House of Commons Hansard #12 of the 37th Parliament, 2nd Session. (The original version is on Parliament's site.) The word of the day was cpp.


Canada Pension PlanGovernment Orders

10:30 a.m.

Some hon. members


Automotive Pollution Reduction ActRoutine Proceedings

10:30 a.m.


Clifford Lincoln Liberal Lac-Saint-Louis, QC

moved for leave to introduce Bill C-235, an act to protect human health and the environment by oxygenating automotive fuels.

Mr. Speaker, I will not describe the bill. I will leave the members to read it at their leisure. The bill refers to the subject you have already referred to and I will leave it at that.

(Motions deemed adopted, bill read the first time and printed)

Chemical Pesticide Use for Non-Essential Purposes Prohibition ActRoutine Proceedings

10:30 a.m.


Clifford Lincoln Liberal Lac-Saint-Louis, QC

moved for leave to introduce Bill C-236, an act to prohibit the use of chemical pesticides for non-essential purposes

Mr. Speaker, I thank the members of the House for allowing me to introduce this bill which refers to the use of chemical pesticides and I will leave it to them to read it on their own time.

(Motions deemed adopted, bill read the first time and printed)

The House resumed consideration of the motion that Bill C-3, an act to amend the Canada Pension Plan and the Canada Pension Plan Investment Board Act, be read the second time and referred to a committee.

Canada Pension PlanGovernment Orders

10:30 a.m.

Canadian Alliance

Scott Reid Canadian Alliance Lanark—Carleton, ON

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--

Canada Pension PlanGovernment Orders

10:40 a.m.

The Deputy Speaker

I want to remind members that we cannot name members, notwithstanding that it comes from a quote. We cannot do indirectly what we cannot do directly. If the member is from LaSalle—Émard, it should be the same as if it were coming from the member himself, and through a quote does not stand the rigour of the test here.

Canada Pension PlanGovernment Orders

10:40 a.m.

Canadian Alliance

Scott Reid Canadian Alliance Lanark—Carleton, ON

Mr. Speaker, I will reprise that a little, taking into account what you just said.

The quote continues:

--Liberal leadership candidate...says...Money now going to the Canada pension plan should be channelled into a chain of regional funds across the country.”

The following is a direct quote from the former finance minister who was then, as now, a Liberal leadership candidate. He said:

Take the savings of Atlantic Canadians, kick-start it with federal government money and allow the money to back Nova Scotia entrepreneurs who are going to create jobs....

That indicates a willingness to use moneys in the Canada pension plan for the purpose of improving regional development. That goal does not maximize the pension incomes of Canadians or the return on investment of the Canada pension plan investment fund and that is a serious problem.

Let me continue with another citation from the former minister of finance. The next one is from September 26, 1997. This one is important because it indicates the direction in which he and the bill are planning to take this large pool of Canadian money. He said:

I have always been an apostle of the Caisse de dépôt and I think having a Canadian Caisse de dépôt to manage the savings of Canadians is very important.

The reference here is to the Caisse de dépôt et placement, the Quebec government pension plan that invests the tax money from Quebeckers who, as I think many people here will know, are not actually participants in the Canada pension plan.

That statement was made by the former finance minister as he was setting up the board that we are now seeing put into place.

I want to talk a little about what is involved in using the Caisse de dépôt et placement model because in fact we do have a 30-year history of the Caisse de dépôt et placement carrying out investment activities on behalf of the citizens of Quebec and it is not a pretty picture.

I have another quote by Andrew Coyne taken from an article in the National Post speaking about the Caisse de dépôt et placement and the possibility of creating a pan-Canadian version of the Caisse de dépôt et placement. He said:

Is this what we really want: a mammoth, government run investment fund, with the money and the mandate to take controlling stakes in private firms, hire and fire directors, block takeovers and otherwise tilt the scales in the capital markets to suit the whims of the government of the day? Socialism by the back door? Is the Canadian Caisse, as [the former minister of finance] is already calling it, to be the vehicle with the same mix of nationalism, dirigisme and plain-old cronyism for which the original is justly famous.

I believe that is a very good question.

There are no guarantees in the legislation of non-intervention on the part of the Canadian Caisse de dépôt in the Canadian economy. All we have right now are guarantees of goodwill on the part of the people who are running it, the people who are being appointed to the Canada Pension Investment Board.

Going through the commentary of the individuals who are currently on the board, I am somewhat encouraged, for the short term, by what has been said by current appointees. In particular, I am encouraged with John MacNaughton, one of the members of the board. I will quote from an interview that was reported in the Financial Post about two years ago when he was being appointed to the board. He was asked about some of the interventionist activities that the Canadian Pension Plan Investment Board might take. He said:

Unlike high-profile U.S. pension funds such as the California Public Employees' Retirement System, Mr. MacNaughton has no plans to be a crusader on corporate governance. For him, a solid board of directors is every company's best watchdog.

He does not believe in using the Canada pension plan investment funds for the purposes of gaining seats on boards and trying to get involved in direct corporate governance. However the very fact the question could have been asked of him indicates that that possibility exists.

I will quote further. Regarding the teachers' plan which was cited by the parliamentary secretary as being a model, I should mention that the teachers' plan in Ontario does get involved in corporate governance. In fact we have evidence right here in the House today that the government anticipates the possibility of this fund being used to get actively involved in corporate governance. We should remember that this is a model that varies from the sole goal of trying to achieve a maximum rate of return on the pension funds of Canadians. “Mr. MacNaughton”, states the article, “is adamant that the government will never be able use the” Canada pension plan investment fund “to support any industrial strategy”. As well, states the article, “Nor will he heed any government plea”, which means it could happen, “to restore calm if the stock market tumbles”. So I am reassured about Mr. MacNaughton's intentions. I am not, however, reassured about this legislation.

Here is one reason why. In an article in The Financial Post on July 17, 2000, we read that a number of people being appointed to the board have expressed this point of view, but the article points out that the investment board nevertheless “opens the door to demands that collective equity funds”, or in other words funds invested by the CPP, “be used for collective equity goals to meet ethical criteria, to stabilize the stock market or to develop a an industrial strategy. And, if the politicians so desire, Mr. MacNaughton can be replaced.”

No sooner had Mr. MacNaughton made his comments with regard to the board and how he was going to avoid getting involved in the social goals than the New Democratic Party's finance critic was urging the then finance minister, current candidate for the leadership of the Liberal Party of Canada, to get involved in instructing the Canada Pension Plan Investment Board not to invest in companies that profited from human rights abuses or from threats to health. The former minister of finance, the hon. member for LaSalle—Émard and the current candidate for the leadership of the Liberal Party, said that in fact he would take these comments “quite seriously”. In other words, he was willing to look at goals other than providing the maximum rate of return on investment and thereby maximizing the pension incomes of Canadians from the Canada pension plan.

This is a problem that has occurred elsewhere. I mentioned, of course, that the former minister of finance has repeatedly said that he is an enthusiast of the Caisse de dépôt. I would just like to show what happened in the Caisse de dépôt et placement when it was faced with a similar problem: a man leading the investment board for the Caisse de dépôt who believed in complete non-intervention, who believed in simply maximizing rates of return, and a government that had other goals. In doing this, I am quoting from a book called Québec inc. et la tentation du dirigisme , by Pierre Arbour, who was formerly involved in the administration of the Quebec Caisse de dépôt et placement. I will quote from what he says about an occurrence:

Things were not going so well on the board of the Caisse de dépôt. Eric Kierans, former head of the Montreal Stock Exchange, had been appointed to the board in October 1978. Unfortunately, he resigned in 1980 in an uproar upon learning that Jean Campeau had negotiated with the Department of Finance a loan to the Province of Quebec at a preferential rate, which placed the depositors to the caisse at a disadvantage while benefiting the Department of Finance.

Jean Campeau 's behaviour was that of a former Deputy Minister of Finance rather than of the head of the caisse, and it deprived the caisse of an experienced administrator in the person of Eric Kierans, a man capable of standing up against such abuse.

