can be dealt with on a case by case basis to justify a disability benefit.

That is an expensive proposition. Members can imagine how when we build up pension benefits, survivor benefits, death benefits and disability benefits, the CPP is a very important program for Canadians. For the life of me I do not understand how a mandatory retirement plan replacing CPP would address all those other benefits. What would happen to the survivor benefits? What would happen to the death benefits? What would happen to the disability benefits?

I asked the member for Peace River what would happen to the disability benefits. He said that was a very good question and that he would have to think about it.

Those things are not thought about after one says “here is our solution to the problem”. Those things have to be thought out in advance. I must say that it is disconcerting to me to think that when suggestions like that come out they could actually become part of a policy or a platform item of a party to suggest that by a stroke of the pen we could get rid of the CPP and do something else, which I am not sure Canadians could manage, particularly in those early years.

We made a number of changes in the plan over the years. They were important changes to respond to the needs of Canadians.

The Canada pension plan system has an unfunded liability and members know that. It has become a source of criticism by the members of the government and of the Canada pension plan system itself. However members must understand from where we came.

The Canada pension plan system started in 1966. When it was first started the initial premiums I believe were about $35 a year. It was very nominal. At that time there were at least five working persons in Canada contributing premiums for every one pensioner.

Why was the Canada pension plan system set up? If we look back and we figure out who these people are who receive pensions, they are the people who came through the depression years. These are the people who in the most important part of their earning life went through a depression and had no opportunity to provide for retirement. It was devastating for families. They could hardly feed themselves. It was a period of time before I was born, but we educate ourselves and we have to understand where Canadians came from. So that was a big part of why the CPP was set up.

Canadians had nothing for themselves in retirement. We had to take care of them somehow so we established the Canada pension plan system in 1966 to provide some measure of retirement dignity for those who had built this country. What more noble cause could there be?

The people who started collecting pension benefits back in 1966 made no contributions to the pension plan. They just started collecting benefits because they had nothing. So all of a sudden this principle that we are always in arrears, today's workers are paying for today's pensioners.

When there are over five workers for every one retiree there can be low premiums. What has happened as we have moved through the decades? Our society started to age. In the next 10 or 15 years instead of having five workers for every pensioner there will only be three. It is clear that something has to change.

Pensioners collecting CPP who had worked some 40 years and made regular contributions to the CPP from 1966 to 2001, their accumulative premium contributions were less than $16,000. I will put that in perspective.

Today's pensioners paid in about $16,000 if they had worked from 1966 to 2001. What can we get for $16,000 even if we assume that it was invested and received a fair and reasonable return over all the years of contributions? We would not have received much, and yet our Canada pension plan system paid out pension benefits, death benefits and later disability benefits, the child benefit and survivor benefits.

Things changed to the point where premiums had to increase. Today's pensioners receive about $8 for every $1 they put in. The opposition is suggesting that it is a travesty that tomorrow's pensioners will not get the same $8 for every $1. I do not know where anyone can make investments like that anymore. We did it at the time because it raised the quality of life of yesterday's pensioners up to a reasonable standard so they could live in the dignity to which they were entitled. It was not equitable but it was the right thing to do.

Now we have to look at the reality of an increasing retirement population. We have to look at the fact that all of a sudden it is expensive to continue to provide retirees with those ongoing benefits and still maintain some stability in that. It costs money and there were increases.

Members continue to say that this was a tax grab, the biggest tax bite ever, and all the hyperbole one can think of. All of the funds in the Canada pension plan are separate and apart from the government's revenue. They are not included in the determination of a surplus or deficit for the year. It is a separate fund. All CPP premium contributions go to the plan and all benefits are paid out of that plan.

When the actuaries did their numbers they told us what we had to do to ensure the long term sustainability of the Canada pension plan system. There were substantial increases. It was important for Canadians to continue to support pension benefits, survivor benefits, death benefits and disability benefits up to a level so that our retirees could live in dignity in their retirement years. To suggest that we are somehow going to take this away and force Canadians to fend for themselves is not only wrong, it is irresponsible.

