Mr. Speaker, I am rising today to respond to government Bill C-3, formerly Bill C-58, an act to amend the Canada Pension Plan and the Canada Pension Plan Investment Board Act. The bill is being introduced at second reading because it was introduced, died on the order paper and has been reintroduced in this Parliament.
The bill's functions, as stated by the government, are to achieve the following four goals: first, it would permit the transfer of money from the Canada pension plan account to the Canada pension plan investment board; second, it would permit the transfer of assets held by the finance minister to the account for technical reasons; third, it would apply to the Canada pension plan fund, the 30% foreign content limit that applies to registered retirement savings plans and also to employer and union sponsored pension plans in Canada; and fourth, it would deal with assorted housekeeping and technical amendments.
As presented by the parliamentary secretary, he suggests there is an overriding theme of providing greater security to Canadian seniors. I would contest that. The bill is merely another stage in a long progression of pension legislation and pension proposals put forward by the government and more particularly by the former finance minister now running for the Liberal leadership. It is designed to dip into the assets of Canada's pension system, whether they be the assets of the Canada pension plan, the non-secured and promised assets of old age security or the private moneys that have been set aside in RRSPs and in union and company sponsored pension plans. It would use those assets for purposes other than guaranteeing the retirement incomes of Canadians. I will demonstrate that in the course of my speech.
This theme goes back to the very beginning of the government, right back to the time when the former finance minister, the member for LaSalle—Émard, became finance minister and proceeded to look at how he could deal at the time with the government's debt crisis. I would like to show what he did to get his hands on these assets for purposes other than guaranteeing the best possible retirement incomes for Canadian seniors. I will point out that there have been three steps in this process. This particular piece of legislation, Bill C-3, represents the third step in this three stage process.
First, in 1994-95, early in his tenure, the then finance minister floated a series of trial balloons. Canada faced a tremendous potential shortfall in its ability to raise revenues, an enormous debt crisis. We faced an enormous deficit at the time. The minister tried to find ways of raising such revenues, including a number of problems before him at that time, through clawing back pensions and dipping into pension funds.
One example is an article in the Financial Post on December 31, 1994, which recorded how this was a trial balloon being floated, as these things often are, through an exclusive to one newspaper. It recorded how the government would try to place a capital tax on firms through which RRSP investments were made. RRSPs have to be invested through a bank, a trust company or an institution of that sort. The idea was that a capital tax would be placed on these firms based on the amounts invested in or through those firms. It would have been presented as a tax on corporations as the public relations spin, but in reality it would have been a tax on the capital placed in registered retirement savings plans.
That did not sell very well. It was withdrawn and the finance minister, the member for LaSalle—Émard, floated another trial balloon in early December of that year, which also did not work out very well, but he was trying. He proposed a 1% direct capital tax on RRSPs every year. This would have caused average Canadians to pay a total of $4,141 extra over their lifetime in taxes on RRSPs with no benefit at the end of that process to reflect the cost that had gone in.
Of course, the cost to the average Canadian would have been much higher because as that money was taken out it lost its capacity to earn interest or be sheltered from income tax. The result would have been that the average benefit to the average Canadian of this tax on RRSPs would have been a loss in RRSP retirement income of 36% in order to get that 1% capital tax for the purpose of dealing with the government's short term financial goals.
A second trial balloon which was put out and which was successfully implemented was a proposal to roll back the age at which RRSPs are rolled over into RRIFs, or Registered Retirement Income Funds, from age 71 to age 69. I will not go into the arguments that were presented by the former finance minister in favour of that particular proposal. I will simply point out that it is exactly the wrong measure to take, given that the average lifespan is expanding and therefore there is a greater long term need for that pension income.
What should be happening is that the age at which money is required to be rolled over should increase as the average lifespan and therefore the average retirement age increases. This hurts all Canadian seniors, particularly female seniors because women live substantially longer than men and therefore can expect to have a retirement that is on average 30% to 50% longer than their husbands or than male Canadians. This means that this measure directly and specifically focussed the impact of the government's short term financial needs and placed it on the shoulders of elderly females who, incidentally, are one of the highest poverty groups in the entire country.
The second prong of this three-pronged approach to get those pension assets for the government's own goals and diverting those funds from the only long term goal that should matter, which is increasing and maximizing the pension incomes of Canadian seniors, took place in an attack the former minister of finance launched in the mid-1990s on old age security.
Many people are aware of the fact that the Canada pension plan has not been properly secured for the past few decades due to faults in its original design. However, the old age security system, the old age pension, guaranteed income supplement and so on, have no security whatsoever. These problems, which are not accounted for in the same way as the Canada pension plan, attract less publicity. This is a huge problem the government has not dealt with. However it did raise the issue in, I believe, 1996. Its approach at the time was to replace old age security with something called the seniors benefit. This would have solved the problem of the lack of financing for the old age security system by essentially raising the height of the clawback on seniors pensions. This would have had the effect of raising the clawback when one took into account all forms of pension income, as high in some cases as 90%.
The goal of the proposed bill at that time seemed pretty clear to a number of groups, including my own party and the Canadian Association of Retired Persons, and we fought very vigorously against it and it was withdrawn. That was the second prong of the approach. It would have captured billions of dollars for the federal government but it would have substantially reduced the incomes of perhaps most Canadian seniors.
The third attempt to divert funds away from the sole goal of increasing the pension income of Canadian seniors is the government's attack on the Canada pension plan. This process, of which Bill C-3 is part, started in 1997 with a bill that was moved by the former minister of finance and the current candidate for the leadership of the Liberal Party, which raised the payroll tax significantly and created the Canada Pension Plan Investment Board. This process is being completed today with this bill.
I want to spend a little bit of time talking about some of the problems that exist with this current legislation and will cause us to invest money based upon considerations other than producing the best possible return on investment, which should be and could be its sole goal if the government cared about making that its sole goal.
I will begin with the underlying philosophy of the former minister of finance which may explain why he chose this model for the legislation. I would emphasize that the bill we are discussing today is very much the product of the former finance minister. It is coming back unamended from the form that he proposed when he was still the minister of finance.
Going back to January 26, 1990, I would like to quote an article from the Toronto Star which says the following things about the minister of finance:
The Canada pension plan should be broken up, and its money used to set up regional funds to back promising businesses across the country, Liberal leadership candidate Paul Martin says.... Money now going to the Canada pension plan should be channelled into a chain of--