It happened there and given the fact that there are no safeguards, it could happen here too. In my opinion, if the government takes seriously the goal of protecting the pension incomes of Canadian seniors, it will provide amendments to this law that prevent the kind of thing that happened in Quebec. I have not seen any interest by the government on this point. I hope that it will change its mind on this point and reject the legacy of the former finance minister who wants to use Canadian pension funds for purposes other than maximizing the retirement incomes of Canadian citizens.

Looking at the Caisse de dépôt model, the question that should be asked is what kind of results can we expect to get if we adopt this model federally? Looking at the 16th statutory actuarial report of the Chief Actuary of Canada, I find that from 1966 to 1995, the period that he was covering in that report, the average real yield after inflation on the Quebec pension plan account, which has always been invested in the manner that is now being proposed for the Canada pension plan, was a little under 4%. By comparison, the average of the largest private managed funds in Canada was just under 5%.

Compounded over several decades, these are enormous amounts of money and enormous losses to Quebec pensioners particularly when we take into account that, projecting into the future, the federal government is talking about investing amounts over $100 billion. We are talking about enormous losses to Canadian pensioners and a permanent reduced standard of living if this level of performance is repeated.

In fact, I would go further. I would say that the federal government, and particularly the former minister of finance, the current leading candidate for the Liberal leadership, is fully aware this would be the result and moreover, has projected into the future this kind of result. In his initial proposals in 1997 he stated that the projected rate of return, the anticipated rate of return on the Canada pension plan investment fund would be 3.8%, that is to say even lower than the submarket rate of return achieved by the Caisse de dépôt et placement that he is using as his model. It is extraordinary that this could actually be considered seriously in the House, this appallingly unacceptable model.

I should also mention that this rate is projected ahead based on the use of a passive index. Using a passive North American rate of index gets a better return than using a passive domestic index, and using a passive domestic index of stocks and portfolios produces a better result than an active index. I am going to spend some time talking about this because this plan makes two further assumptions that I think will do a great deal of damage to the rate of return it will produce.

Looking again at the Quebec model, we see that the Caisse de dépôt et placement has been heavily invested on the basis of producing regional development goals, of promoting industrialization, of promoting social equity and so on, all of which have reduced the rate of return it has produced. It also was used during the last referendum period to help the government of Quebec shore up its short term credit so that in the event of a yes vote the government of Quebec would not have had to refinance its debt for a period of two years. That may be an intelligent strategy if one's goal is, as the goal of the government of Quebec then was, to have some other nobler, greater purpose than shoring up and protecting the pension incomes of the people that it is supposed to work with. However, I believe that no goal should interfere with the goal of trying to ensure that Canadians maximize their pension incomes.

Let us take the other side of this equation. What if there were a national unity crisis in the future? Could we count on the federal government not to try to use this money as the Quebec government did at the time to deal with its short term credit problems? What if the Canadian stock market went into a crisis? Could we count on the Canadian government not to pressure the Canada Pension Plan Investment Board to use that money to shore up the Canadian stock market at a cost to the investment income of seniors? We do not know. I think we should be able to know.

There are some limits on the way in which the Canada Pension Plan Investment Board invests money. The most obvious one is that it is not permitted to put more than 30% outside Canada. This is important because the Canadian economy represents 2% of the world economy. The vast majority of the funds in the Canada pension plan investment fund cannot be invested outside that 2% of the world economy. The obvious result is that we greatly increase the risk of sudden shocks. The wider that money is spread, the greater the insurance against such risks.

It also has the consequence of driving down the long term payouts from the fund. We know this because a number of prominent Canadian actuaries have looked at the moneys invested in RRSPs and in company and union sponsored pension plans and compared their results to the results that would have been achieved had they been invested on a global index. On average the results have been 5% lower per annum than they would have been had they been invested internationally.

One of the prominent pension experts is Keith Ambachtsheer. The following was said in the Financial Post about his research:

Ambachtsheer's research showed that the price of this limitation on diversification is a significant increase in risk to achieve the same return. In addition, he estimated a conservative balanced portfolio subject to the... limit [on foreign investments] earned approximately 1% less on average each year over the last 10 years than an unrestricted portfolio.

That is the kind of limitation we will be imposing on our national pool of pension investments. We increase the risk because we are all trapped in the same pool. All our eggs, or 70% of our eggs, are in one basket. We also reduce the rate of return. There are currency risks. There is the risk of the Canadian stock market. The market is very small and is highly dependent on certain sectors and is more likely to fall. There are also political risks.

In an article in the Financial Post on July 17, 2000, the author of the article asked the following question:

But suppose 15 years down the road the CPP Investment Board has $100 billion or more tied up in the stock market and the market threatens to plunge 40%. Would Canadians be willing to have the investment board sit tight and see $40 billion in collective pension assets go up in smoke?

That is a good question. It is the kind of question the legislation forces us to ask, but which we would not have to ask if the 30% cap on foreign investments were removed.

There are other problems. When we have a large player in a small market, and this would be a very large player in the Canadian market, the result is that the markets are affected by every action that player takes. In a small market a large player that purchases stock has the effect of driving the price of that stock upward just by its own actions. When it goes to sell that stock, it drives the price of that stock down, with the effect of causing itself to always pay a higher than market rate when it purchases and to always receive a lower than market rate for what it sells. The larger the player, the more that is true.

That is a problem for the California public employees retirement system, the largest private pension investor in the United States, which is the closest comparison we have in size to this. I want to read again from Pierre Arbour's book about what happens with the California system and also what has happened with the Caisse de dépôt placement, which is a larger system than the California system in terms of its impact on the Canadian market. I will then take that implication and look forward to what would happen with the Canada pension plan investment fund under the proposed legislation. Mr. Arbour said:

Some may say that the size of the caisse is a handicap to performance, and this is particularly obvious if one compares its size to that of the Canadian or American economy. With the market value of its assets in excess of $41 billion, it has an undue influence on the economy of Quebec. As a comparison, the biggest fund administrator in the United States is CalPERS, a parapublic body that invests the pension funds of California state employees. It has assets of $160 billion US, but operates within the context of an economy that is 40 times greater than that of Quebec, 11 times greater than that of Canada as a whole.

The Caisse de dépôt et placement and the Quebec pension plan have invested in the Canadian economy as a whole, not just in Quebec, because of the problems they have faced with the overwhelming size of the Caisse de dépôt within Quebec's economy. That has to some degree mitigated this problem, although it is still a very severe problem and accounts for a substantial part of the low returns that the Caisse de dépôt has achieved.

The Canada pension plan investment fund, by being restricted to the Canadian market, would suffer the same problem that CALPERS suffers in the American market and that the Caisse de dépôt suffers in the Canadian market. It would suffer it to an even greater degree, thereby resulting in an even greater penalty every time it bought and every time it sold, and therefore an even lower rate of return.

Based on this consideration, the 3.8% rate of return proposed by the former minister of finance is in fact optimistic. It does not have to be optimistic and it would not be optimistic if there were realistic and practical goals that focused exclusively on producing the highest possible rate of return for Canadian seniors on pension moneys. However, because other goals have entered into it, and other technical impediments to achieving high rates of return, we see lower rates of return being virtually guaranteed.

All of this is still assuming a passive portfolio. What I mean by passive portfolio is a portfolio that simply purchases a basket of equities that mirrors the Canadian equities market. This is the approach that CALPERS uses in the United States. It simply purchases a basket of equities that more or less reflects the Wilshire 2500 Index of American stocks. That is as close as one can get to achieving an even portrait or cross-section of the American stock market.

The Caisse de dépôt has chosen to invest actively. That is to say, it makes active decisions to try to pick winners and losers. The results have not been very impressive. The Quebec pension plan, which again is the model that is going to be used for the Canada pension plan, is actively involved in for example, making decisions to purchase individual companies and then trying to operate those companies. Its record has been abysmal. It has tried to get involved in real estate deals. Its record has been abysmal and in some cases has been tinged with what would appear to be corruption. This is a real danger in Canada. I see no safeguards in this legislation that overcome the basic problems the Quebec pension fund and the Caisse de dépôt have suffered in this regard.