[Scott Reid, Canadian Alliance, Lanark—Carleton, ON]

Mr. Speaker, the hon. member talks about the benefits that will accrue to individuals by comparison to the number of dollars they have put in. He mentioned that some individuals have received $8 out for every $1 they have put in. I actually think that is not quite correct. I think that even for the people who put in for the shortest amount of time prior to receiving it the number was somewhat closer, unless they experienced extreme longevity. It is not like that is a bad thing. It is just atypical for someone to have contributed for a very short period of time and then to receive for a very long period of time.

However he is correct when he says that the rate of benefits as compared to the amount of money put in will be substantially less for coming generations. That can scarcely be overemphasized. For people born after a certain point of time, and I cannot remember the exact year but I think the dividing line is some time in the 1970s or early 1980s, they can expect to receive less from the Canada pension plan than they will have put in during their lifetimes.

What is important about this is that it did not have to be the case. If the Canada pension plan had been designed to produce a better rate of return than the lousy 3.8% rate of return that was promised by the former finance minister when he designed the changes, it would have been possible to pay a larger benefit to future seniors and, indeed, to the current group of seniors.

Let us not forget that when he passed his initial package of Canada pension plan reforms in 1995, the former minister of finance, currently the leading candidate for the Liberal leadership, actually cut seniors' benefits. That is never mentioned by that side of the House. That is the precedent for what is going on here. The tendency of the government is to go out and look for ways of taking our pension savings and using them for purposes other than maximizing the benefits for Canadian seniors.

I would like to hear the member explain why he thinks the 3.8% rate of return that the government is promising, which is substantially lower than private returns, is acceptable.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, this is the first I have heard about people contributing to the Canada pension plan system and receiving less benefits over their lifetimes than they have put in. It is a surprising thing. I would invite the member to provide me with any information so I could look at it. I looked at it and in fact even people who enter the plan now will continue to get almost $2 out for every $1 they put in.

Let us talk about the rate of return. The member is probably quite right. I have not seen his numbers but he is suggesting that it is two point something per cent compared to what the free market might be able to get on a return on investment portfolio. However, does he take into account that all Canada pension plan contributions get a tax credit on every tax return that is filed? Does he take into account that it also provides people with a lump sum death benefit for a person's estate, a person's spouse and a person's children? Does he take into account that there is a disability insurance that is enjoyed throughout the period in which a person is a member of the plan?

Those things do not cost zero. They have to be included in the return. If the member would only take those into account he would find out that he is very wrong.

[Pat Martin, NDP, Winnipeg Centre, MB]

Mr. Speaker, now that this large amount of money is out there being invested on the open market on behalf of Canadians, we are now involved in the stock market whether we invest directly in our own personal savings or not because the Canada pension plan is being invested out there.

Would the hon. member agree that there is a need now for the federal government, on behalf of Canadians, to take steps to do something about corporate governance and to take steps to make sure that the places in which we are investing our money are governed by a corporate regime that we can trust to make sure that we do not have an Enron style meltdown disaster underway in this country as they did in the United States? It is like the independence of auditors or forcing companies to list stock options on the expense side of their financial statements if they are using stock options as CEO compensation.

Those issues of corporate governance should be of great concern to the federal government. Would he agree that there is work to be done on behalf of Canadians now that we are out there playing the market with our pension plan?

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, I understand where the member's heart is on this matter but I think he is hunting with the wrong instrument. The Canada Pension Plan Investment Board is not a policy making body.

I think what he is suggesting is that the board should analyze companies and if it does not like their governance it should not invest in them. That is beyond its mandate. It is important in terms of the concerns of Enron and all those other things but the member should understand that the investment board is not there to disrupt the marketplace nor to invest in any way other than to maximize the return for the plan and, indeed, for the contributors to the Canada pension plan system.