Just to make this point, I want to cite three losses in particular that occurred with the Caisse de dépôt. It is what Pierre Arbour refers to as the perte totale dûe à l'interventionnisme. His numbers are a little out of date but the Quebec government lost $448 million in Steinberg-Socanav because it thought it could actively manage a private company. On Brascade it lost $858 million, and on Domtar $117.2 million. That is the record.

I know of no record, looking around the world, of government run pension funds that have successfully managed active portfolios, that have successfully produced satisfactory returns on investments from investing in private companies. The exception is where they have been involved actively in restricting trade, thereby forcing the population as a whole to use government services or the services of government owned companies in order to increase the returns on those companies. That is really a question of diverting wealth from other people into these funds. That is something we do not want to pursue.

It seems to me that all of this which I have gone through has not touched on perhaps the greatest question of all, which is the problem of potential political interference for partisan goals. This is a delicate subject and I do not doubt the good intentions in this regard of the former finance minister when he proposed the legislation. Nonetheless the record shows that there are individuals, including individuals who have sat in the House, including individuals who have served as ministers in the House over the years, who have not been free from the temptation to get involved in using public funds for private or political purposes.

There is a danger of having an enormous fund, which the government has put at arm's length but which is not politician proof, available when there are goals that could serve the purpose of either assisting the government to win extra votes in a certain region, or among people who work in a certain industry or that would increase its fundraising in a certain area.

The pension plan is meant to be around when I am retired and have been so for 20 years. Half a century from now, when these temptations are out there and when we project to the future, what assurance do I have that someone in the role of finance minister or a government did not have the temptation to take this money and use it for the purposes of regional development, or preserving national unity, or shoring up some aspect of the stock market, or industrial planning or for any other purpose that would have the effect of driving down the rate of return below the 3.8% which has been promised, a rate which is in itself completely unacceptable.

In dealing with the Canada pension plan the only question that ought to concern us is that all Canadians are forced by law, if they work and if they participate in the workforce, to contribute to this plan. They are forced to contribute at a certain rate. They do not have the option of taking the money and putting it in some alternative plan. They are therefore completely dependent upon that plan. The only consideration that can weigh upon us is producing the best rate of return for those pensioners.

Frankly, the legislation in its current form fails to do that. It guarantees failure. It gives the promise of something far worse than mere failure, of disaster for all Canadians who depend on the pension plan and who have nowhere else to go if this system fails to produce satisfactory income for them.

When the people who are now in their thirties and forties retire, when they have been on the pension plan and depend on it as their primary source of income when they are in their seventies and eighties, which is now projected as 40 or 50 years down the pike, the former finance minister will be long gone. His term as Liberal leader will be over. He will not have to pay the consequences. They will have to bear the consequences of this malformed plan.

Bearing this in mind, it is incumbent upon all of us to do our duty, to take the law, to indicate that we reject it in its current form and to demand that it be rewritten so that Canadian seniors, both those who are seniors now and those who will be seniors in the future, will get the best possible rate of return on their investments and the best possible security for their retirement incomes. Nothing else is acceptable.

Canada Pension PlanGovernment Orders

11:10 a.m.


Pauline Picard Bloc Drummond, QC

Mr. Speaker, I am pleased to speak to Bill C-3, an act to amend the Canada Pension Plan and the Canada Pension Plan Investment Board Act.

I am rather offended by the comments made by the member from the Canadian Alliance. He seems to despise one of the finest institutions that Quebec has created for its own growth. This can be clearly seen, it is creating jobs. The Caisse de dépôt du Québec has created the largest number of jobs; this has been confirmed by Statistics Canada data. It is largely responsible for the job creation and economic growth that we are now experiencing.

His comments demonstrate how little he knows Quebec's institutions, not to mention Quebeckers themselves. If the Alliance hopes to make inroads in Quebec someday, it will not be with this type of statements, which basically insult all Quebeckers who worked to set up these institutions.

I would like to provide some context on Bill C-3. First, the Canada Pension Plan Investment Board is closely modelled on the Quebec Caisse de dépôt et placement. It too has the mandate to achieve the best possible rate of return on the funds it receives from the Canada Pension Plan. Revenues generated through the investments will allow the CPP to pay Canadian workers their pensions.

The Canada Pension Plan Investment Board was established as a federal Crown corporation by an act of Parliament in December 1997 and made its first investment in March 1999. At that time, both the Bloc Quebecois and the Caisse de dépôt supported the bill overall. As I said earlier, we have our own pension plan, the Régie des rentes, which is managed by the Caisse de dépôt.

To summarize, this bill would consolidate the management of all Canada Pension Plan assets through the board, which should help ensure the stability of the public pension plan. The changes outlined should allow for the management of the operating balance and the portfolio of bonds to be transferred to the Canada Pension Plan Investment Board.

This bill seems justified in order to complete the transfer of all pension funds assets to the board. Again, the federal government is copying one of Quebec's proudest achievements, namely the Caisse de dépôt et placement du Québec.

We certainly support this initiative. However, I have some reservations about the provisions of the bill dealing with the limitations on foreign assets. I think we need a more thorough analysis to understand all their impacts. We must not forget, however, that if the board becomes too active abroad, it will lose the role of wealth creator it plays within Canada's borders and indirectly, sometimes, in Quebec.

As I said, the position of the Bloc Quebecois on this issue has not changed. As hon. members know, this bill was introduced during the first session and the government has now revived it. Our position since the last session has not changed. We support this government initiative and wish it as much success as the Caisse de dépôt et placement du Québec, created 36 years ago, has knowm to this day.

Once again, a model from Quebec that has left its mark has caught the attention of the House.

Like my colleague from Saint-Hyacinthe—Bagot before me, I would now like to draw a picture of the Caisse de dépôt et placement in order to inform hon. members of this House and Canadians about the positive things they could do with this major instrument which is the Pension Plan Investment Board.

For Quebeckers, the Caisse de dépôt et placement is somewhat the spearhead of their financial emancipation, as I already mentioned earlier. This is why I was stunned to hear the position of the Canadian Alliance. Again, it is as if they were putting Quebec down.

The Caisse de dépôt et placement helped Quebec become what it is today. We are happy that Canada is using it as a model and an instrument, as I said earlier, to support the assets of Canadians in a very positive way.

The nationalization of electricity, and the creation of the Régime des rentes and the Caisse de dépôt et placement to manage Quebeckers' savings, are probably the cornerstone of what we, Quebeckers, have become financially and economically in the last 36 years. And we are very proud of that, whatever our Canadian Alliance friends' views on the matter. The caisse is our cherished child; hands off. They think they can make a breakthrough in Quebec, but they will not win our support by turning their nose up at our tools and the means we have devised to pull ourselves out of the rut, out of poverty.

I realize that many Canadians keep a prying eye on the Caisse de dépôt et placement because it has become a major force on Canada's financial scene. This scares many people, including the big financiers on Bay Street, who have done everything they could to try to weaken the Caisse de dépôt et placement since it was first created. This is something that is a bit visceral with Canadians and Canadian financiers, especially those in Toronto.

People are upset to see how much Quebeckers have saved over 36 years through the Caisse de dépôt et placement, how much wealth its decisions have created during that period, and what a formidable financial force the caisse, which started out with capital of $1 million in 1966, has become. It is so formidable that it has become the 12th largest fund manager in North America. I will repeat for the Alliance members who may not have heard and for the last speaker: it has become the 12th largest fund manager in North America. It is the largest in Canada. Also, it ranks eighth in real estate holdings.

Of course, such success does not please everyone. I will remind the hon. members of sad events in our history, events such as the attempt in 1982 and the aborted attempt in 1983 to weaken the Caisse de dépôt et placement. But let us first review the rich history of the past 36 years.

The Caisse de dépôt et placement was created in the wake of the quiet revolution by one of the founders of this revolution, the main one, because he was then Premier of Quebec, Jean Lesage. In 1964, at the Quebec City conference, Mr. Lesage had a bit of a creative temper tantrum in reaction to Mr. Pearson's desire to impose a Canada-wide pension plan run by one manager, which of course was the federal government at the time. Quebec had already given thought to setting up a typically Quebec pension plan with just one caisse to manage these considerable savings.

I find it hard not to mention all those who laboured, both politically and technically, in the 1960s to build the Caisse de dépôt et placement. One of those involved was the late Michel Bélanger, who had been president of the Montreal Stock Exchange and a member of the Bélanger-Campeau commission. At the time, he was a senior government official and one of those who had come up with the idea of the Régie des rentes and the Caisse de dépôt et placement.

There were also Claude Castonguay, whom everyone knows, André Marier, Marcel Bélanger, Roland Giroux and Roland Parenteau.

There was also the first president, Claude Prieur, who started off in a little office in downtown Montreal, with very few means when he began as president of the Caisse de dépôt et placement du Québec.

I would like to quote Mario Pelletier, who wrote an excellent history of the Caisse de dépôt et placement du Québec. Mr. Pelletier wrote that, in January 1965, Claude Prieur, the first president of the Caisse de dépôt et placement du Québec, a manager with the powerful Sun Life company until then—he was a pretty sharp tack, as they say—moved in all alone into the decrepit office on McGill Street.

During the two months that went by before any income came in from the Régie des rentes, he was forced to take out loans in his own name, with no help whatsoever from the government, in order to set up what would later become the Caisse de dépôt, which now has $133 billion in capital.

Today, the Caisse de dépôt does $10 billion worth of transactions every working day. That was last year's average. Listen carefully, because this is important to highlight—and I am also mentioning it for the Canadian Alliance—we are talking about $10 billion worth of transactions each working day.

Last year alone, the Caisse de dépôt et placement du Québec carried out $2 trillion in transactions, or three times Canada's GDP.

I should point out that the term billion in English does not refer to the same thing as the term billion in French. We have thousands, millions, billions and, finally, trillions. In French, the term billions refers to a greater number than billions. So, there were $2.5 trillion worth of transactions last year, which is three times Canada's GDP, or more than $10 billion every working day. We are talking about the 12th largest manager of global assets in North America; it is the eighth largest in terms of real estate holdings. This is no small institution.

There is also another person who was involved in creating the Caisse de dépôt, whom I neglected to mention on purpose. It was Jacques Parizeau.

He worked very hard to make the Caisse de dépôt what it is today, an institution that has stood the test of time, with a few updates, mostly since the early 1990s, with respect to the Caisse de dépôt's international activities.

Mr. Parizeau was known at the time as a brilliant economist, recognized as such, a senior government official, a great builder of the Quebec state, and he would become, some years later, Quebec's finance minister, then premier.

Mr. Parizeau did not only contribute to making the Caisse de dépôt what it is today, being one of its main initiators. In fact, he played a key role in everything pertaining to the modernization and dynamism of Quebec's financial sector.

Mr. Parizeau drew from that experience with the Caisse de dépôt et placement and the Régie des rentes du Quebec, the Quebec pension plan, and from his experience as finance minister at the time, to develop modern tools to move Quebec forward, to move the Quebec business sector forward, and to get the business people to move forward, since the business sector of the late 1960s was quite different from what it has become today.

Among other things, the creation of the Caisse de dépôt et placement marked the start of a move toward a greater participation of small investors in Quebec's economic and financial evolution. This goes back to the Parizeau commission on guaranteed investment funds, which means guaranteed deposits.

Mr. Parizeau initiated this commission, which created the Régie de l'assurance-dépôts, guaranteeing small investors would keep a portion of their deposits in financial institutions. The security of their investments was guaranteed. From 1967 on, that was a big help for small investors in Quebec, enabling them to take part in the economic and financial evolution of the country they love and cherish.

Mr. Parizeau was also the one behind the stock savings plan created in 1979. Once again, his goal was to get everyone involved in the economic and financial progress of Quebec. He was also at the origin of the modernization of the tools for monitoring and properly administering our securities, such as the Commission des valeurs mobilières du Québec and the Inspecteur général des institutions financières.

It is based on this experience with the Caisse de dépôt et placement, from the work done by the original stakeholders behind its creation to the addition of fundamental and democratic tools to democratize the financial sector, that the Caisse de dépôt et placement was built up over time. It has evolved over the years and contributed to the creation of various companies that have grown into major undertakings, such as Alcan, Hydro-Quebec, and Bombardier. In this connection, let us keep in mind that the first government involvement was via the Caisse de dépôt et placement, with investments in Bombardier, Domtar, Vidéotron, Noranda and Canam Manac.

In 1985, the decision was made to focus more on small and medium size businesses that were the ones creating jobs in the regions. Investments were made in 63 companies, with an average performance of 30%. This is nothing to sneeze at, although my Canadian Alliance colleague looked down his nose somewhat at these figures, but for startup companies this is an extraordinary performance.

So much so that the Caisse de dépôt et placement became an incredible agent of the economic and financial development of Quebec and it was ranked tops among fund managers in Canada in the 2000 Reuters Survey, which Tempest carried out by contacting--not just anyone--but TSE 300 companies.

In the year 2000, the biggest companies in Canada considered—and this still holds true today—the Caisse de dépôt et placement du Québec, which is a source of pride for Quebeckers, to be a vital tool that has played a cutting-edge role in the financial emancipation of the people of Quebec since the late 1960s. Moreover, it is ranked as the best money manager in Canada.

In the context of globalization, the caisse model continues to be successful. We cannot escape globalization; it shapes our environment and affects us all.

Globalization is the source of both fear and enthusiasm, and is replete with both opportunities to be seized and pitfalls to be avoided. The Caisse de dépôt et placement is interested in globalization from the point of view of its investors, its impact on the development strategies of its partners, and of the role it will be required to play as a result.

For a number of years, the caisse has developed based on solid values with two aims: growth and cost-effective performance.

The caisse's assets have risen from their 1981 level of $11 billion, to $44 billion in early 1995, and now to in excess of $110 billion. Just do the math: ten times the 1981 level, and more than twice the 1995 level. That is what success in Quebec is all about.

The caisse continues to respect the decision of its board and its administration to provide its depositors and its clientele with the financial products necessary for a diversified and cautious portfolio, but one that is above all efficient.

In Quebec the caisse has bolstered the fund administration industry. Its objective is a simple one: to share its success with other similar funds. It administers mutual funds for Cartier, whose funds are available throughout Canada.

As far as performance goes, all we need say is that the 1999 results of all of its investment teams overshot their objectives, with an overall performance rating of 16.5%. This is worthy of mention because it is not seen very often.

I would point out to those who might underestimate this, that over a five-year period, most of the teams of the caisse were at the leading edge of their industry, with an overall performance in the order of 14.7%.

The caisse approach, as we call it, contributes to the growth of the economy of Quebec, the growth of our industries, the growth of our companies. As a result, the quality of life of millions of people in Quebec is enhanced, and their future assured. The caisse operates with respect for its members.

The approach the caisse takes in order to achieve those aims focuses on partnership. Whether in Quebec, in Canada, or elsewhere, the caisse draws upon the expertise and experience of its partners in their respective areas.

Another key to success is information. There is no doubt that the quality and the originality of the information available to its decision-makers play a major role. The caisse devotes significant resources to process and make use of the huge pool of information that its managers and partners have. As we can see, the caisse respects some fundamental values while actively promoting and developing these values.

It is obvious that the history of the caisse and the way it does business is rich in happy developments. Let me talk about a situation that occurred in 1982, although some may feel this is ancient history. However, it still has echoes today, particularly since 1993.

As members of the Standing Committee on Finance, Bloc Quebecois members--especially my colleague from Saint-Hyacinthe—Bagot--meet business people from across Canada. Some of them have shown contempt toward the Caisse de dépôt et placement.

When this bill was last debated, my Canadian Alliance colleagues were among its critics, as they are again today. We met Bay Street financiers who hate the Caisse de dépôt et placement, even though it makes a positive contribution to the Canadian economy and has become a key player in a number of so-called Canadian businesses that make Liberal, Conservative, Canadian Alliance or New Democrat members so proud.

Still, some continue to despise the Caisse de dépôt et placement and to say that it is bad, that it is rotten. Because the Caisse de dépôt comes from Quebec and has become Canada's largest manager, there is reluctance on the part of Canada to recognize achievements by Quebeckers. This is because until this financial emancipation occurred, it used to be said that Quebeckers were not cut out for business, economic and financial matters. But now that we have created something as fundamental as the Caisse de dépôt et placement, they are a little less eager to put down Quebeckers.