[Geoff Regan, Liberal, Parliamentary Secretary to the Leader of the Government in the House of Commons]

Mr. Speaker, I listened with interest to my hon. colleague's comments. It is certainly an interesting topic. I would like to ask him, though, how he feels about the aging society. We hear so much about the grey way, with boomers getting older. There are so many concerns about that having an impact on the Canada pension plan. I would like to ask him what impact he sees coming from that greying population.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, that would be an interesting subject for discussion for a broadly based round table, because it really is all about the impacts of an aging society, in every aspect. We know how the baby boomer spike has moved through the system and has affected us over the decades in various ways. It used to be that tennis rackets and golf clubs were the big investment for baby boomers and now it is bird-watching equipment.

The impact on the Canada pension plan system is significant in terms of the ratio of workers to retirees. It is going from about five workers per retiree down to three. It means that there is a greater demand. By the same token, if we follow it out to its logical extension, once the baby boomers get into the late retirement years and in fact pass away, all of a sudden the demand is going to shift again. We are going to go through this and we are going to get the echo generation.

Canadians were saying at the time that they thought the Canada pension plan system was bankrupt or was maybe going to be bankrupt and they were concerned about it. The government, through Bill C-2 and now through this bill, Bill C-3, is completing a process to ensure that the Canada pension plan system is on a sound footing, that the returns on the moneys invested are comparable to other investment opportunities and that this plan will be there for them in their retirement.

[Monte Solberg, Canadian Alliance, Medicine Hat, AB]

Mr. Speaker, it is my pleasure to rise and address Bill C-3, an act to amend the Canada Pension Plan and the Canada Pension Plan Investment Board Act. I would love to just jump in and start addressing some of the things I just heard but I want to do this in some semblance of order.

First I want to attack some of the myths I heard perpetuated earlier today by members of the NDP, primarily about the reliability of the market. I also want to say a little bit about the reliability of government. I want to address the straw man that the member for Mississauga South erected about the Canadian Alliance's plan to address the Canada pension plan. I also want to say a little about the lack of emphasis in the whole debate on the benefits of reducing taxes and increasing disposable incomes as a way to enhance people's retirement. Let me start with some of the myths I heard earlier today.

Every time the NDP members get up they talk about Enron. They want to talk about the lack of reliability of the market as an investment vehicle. There is no denying that Enron has been an unmitigated disaster, but there are thousands of companies out there and it is only the very few that go bad and get all the publicity. I do not think there is any question that overall the market provides a superior rate of return to anything else we have found to this point. If people stick with it and invest over the long run they end up better off.

I ask my friends from the NDP, where do they think jobs come from? They come from the market. That is where people find their incomes on a day to day basis. They rely on the market. They do not rely on government. Government cannot create jobs and the societies that have tried to create jobs through government of course are the ones that have crashed and burned and imploded on themselves. The fact is that we get our income standard of living from the government. We get the premiums that are available for the CPP from the market.

Finally, we get all the taxes that are necessary to run the government from the market. That does not mean that the market does not go down sometimes, that people do not become unemployed, but rather obviously it is in the interest of a country to ensure that the private sector and the market are as strong as they can possibly be because that is where our wealth, our prosperity, will come from.

The very first thing that we need to do when we sit down to have a big debate about retirement systems is to ensure that whatever we do enhances the ability of the private sector, the market, to produce jobs and incomes for people. To run it down as being unreliable really ignores some facts.

That brings me to my second point, which is that the government is far more unreliable in terms of its ability to safeguard people's money than the market. Look at the Canada pension plan as a starter. When the Canada pension plan was formed, the government took the money and lent it to the provinces at below market rates of interest. In other words, Canadians were dutifully paying their premiums while the government, instead of looking out for people who would be getting their pensions, decided it would distribute this largesse to the provinces at below market rates of interest, which maybe would enhance its standing with the provinces but would cheat Canadians out of their pension benefits. That was the first thing it did.

How well does it administer the Canada pension plan even today? Let us remember that it was not very long ago, and I see some Liberals across the way who will remember this, when the government proposed to raise the Canada pension plan premiums by 73% and max them out at 9.9%. The chief actuary at the time called into question the government's assumptions about whether or not those types of premium hikes would be adequate. He was fired for that. It really calls into question the assertions from members across the way that somehow the investment board will be at arm's length from the government, because the actuary was supposed to be at arm's length from the government as well. Notwithstanding that, the chief actuary was fired for having the temerity to point out that the premiums the finance department was proposing would not be adequate to fund the Canada pension plan over the long run.

I also want to point out that there is good cause to suspect that Canada pension plan funds would be redirected beyond just putting them into the stock market index, as has been proposed right now. Where does that come from? Why do I make that assumption? I make it because in 1991, when the former finance minister, the member for LaSalle—Émard, was running for the Liberal leadership, he proposed at the time that the Canada pension plan be used for regional development. In other words, he wanted to take those billions of dollars which were being set aside for people's pensions and gamble them on all kinds of crazy schemes out in the regions.

[An hon. member]

Nonsense.

[Monte Solberg, Canadian Alliance, Medicine Hat, AB]

My friend the secretary of state, the former junior minister, says “nonsense”, but it is a matter of record. It was part of his platform.

We have seen the effect of those types of programs in the past, whether it is the recent pork barrelling of the newly departed solicitor general or a coffin manufacturing company in Cape Breton that was funded by the federal government for three years and did not sell a single coffin as far as I know.

[An hon. member]

Fibreglass coffins.

[Monte Solberg, Canadian Alliance, Medicine Hat, AB]

They were fibreglass coffins, a new concept. I do not think the company sold a single one. It went down the tubes. That is the sort of thing the finance minister thought Canada pension plan should be used for. That was 11 years ago, but we have no reason to believe he has changed his beliefs.

I want to point to some of the other funds that the government has said in the past should be beyond the reach of government and should be used for very specific purposes. In fact, that is not the way it has panned out. Let us look, for instance, at employment insurance. Employment insurance ostensibly is there to provide benefits for workers in times of unemployment. Therefore, premiums should reflect the amount of money that is necessary to carry the country through a recession in order to provide benefits for unemployed workers. Typically, if I recall correctly, actuaries say that we would need to have a fund of about $15 billion. Right now the federal government has raised premiums to such a point with employment insurance that it has taken about $46 billion more out of workers' pockets than is necessary to provide benefits. That is $46 billion. I think people have every right to be concerned that the government will not leave the Canada pension plan fund alone. There is every reason to believe that perhaps it might dip into it at some point.

If people say that is nonsense, like my friend said a minute ago, I remind him of what happened to the public service pension plan when it ran a surplus. It ran what I think was a $10 billion surplus. I cannot recall exactly, but my friend says yes, it was $10 billion. What do we usually do when a pension plan runs a surplus like that? We go to a judge in whatever province we are and the judge decides how it should be divvied up based on how much the employer and the employee have put in. But there was no such due course in this case because the lawmaker was also the arbitrator, and the federal government took all of it. The public servants, of whom I suppose members of the New Democratic Party would be wildly supportive, were left high and dry because of it.

My point is simply that government is not a very good protector of pension funds or of the public's money in general. There are many other examples I could point to. In fact I could point to how well the NDP in British Columbia looked after the public's money when it came to certain elections in which that government was proposing that it had balanced budgets. In fact it was running a surplus, but in the end we found out we could not rely on what that government said.

That, in short, is the concern. We cannot rely on what governments say, so let us not speak about the unreliability of the markets. The markets at least are widely diversified, but government has total control over taxpayer money. We have no options when it controls that money. The result is that when things go sour, they go sour for everyone. We should be deeply concerned about that.