In 1982, the federal government decided to introduce Bill S-31. We still remember that Bill S-31, introduced by André Ouellet, then Minister of Consumer and Corporate Affairs, prohibited the Caisse de dépôt et placement from holding more than 10% of the stocks of major businesses in Canada. At the time, the Caisse de dépôt et placement was considering investing in Canadian Pacific.

This generated incredible controversy. Owned by Quebec interests and built on Quebeckers' savings, the Caisse de dépôt et placement would become CP's main shareholder. This created an incredible uproar in Canada, so much so that business people from English Canada decided to wage a war against the Caisse de dépôt et placement. This is why the Caisse de dépôt was not very popular at the time. It was impossible for Quebeckers to become CP's main shareholder.

They decided to put unbelievable pressure on the federal government to get it to introduce Bill S-31, which provided that the Caisse de dépôt et placement could not hold more than 10% of the shares of companies involved in interprovincial transportation.

This did not target Canadian Pacific alone—it was clear that the railways affected all of Canadian business. Do you want to know why? Because all Canadian businesses at the time had a stake in transportation. If it was not air transportation, it was shipping—in the oil industry, for example, it was in pipelines—or the railways, which was a secondary activity, but which was added on to manufacturing and also the service sector.

For the year that the saga of Bill S-31 dragged on, from 1982 to 1983, before the government finally withdrew the bill due to pressure from Quebec business, we Quebeckers lost incredible opportunities to invest the significant sum at the time—I think it was around $17 billion—that the Caisse de dépôt et placement held in capital.

During that year, we lost the ability to benefit from the increase in value of Canadian Pacific shares. In 1982, CP shares were worth $30. In 1983, they were worth $50. We could have made a $20 profit per share if the Caisse de dépôt et placement had been allowed to own more than 10% of CP shares. The caisse lost some $15 to $20 million dollars, with CP alone. We have to assess all opportunities that were lost because shares of other Canadian businesses could not be purchased, given that the provisions of Bill S-31 that were retroactive.

Before this bill, we were told it would be retroactive. If the Caisse de dépôt et placement had invested more than 10% in the specified businesses, it would have had to get rid of the difference. Selling shares when you are being forced to do so means you end up selling off shares at a loss.

This is what they were going to force the Caisse de dépôt et placement into, as it was getting too powerful for the liking of English Canadians. The president of the Toronto Stock Exchange at the time, Mr. Bunting, launched an incredible offensive to bring down the Caisse de dépôt. All of the big Canadian corporations like Bell Canada, Stelco, the Bank of Montreal, the Royal Bank, Dominion Textile, Nova, Inco and Hiram Walker fought against the Caisse de dépôt et placement to keep us from moving forward.

Totalling the losses, for example for 1982-83, we lost $100 million in opportunities in one year. This is a plausible figure because for CP alone it is around $15 million or $20 million. Given the average yield of the Caisse de dépôt et placement, between 1982 and 2001, this means over $1 billion of potential capital lost to Quebeckers.

Thus today the value of the Caisse de dépôt et placement is not $134 billion but $133 billion. Quebeckers would have had $1 billion more to invest and to build up their savings with.

Because of the Bill S-31 episode, we have $1 billion less, and that is a real annoyance. Today, here we are faced with your bill, which creates and consolidates the activities of the Canada Pension Plan Investment Board. We are here to support it, despite our memories of Bill S-31. We said to ourselves “Let us put that in the past for now”. People take much delight in recalling this episode.

But we are supporting you in this wonderful plan to create another sort of caisse de dépôt et placement in Canada, using the money in the pension plans of Canadians outside Quebec, because it will open up opportunities and thus democratize the economic growth of Canada.

As do all my colleagues from the Bloc, I wish you as much success with the Canada Pension Plan Investment Board as we have had with the caisse de dépôt et placement.

But I hope that nobody puts obstacles in the way of this wonderful initiative such as we have had to face since 1982. And there were all sorts of subsequent criticisms of the caisse de dépôt et placement. There were all the smear campaigns I have seen since I became a member of the Standing Committee on Finance. As a member of that committee, I have heard a lot of incredible comments.

When one visits Toronto and talks about the caisse, it is as though one had mentioned the plague. People are afraid of it. We are flattered by this reaction. But, at the same time, it would have been nice if, in the past, you had been as enthusiastic about the growth of the Caisse de dépôt et placement du Québec as we are now about the creation and consolidation of the activities of the Canada Pension Plan Investment Board.

I remind the House that we are in favour of this bill to amend the Canada Pension Plan and the Canada Pension Plan Investment Board Act. The board acts as an investment corporation not unlike the Caisse de dépôt du Québec with a mandate to invest the money from the Canada Pension Plan in order to get the best possible return.

The Quebec Caisse de dépôt et placement also provides support for clients interested in the long term strategic development of their business, regardless of where it is located in the world. It is an accessible partner much sought after by businesses that think big. It is among the most active investment bodies in the world in the area of private investments. People who are interested in exporting their products and services and opening up new markets will find the support they need at the caisse.

Furthermore, clients of the Quebec Caisse de dépôt et placement benefit from its worldwide network and its specialized services. I do not understand why the Canadian Alliance is against the bill before us, when the board in question would allow the regions to promote strategic development and provide support for businesses. These are businesses that want to think big, that hope to export and want support. I do not understand. What other kind of wonderful instrument are they trying to come up with or have they already come up with to replace an instrument as effective as the caisse de dépôt et placement? It has proven itself in Quebec and an equivalent body in Canada would definitely contribute to strategic development, as has been the experience in Quebec.

It also provides, at each major stage of expansion, a unique source of capital for businesses. It supports the sustained growth of businesses from all sectors of the economy, from the most traditional to the most modern ones. Its professionals, who are active in their respective areas of expertise, share their skills and know-how by making available to these businesses a one-stop financial service.

Regardless of the projects, including business start-ups, support for expansion, a public call for savings, local or international expansion, a merging or takeover, financial restructuring, asset acquisition, exports or setting up abroad, family property transfer, or the sale or redemption of stocks, the goal of the caisse is to build the future and make the present better.

The Caisse de dépôt et placement du Québec is active in all the world's major financial centres and it has been developing its skills as a manager of public funds for over 36 years. It uses its own expertise, along with that of its partners, that is the institutions and businesses. Its clientele, which is mostly made up of public organizations, puts its deposits in the hands of the experts of the Caisse de dépôt et placement, because the caisse's management, which relies on a combination of daring moves and caution, guarantees returns higher than the main reference indicators, year after year.

As I mentioned earlier, the Caisse de dépôt et placement is Canada's largest investor in the private placement and venture capital sector. It is the primary holder of bond certificates from Quebec's public sector, and it has the largest real property portfolio in Canada. I am repeating this so that members opposite can understand clearly: in order to develop new structures for the financial management of collective savings and take advantage of the best investment opportunities, the Caisse de dépôt et placement is the place to go.

It is making ever greater use of its experience abroad, particularly on emerging foreign markets. Through consulting services and in partnership with the local expertise available, it is involved in the setting up, management and administration of social and collective savings programs such as retirement funds.

The objective is twofold: to stimulate local financial markets through sound and rigorous management, and to be involved in the establishment of a social protection structure, in particular through the creation of retirement funds.

In conclusion, I hope that Canada can have such an instrument, which has contributed to the economic expansion of all of Quebec. This is the wish that I am making for all the other Canadians.

Canada Pension PlanGovernment Orders

11:50 a.m.

The Deputy Speaker

For the remainder of the debate members will have a maximum of 20 minutes for their interventions with the possibility of 10 minutes for questions or comments.

Canada Pension PlanGovernment Orders

11:50 a.m.


Peter Stoffer NDP Sackville—Musquodoboit Valley—Eastern Shore, NS

Mr. Speaker, I want to thank the House for the opportunity to speak to this important bill today on behalf of our party.