That is why I have very little faith in the government to keep its hands out of that big pool of cash, which is what is being proposed under Bill C-3. No, in fact the government cannot be relied upon.

I want to address the straw man that the member for Mississauga South erected and then proceeded to tear up, attributing the straw man to be the position of the Canadian Alliance. The member for Mississauga South said that the Canadian Alliance believes in a mandatory pension plan that people would have to contribute to whether or not they had a job. At least I think that is what he said. That is complete hokum. We have no such position. That is absolutely ludicrous.

We said that we should be open to exploring other ways to enhance the public's retirement benefits. That includes looking at other systems where they take at least a portion of the premiums that people pay toward a mandatory plan and use them to invest in RRSPs that would have to be locked in until a person's retirement. One could not speculate with these investments. There would be a fairly narrow range of things one could invest in. There would be all kinds of safeguards to ensure that there was prudence built into the plan. That is all we are advocating.

We are advocating that precisely for the reason my friend from Lanark--Carleton proposed a minute ago. We have a coming generational war between people who have been contributing into the Canada pension plan for a short period of time and who will then go into retirement and will receive in some cases eight or nine dollars to one dollar, compared to people who are just starting to pay into the Canada pension plan now and down the road will actually end up with a negative return. The member for Mississauga South doubted it but all he has to do is consult the chief actuary's report. He will see that people coming on stream today will not end up better off under the Canada pension plan.

When we take into account the opportunity cost, in other words what people could have done with that money if they had invested in bonds or an index fund, and compare it to the return they would get on the Canada pension plan, they end up definitely much worse off. That is no exaggeration. That is precisely what the chief actuary of the plan is saying.

We want to ensure that young people today have some options. That is all we are saying. We do not think it is fair to condemn those people to paying more and more of their money to taxes, thanks to the government, and more and more of their premiums to a Canada pension plan that leaves them actually worse off over the long run.

The final point I want to address is the lack of emphasis in this whole debate on the need to increase people's standard of living, their take home pay, as a way of enhancing their retirement. The Canadian Alliance for a long time has said that tax relief is an additional pillar that needs to be considered when we are talking about retirement incomes. It is fine to talk about changing the rules with respect to RSPs. We agree with that by the way. We think that RSP levels should be raised and we have argued for that. It was a plank in the last election campaign. We believe that very strongly and will continue to argue for that.

We believe that the CPP should be changed and I have just said a little about that. We believe in sustaining old age security and the spouse's allowance and all those things. We have no argument with that.

What we do say is that everyone will be better off, both in their current spending and in their ability to fend for themselves in their retirement, if we start to lower taxes in a more dramatic fashion. The government has run up a number of surpluses over the last number of years. What has it done? It has driven spending levels through the roof.

Today I heard the most hilarious thing I have heard in this place in a long time when the finance minister got up and said that as a percent of the GDP our spending has gone down. That is interesting but completely irrelevant. What is relevant is the amount of spending per capita. Has the spending per capita gone up in real dollars over the last number of years? It has gone through the roof. That is the real issue.

What we should be doing is establishing a level of spending per capita and staying at it, not continually raising it, crowding out private investment in the market.

Now that, in our judgment, we have more than adequate amounts of money going into the government coffers to provide all the goods and services that we need, we need to do a couple of things. We need to ensure that money goes to the things that are most important.

After the resignation of the Solicitor General today we can make a pretty strong argument that clearly that has not been the case in the last little while. We see all kinds of money going to pork-barrel type programs in different regions of the country, which is completely wrong. It is an offence to see the Prime Minister stand up and defend it, especially when one considers that the Solicitor General was breaking the criteria for the program that he was getting the money from.

If the rules are there, they should be abided by. It is the government that sets the rules. If it does not want them there, then get rid of them and at least be honest about it, but the government itself put the rules in place supposedly to protect the interests of taxpayers.