I note that the parliamentary secretary who spoke earlier failed to mention exactly how the pension plan came about. For his memory, and many others in the House, if it were not for people like J.S. Woodsworth, M.J. Caldwell, Tommy Douglas or Stanley Knowles, we would not even be having this conversation today. It was these gentlemen, and many others in the labour movement, the church movement and in social movements throughout the country who fought tooth and nail to convince Conservative and Liberal governments of the importance of a pension plan to offset the high cost of living and to ensure that all Canadians had a semblance of a moderate and decent way of life in their most elder years when they retired from their working years.

It was in 1966 when that came about. Again, if it was not for those great leaders, and I add new democratic leaders, we would not have this debate today. I wish to acknowledge their sincerity and hard work over the years in bringing a pension plan and the efforts of a pension plan to Canada.

The reality is there were parties that opposed the pension plan historically, the Liberals and the Conservatives. I am quite sure if the Alliance Party was here back then, it would have opposed it as well. When we hear the Liberals stand up and now say they will do things to improve it or offset and protect Canadians across the country, we have to take it almost tongue in cheek.

It was not too long ago that the federal Liberal government, and I cannot say the word stole, took close to $30 billion of surplus funds out of the federal public service and used that money for other means. The fact is that was not its money to play with. That surplus money belonged to public civil servants who are now retired and to those who are currently working. That money was not the Liberal government's to play with, but it did.

It still leaves a sour taste in people who are now retired and the federal superannuation organizations, for example CARP. Many people who work in the federal civil service will never forgive the Liberal government for taking the money that rightfully belonged to them and putting it toward other purposes.

Speaking of pensions, we have our firefighters from across the country who come here on a yearly basis and throw a really good reception for all of us. They also lobby us very hard. One of the concerns they push tooth and nail for is the right and the ability to put more of their own money into a pension plan. They want to increase their allotment to 2.33%. A simple transaction would make this happen. Why has the Liberal government not moved on this easy request from the firefighters?

When the Liberals talk about pensions and everything else we have to go on what they are acting upon or what they are not doing. We take their words with a large grain of salt. The firefighters have been demanding, asking and pleading for this one little clause to be changed so that they themselves who have physically and emotionally demanding jobs can retire with a semblance of a decent pension, and they would do it with their own money. The government completely ignores their requests. When the government cannot do something that simple we kind of wonder what else it does.

While I am on the topic I wish to mention veterans and their spouses. When veterans of World War II or Korea pass away their spouses get a pension for a year and then that is it. Why is that? Why do we treat the spouse and family members of a veteran so callously? Everyone knows that when a veteran served in our armed forces or went overseas there was someone back home who looked after the home fires. They wear the clear ribbon which means they are the invisible fourth arm of the military. Those spouses back home are just as much a part of the military effort as the person who served overseas. They should not be cut off from any pension or face reductions just because the veteran has passed on. That pension should be carried on to the widow or the widower until that individual passes on. This is something that these groups have been asking for many years. Still the government says no, it closes doors with cold shoulders.

Another example is just as amazing. When seniors get the CPP and OAS at 65, if there is an increase to the OAS, the CPP goes down. If there is an increase to the CPP of a few dollars, the old age security goes down. Why is that? For the sake of a few dollars and a few small percentage points of an increase trying to give our retired people in the country a bit of a breather not only on high taxation but the high cost of living, the government gives with one hand and then takes it back with another. It is incredible that it continues to do this. I have outlined four different areas of various pension concerns that we have raised continuously on this side of the House to that side of the House and those concerns are completely ignored.

I wish to comment on the recent concern of this particular pension fund. Years ago a member of the House said an arm's length agency eventually becomes out of reach. That is exactly what this would do. Moneys that go into the pension plan come from employers and employees. It should be the employers and employees of this country who decide what should happen to that pension plan, as well as any surplus plan.

The legislation would set up a board of directors. I wonder how many people from the Canadian Labour Congress are part of this association. I wonder how many people from retired seniors groups are part of this association. I wonder how many people from retired, social or active church groups are part of this association. None at all. That is simply unacceptable.

The fact is it is our money. It is pension money and it is being invested in foreign stock markets and foreign entities without consulting the people of Canada. Now as this arm's length agency gets further and further away from the halls of Parliament we will know even less of what is being done in the near future.

To my colleagues of the Alliance Party who wish to have more of this public money invested overseas, would they be recommending we invest in Talisman, WorldCom, Enron, or any of those companies around the world, especially in the United States, that have a complete disregard for their own employees and their own environmental concerns around the world? I say not.

I will give credit to the Caisse de dépôt et placement du Québec. There is a clause in its regulations that says it has to invest in its domestic economy within the province. That is something that this particular pension plan that is now with a private agency should have as well. There should be a debate in the House of Commons as to what should happen to any surplus moneys. We should also be investing within our provinces, within Canadian companies, and within our own borders.

Capital venture funds and those kinds of things would be great to invest in to assist our Canadian companies and, for example, various labour groups and associations and small and medium sized businesses. It would provide opportunities to have access to funding, to grow businesses and the economy within our own borders. To invest in offshore or overseas companies does not do any good because we know they have no ethical background or, for that matter, moral background as to how that money should be invested.

We could be investing in companies that develop nuclear weaponry. We could be investing in companies that have complete disregard for the environment. I could not help but notice in the papers today that more companies are quoted as doing some pretty nasty environmental work and things of that nature in other companies around the world. Those are companies that none of our pension moneys should be invested in. That is simply nonsense.

It is kind of ironic that we in the House of Commons are discussing the Kyoto protocol and how we will clean up the earth and reduce greenhouse gases, et cetera. Yet the pension moneys that we are talking about could be invested in companies that pollute our planet, that increase greenhouse gases, that increase the damage to our environment and our planet. I am sure Canadians would be shocked and appalled if they knew that their public money was going into companies that do this.

We completely disagree with the Alliance Party in this regard. This is Canadian pension money. It should be invested within Canadian borders. It should be invested for the good of all Canadians and not for the good of foreign interests outside our borders. It is simply unacceptable.

The NDP opposes the bill unless a strict mandate along with other things are included. Ethical screening should be in place and reviewed by the House of Commons or at least by the finance committee. It is money that belongs to Canadians. They have a right to know where that money is going and exactly what it is doing for them.

High risk ventures do not often pan out. We have seen what has happened to the stock market. Thousands of employees at Enron and WorldCom have lost their pension fund and their place of employment and everything else. Why? The reason is because of a few unscrupulous people who looked after themselves and their friends and completely ignored the concerns of the workers and everyone else. That is something that the NDP completely opposes.

A pension plan is more or less a social safety net. People want to be guaranteed and assured that when they retire that money is there for them.

People are told to invest in RRSPs, RESPs and in the stock market when they are young and working. They are told to look after themselves. They should do everything they can to invest their own money and not rely on the government's pension plan because it will not be there for them when they retire. Why in the world would we promote that type of attitude? Why in the world would we promote the idea that the government's pension plan, which is the pension plan of Canadians, will not be there when people retire?

Many thousands of Canadian families do not have enough money at the end of the month to save privately. They are trying to get their kids through school, pay their bills, their taxes and everything else. Many Canadians fall behind on a monthly basis. A lot of them do not have money to save as others may have. When they retire they will require and desperately need the pension plan. It is up to us to ensure that the pension plan is there for as long as we are here and as long as this government is running, and as long as this country is still standing so we can look after our seniors and those who require a pension plan in order to move forward in their lives.

There are a lot of people in Canada who are disabled and require the CPP disability pension for them to carry on with their lives. Someone who is working and suddenly becomes permanently disabled has to go through a horrendous fight and struggle to obtain the Canada disability pension. It is amazing. I am sure there is not one MP in the House of Commons who has not had to work on three or four of these kinds of files on a monthly basis. It is a difficult thing for these people to go through. We are now hearing concerns from people who are being cut off their disability tax credits and everything else.

It should not be a burdensome thing for Canadians to apply for the disability pension plan. It should not be difficult for individuals who have been in a severe car accident and have two medical reports, one from a general practitioner and the other from a specialist, saying that they have lost both their legs or they have lost an arm, or they have become blind, or become deaf or whatever. Why is it that bureaucrats in Ottawa make it difficult for them to achieve some sort of semblance in their life when it comes to a minimum pension plan so that they can carry on for the rest of their life? We cannot continue on that way.

People like our former colleagues John Solomon and Nelson Riis and many other members of Parliament throughout the history of the NDP have stood up and raised the issues of what is happening to the pension plan, where the money is going and everything else.

There must be ethical screening for this money. It must be controlled by the House of Commons. Members of Parliament should have frequent debates on where that money is going, how it is being invested, and what it is doing. If there are surpluses, which we anticipate there may be in the future, the NDP would ensure that those surpluses would benefit retired people and those people who would soon be entering into the pension plan.

Over the last few years people have seen a slight reduction of EI premiums on their pay cheques but they also have seen a massive increase in their CPP deductions. In terms of take home pay, there has been no benefit to Canadians in that regard.

The CPP deduction is extremely important and we would like people to stop calling it a tax on wages. If properly, morally and ethically invested, the fund could be there to ensure that all Canadians, when they retire from the workforce, would have a pension plan on which they could rely and which would ensure them that they could stay in their homes and not have to go into what we used to call the poorhouse.

We oppose the continuation of this arm's length agency because we know that eventually it will be out of reach. It will not have to answer to parliamentarians and many stakeholder groups will not be part of the decision making.

On behalf of the NDP, we want to ensure that all the money is properly accounted for and is there for people who are collecting pensions now and for people who will collect pensions in the future.

I will go back to the firefighters. We want to encourage the government to quickly put in the 2.33% allotment for which the firefighters have been asking. We want the government to ensure that the spouses of those veterans who have passed on have the full pension plan until the day they pass on. We want to ensure that if there is an increase in CPP and OAS premiums that it will not affect seniors.

We want to ensure that investment of this money is done on moral and ethical grounds. The money should be invested into capital venture labour funds, for example, to benefit all Canadians. The government can get advice from organizations like the Canadian Centre for Policy Alternatives, the Canadian Labour Congress and various church organizations and social groups throughout the country. They can encourage and give advice to the government on what to do with the surpluses or how to invest that money to ensure a proper security and income return on that pension plan so it is there in perpetuity.

Canada Pension PlanGovernment Orders

October 22nd, 2002 / 12:05 p.m.


Yves Rocheleau Bloc Trois-Rivières, QC

Madam Speaker, I want to congratulate my NDP colleague on his speech and I also want to make a few comments.

First, we cannot talk about a deposit and investment fund in Canada without referring, as my colleague from Drummond did so cleverly, to the existence of as extraordinary an institution as the Caisse de dépôt et placement du Québec, which was founded in the 1960s. My colleague from Drummond spoke at length about the work of Jacques Parizeau, one of the great thinkers behind this fine institution.

Mr. Parizeau was one of the great premiers and one of the great finance ministers in Quebec. He was a very bold and courageous premier, a great manager of the province's finances and a builder of Quebec. He is a man of vision but, at the same time, he has compassion for the role of the state, a totally modern state despite what some of the new stars that we see in Quebec today may think. These people have obviously been planted in Quebec, just as is the case elsewhere on the planet, to promote neo- liberalism and to counter the good work that the state can do in a society.

Going back to the Caisse de dépôt et de placement, we should not forget that this institution was established in the heyday of modern Canadian federalism, when the federal government agreed to discuss and negotiate between equals with the provinces. This was the Lester B. Pearson era.

Members need to remember that this fine institution, the Caisse de dépôt et de placement, appears to have been one of the reasons why Pierre Elliott Trudeau, Jean Marchand and Gérard Pelletier, who have been called the three doves, entered politics. They ran and, unfortunately, were elected. They took it upon themselves to put Quebec in its place. The Caisse de dépôt came on the heels of the nationalization of electricity, as a means for a people to better control its own destiny. Thanks to the Pierre Elliott Trudeaus of this world, their meanness, their narrow-mindedness and their egocentricity toward Quebec, this kind of development was never seen again.

I have a question for my NPD colleague. How does he explain the really shameful attitude, as my colleague for Drummond put it, of Bay Street? How does he explain their attitude concerning the Caisse de dépôt?

My second question is this: Can we be sure, with this initiative of the Canadian government, that the Caisse de dépôt et de placement in Québec will not be subjected to the Canadian investment board? Quebec should be recognized as a distinct society, at least in the financial sector.

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12:10 p.m.


Peter Stoffer NDP Sackville—Musquodoboit Valley—Eastern Shore, NS

Madam Speaker, looking at it politically, if any federal government was to go into Quebec and say it was going to take over the caisse des dépôt, look after it and take funds from it, I think it would be a political nightmare. I do not think that any federal politician would go into Quebec and tell the Quebec people and government what to do with the caisse des dépôt. It just simply will not happen.

My inlaws live in Laval, Quebec, and they are very pleased with the Quebec pension plan. They are retired and have a very good pension plan from the caisse des dépôt. That is enough said on the success story.

The federal government could learn an awful lot from Quebec and its pension plan. There are two things.

First, there are requirements that it has to invest within the boundaries of Quebec. We could expand that to the Canada pension plan where it would have to be invested within Canada. Quebec is much more open for screening.

Second, the average Quebecker can go in, look at the documents and the fund and see where the money has gone and how much the fund has taken in. It is much more open within the Quebec borders than we are within the federal borders.

Success sometimes breeds a little jealously and I think Bay Street may be a little jealous of the success of the Quebec pension plan.

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12:10 p.m.


Svend Robinson NDP Burnaby—Douglas, BC

Madam Speaker, first, I think the Caisse de dépôt et placement du Québec is truly a model for eastern Canada.

We are not afraid to extend the principles of the Caisse de dépôt et placement du Québec, unlike the Canadian Alliance who argues that it would be terrible to base the Canada Pension Plan on the same principles as the caisse. We, in the NDP, say bravo to the Caisse de dépôt et placement du Québec.

I want to make a brief comment and then ask a question of my colleague. I strongly support his call, and the call that has been made for some time, for improvements to the pension scheme for firefighters. Certainly we have been working for some time on this. The firefighters have an effective lobby. They come to Parliament Hill once a year. They get lots of support from members on all sides of the House and yet nothing changes.

I take this opportunity to underscore the importance of showing some respect for these people who put their lives on the line to save the people of this country and to heed that plea, as my colleague from Sackville—Musquodoboit Valley—Eastern Shore said so eloquently.

I am one of those members who had the great privilege and honour of serving in the House with Stanley Knowles. One of the real pillars of Stanley's approach to politics was his profound concern for pensioners. He pointed out there were really three pillars to pensions: first, the old age pension; second, the Canada Pension Plan; and third, of course for those who had it, private pensions.

Members of the Canadian Alliance have suggested that somehow we should turn over the Canada pension plan to the market. We should get rid of the public component of it and the requirements that there be investment in Canada and turn it over to the great casino of the market. We know all too well what has happened with Enron, WorldCom and Nortel Networks, and so on.

I know my colleague from Kings—Hants is a great supporter of that casino market system. I wait with interest for his comments and his proposals for the pension system.

Could my colleague respond to the suggestion by the Alliance that we throw the Canada pension plan into the great free market system and see what happens to those who have invested in stocks like Enron, WorldCom and Nortel Networks?

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12:15 p.m.


Peter Stoffer NDP Sackville—Musquodoboit Valley—Eastern Shore, NS

Madam Speaker, people like Stanley Knowles, Tommy Douglas, M.J. Caldwell and J.S. Woodsworth were supported by many great New Democrats in the House.

Mr. Stanley Knowles definitely had the support of my colleagues from Regina—Qu'Appelle, Burnaby—Douglas and Winnipeg—Transcona who have been long serving members in the House. Without their support and encouragement, they could not have carried on their fight for pensioners.

If we took the Alliance's approach to investment in pension plans, we would have a terrific number of people within a very few short years living well below the poverty line, and a lot of those people would be seniors. Prior to 1960, 33.6% of all seniors were living below the poverty line. After the Canada pension plan and the Quebec pension plan came in, that figure dropped in 1995 to about 11% of all seniors living below the poverty line.