We believe that billions of dollars can be saved by pruning unnecessary programs, programs that are used for patronage and pork barrelling, programs that are of little or no benefit, or in some cases are actually injurious to the health of the private economy. Let us get rid of those, take the savings and put them toward things that really do help people, things like health care, which makes sense to us, and things like a few million dollars for the disability tax credit.

The members across the way try to claim the high ground when it comes to being concerned about the disabled. They are the ones who are proposing that the tax credit rules be tightened, thereby denying many thousands of disabled Canadians the ability to save a few dollars because they have extra expenses because of their disability. We think it is meanspirited. We would like to see the government take some of the savings pruned from pork barrelling and put it into things like that.

We would like to see the military strengthened. We would like to see money for health care. These are clearly things that Canadians value. There is about a $15 billion to $20 billion envelope in the government that we know is rife with waste and we would like to see that pruned. We also believe that we should take the savings, pay down debt and lower taxes.

If we look up on the wall in this place, there is a carved relief that reads “impôt tax”. Now if that does not speak volumes about this place, because it is a money-sucking hole when it comes to tax dollars. It is entirely appropriate that the relief up there has a little family of three, a mother, a father and a child. To me it just speaks volumes about the attitude around this place.

Families like that family depicted up there are held hostage by ridiculously high rates of taxation. It has an impact on the ability of people not only to look after their families but it also has an impact on their ability to set aside money for their retirement. We know that.

The statistics tell us that very few people can contribute to their RRSPs to the maximum. That has a lot to do with the high levels of taxation. We know that people have a negative savings rate or a very close to zero savings rate today because we have very high levels of taxation in Canada. When the finance minister was the industry minister, he pointed out that Canada's standard of living relative to that of the United States was lower than the poorest of the poor American states of Alabama and Mississippi. Those are not my words. It was the finance minister, the Deputy Prime Minister, who said those things when he was the industry minister.

The government needs to have a plan to lower taxes dramatically. It has no such plan. It needs to pay down debt in a rigorous way, not whenever it just decides to do it but as a line item in its budget. We would like to see a plan that overall convinces the world that Canada is a great place to invest, something that is certainly not reflected in the strength of the Canadian dollar today. We would like to see a government that produces a plan that gives Canadians some real hope.

[Bryon Wilfert, Liberal, Parliamentary Secretary to the Minister of Finance]

Mr. Speaker, I heard the hon. member's comments and I am not sure if he read the bill. The bill will consolidate all CPP assets under one independent board to enhance risk management. I am not sure whether the member is for it or against it, but I want to make it very clear that the board has been brought together by the fact that the ministers of finance of the provinces and the federal government consult and nominate members to the board.

There was some question about who was on the board. I think there was some question as to the quality of its members. Let me just suggest that the quality of its members is outstanding. There is Dale Parker, corporate director, former president and CEO of the Workers' Compensation Board of British Columbia. There is the retired former chairman of the Toronto-Dominion Bank, Richard Thomson. A former economics professor and business executive from the University of British Columbia is on the board. We have an outstanding list.

The fact is that the provinces and the federal government nominate these people. They have to have a strong background in the fiscal sector and investment ability. We know that public and pension management experts say this is an extremely well-run board. It is at arm's length of government. It is free to pursue courses of action which some of us have talked about today. What is important is that this is a board that has been supported by all the provinces and the federal government and is of the highest quality.

Does the member support the changes which the provinces and federal government have unanimously come to? Does he believe that we should throw people out into the marketplace who do not necessarily have a lot of dollars--

[The Acting Speaker (Mr. Bélair)]

The hon. member for Medicine Hat.

[Monte Solberg, Canadian Alliance, Medicine Hat, AB]

Mr. Speaker, obviously the hon. member was not listening. I did not question the credentials of anybody on the board. I did not address that issue. My friend across the way is looking at the little picture. I am looking at the big picture.

The little picture automatically assumes that it is best to invest all this money in the hands of one body. That is what we are arguing against. We are saying that is not the way to go.

What we are arguing is that every time the government has set aside money, ostensibly on the grounds to look after people, what has happened is the government has dipped into it. Whether it is the Canada pension plan before where the government was lending out money to the provinces at below market rates of interest, whether it was the EI fund which the government ripped off to the tune of approximately $40 billion, whether it was the public service pension plan which it ripped off to the tune of $10 billion, it does not matter which case we look at, what we find is that the government cannot resist a big pot of money.

I also point out to my friend that the claims he makes about the independence of the board in a way are irrelevant. The chief actuary of the Canada pension plan was supposed to be completely independent. When he gave the finance department information that it did not like and pointed out that the premiums that the finance department were proposing were not going to be enough to cover the deficit in the CPP, the department fired him. I would like to hear a response from the member to that.

[Bryon Wilfert, Liberal, Oak Ridges, ON]

Mr. Speaker, it is astonishing how the member can stand up and talk about everything other than the true facts.

The fact is that we have an independent board. The big picture is do we want Canadians to have a sustainable CPP or not? From all the evidence, I think the majority of Canadians do. We have undertaken that review since 1997 in conjunction with the provinces and we are now implementing the final stages of it.

In terms of return on investment, maybe the member missed it earlier. The fact is that as of December 31, 2001, the return was 6.2% as against any other publicly funded pension plan, such as OMERS, the teachers' plan, et cetera. In other words, we have an excellent board that is undertaking to make the kinds of investments which are secure for Canadians.

Again, I go back to the member. Does he think that the approach taken here, with the consent of the provinces, which I know his party is always concerned about, is one where there is a balance between the market and providing security for Canadians in the long run?

[Monte Solberg, Canadian Alliance, Medicine Hat, AB]

Mr. Speaker, I think my friend missed the point again. I am not arguing that these are not independent people, they are. I am not arguing that.

My point is that if the government says to the board that its mandate will now be, for instance, to use this money for regional development to some degree, which is what the former finance minister advocated when he was running for the leadership in 1991, then that is what it would have to do. Even though it is independent it would have to find a way to do that because that is its mandate. Some board members might resign, and I would hope that they would.

I would also point out that when it came to the public service pension plan, I do not doubt the independence of the people who ran it. That is not the point. The fact is the government decided that it would come in and take the money away. It has nothing to do with the independence of the people who administer the plan. It has to do with the intention of the government. Frankly, in the past the government's record has been awful.

[Scott Reid, Canadian Alliance, Lanark—Carleton, ON]

Mr. Speaker, I have to comment upon the hon. parliamentary secretary's observation about two things.

First, is with regard to the independence of the board. An equally independent board of outstanding individuals was put together for the Caisse de dépôt et placement du Québec. Eric Kierans served on that board in 1978. He resigned in protest when the government decided to use moneys from that plan against its original purpose. It issued a below market interest loan to the provincial government; in other words, to confiscate money from the Quebec pension plan investment fund and give it as a gift to the government of the day. There is no guarantee under this legislation that the same thing would not happen here.

Second, we hear over and over again from the parliamentary secretary about the unanimous consent of the provinces to this. Let us be clear about why the provinces have been so enthusiastic about this. It is because the Canada pension plan traditionally has invested all its moneys in below market interest bonds to the provinces. It gets the special rate given for federal government bonds, which in some cases is up to 20 basis points lower than the market rate for those provincial government bonds; in other words, used as a method of regional redistribution of moneys as opposed to maximizing the rate of return.

The reason the provinces went along with these changes was because the former minister of finance, the current leading candidate for the Liberal leadership, has gone out and redefined this pension plan. The first thing he did when he was working on this legislation was to expand the amount of money going to the provinces in the form of below market rate investments; in other words, a further theft from the pension savings of Canadians. The parliamentary secretary stands here and defends this. It is absolutely outrageous. He owes an apology to Canadian--

[The Acting Speaker (Mr. Bélair)]

Order, please. The hon. member for Medicine Hat.