A public pension plan has definitely assisted many pensioners and couples and has ensured that they will have a quality of life in their retiring years.

First, Canadians would never accept it If we opened it up to the world market, the casino market trade, stocks, et cetera, as my colleague suggested that the Alliance would do. That is why the Alliance will never go anywhere electorally in the country. Second, it would be very dangerous. In a few short years we would see a lot more Canadians living in poverty because the pension would not be there for them.

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12:15 p.m.


Gilles-A. Perron Bloc Rivière-des-Mille-Îles, QC

Madam Speaker, I will be very brief. In his speech, the NDP member stated that the government has dipped into the government employees' pension plan.

If we were to draw a parallel and say that the government is about to dip into the employment insurance fund, would the member agree to set up a fund to manage the employment insurance surplus?

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12:15 p.m.


Peter Stoffer NDP Sackville—Musquodoboit Valley—Eastern Shore, NS

Madam Speaker, if I understand the question of my colleague from the Bloc correctly, the federal government took a very large surplus of money out of their pension plan. I think that is absolutely wrong. That surplus belongs to the retired workers of the public service. It also belongs to the workers who are currently serving in the public service. It is their pension plan when they retire in the future.

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12:20 p.m.

Progressive Conservative

Scott Brison Progressive Conservative Kings—Hants, NS

Madam Speaker, it is with pleasure that I rise today to speak on Bill C-3, an act to amend the Canada pension plan. It is worth noting that this was originally introduced as Bill C-58 in the first session. This government is the first government in the history of the Canadian Parliament to have twice as many throne speeches as budgets and it has again unnecessarily delayed legislation, allowing legislation to die on the order paper which then has to be introduced again, discussed again and ultimately passed.

From purely a parliamentary productivity perspective it is ludicrous that the government, in the interest of re-imaging its supposed vision for the country and trying to polish the Prime Minister's legacy, actually delays action. A good legacy for any government would be action. A bad legacy, I would posit, is one that delays action. This is a government that time and time again talks but does not act.

Throne speeches are typically more about talking than acting. Budgets are about acting. The government should have had a fall budget for full accountability and action to address some of the issues facing Canadians, whether it is the capital markets downturn, notwithstanding what has happened in the last week, which hopefully will be sustainable. But by and large Canadians are concerned about the future of their retirement plans. Increasingly, every month when they get their RRSP statements they have great concern about their futures.

Clearly the Canada pension plan is an important cornerstone of the future retirement savings plan of most or all Canadians and certainly is one that is supported broadly by a wide range of Canadians who support the notion of a government pension plan, one that is secure but also one that maximizes their retirement income in retirement.

Earlier in the comments of my colleague from Burnaby--Douglas he said that he was waiting with bated breath to hear what my comments would be on this. I suggest, if we look at market performance historically over the long term, that in fact participation with a diversified portfolio in the equities market over the long term is a far better way to build equity and ensure a secure retirement than the previous treatment of the Canada pension plan capital pool, which was to lend it to provinces at substandard rates.

If we look at the union funds and the pension funds in Canada, whether it is teachers' unions, or OMERS, which I believe is the largest investor in the capital markets in Canada, or many of the government unions that invest in the capital markets, all those individuals and pension funds that invest in the capital markets, we see that they invest in the capital markets because they realize that maximizing the retirement incomes of their membership in the long term requires prudent participation in the capital markets. I would urge the member, as a member of a political party that espouses equality and egalitarianism, and suggest that he ought not to deny all Canadians the opportunities that union members have currently to benefit from participation in the capital markets in order to maximize their retirement incomes.

This movement of the Canada pension plan capital pool toward capital markets is one that in the long term, and I think the hon. member will share this, will benefit Canadians and improve their retirement incomes. Notwithstanding what has happened in the last year to two years in the capital markets, by and large the return last year on the Canada pension plan, compared to most mutual funds and most investment portfolio manager records in the last year, was actually fairly good. That is not to say that it was a positive return. I do not know too many investors or portfolio managers who enjoyed positive returns over the last year, but we cannot pick market timing completely.

The Canada pension plan has to be invested for the long term. Good portfolio management expertise will prevail with the right quality of skill sets on the management level. That is one of the reasons why it is so important that the board of the Canada pension plan be chosen very carefully. We have had and continue to have significant concerns about the way the government makes order in council appointments. The correlation between Liberal Party contributions and an appearance in the board's order in council appointments is uncanny. The degree to which this level of partisanship can threaten the potential quality of a board is very important.

When we are talking about the future retirement incomes of Canadians, it is absolutely essential that the individuals on these boards be beyond reproach, that they be chosen with absolutely no inclination or partisan influences. I would hope that we would see a greater commitment from the government to selecting the absolutely best possible members of the Canadian pension plan board, based on their expertise, experience and understanding of investment principles in the capital markets, and not based on either Liberal memberships or their propensity to contribute to the Liberal Party funds.

I believe that we also have to take a serious look at other ways to address the demographic time bomb that exists in terms of Canadian retirement planning right now. Moving forward, we are really just a few years away, just 10 or 20 years depending on the demographer, from seeing a significant reduction in the number of Canadians who are actually working and paying taxes, along with a significant increase in the number of people who will be drawing. As such, I support the increase of, for instance, RRSP contribution limits. That is one way in which we can defer taxes to the future as people withdraw from these RRSPs. Also, the increase in RRSP contribution limits would give Canadians an opportunity to shelter more income today than they would otherwise be able to.

With the most recent changes in the tax brackets, there is an anomaly in our tax system now. The current $13,500 RRSP contribution limit is not consistent with where our tax brackets are, so we ought to see a significant increase in the contribution limit. It is not a write-off of tax revenue for the government. In fact it is a deferral of tax revenue to a time when we are going to need a tax revenue even more than we do today.

I would also urge the government to use the infusion of the CPP capital into the capital markets as an opportunity to move more aggressively to raise foreign content limits, to allow Canadian investors to achieve a greater level of geographic diversification in their RRSPs, which is important from a portfolio management perspective. Currently many of the mutual funds and the professional managers are already flouting the foreign content limit. It seems perverse to create rules that can be escaped by highly paid financial and tax advisers and by mutual fund managers and not have this available to the ordinary Canadian investor. That is exactly the perverse system that the government has today in terms of our foreign content limit on RRSPs.

Beyond that, it is time for us to consider some new approaches, to give Canadians more options in terms of ensuring that they have adequate retirement incomes in the future. One suggestion, for instance, would be to allow Canadians an opportunity through a new approach to employment insurance policy. We know that the government has benefited significantly by padding its books with outrageous employment insurance surpluses. Perhaps it would be a good idea to use some of those surpluses to actually strengthen Canada's employment insurance system in the following way.

Perhaps after paying into the employment insurance system for a period of 10 years, for instance, as part of a vesting period, if you will, Canadian workers ought to receive a statement every year telling them that their employment insurance account balance is whatever it happens to be. It will not be a terrific investment because clearly for those who do not draw from employment insurance frequently, or who in many cases do not draw at all, their contributions will be used to top up those of people who draw more frequently. But the fact is that some recognition for those who do not draw frequently would make a great deal of sense. To actually reward people who do not draw from EI frequently would accomplish some of what the Liberals wanted. The Liberals moved to reduce benefits for those who draw seasonally, but in some ways we could accomplish the same end goal with a lot less hardship if we were to find ways to reward those who do not draw frequently.

Also, what about the notion of allowing Canadians to withdraw money from their EI accounts to further their education, to upgrade their skills, to study a computer course, or for an MBA or a CFA, to go from being underemployed to fully employed? That would be consistent with labour market mobility, which we recognize as being important in today's society and a hyper-competitive global environment.

What about allowing Canadians, after a lifetime of paying into EI, to roll some of their EI account balance into their RRSPs? I have heard so many times from people in my constituency that they have paid into EI for 15, 20 or 30 years, have never drawn a cent and will never be able to. This would be one way to reward Canadians for not drawing from EI. It would be a way to augment their retirement savings. It would be an EI system that works for people who work. I think that might make sense when we are considering issues of helping Canadians ensure a more prosperous and secure retirement future.

I hope that the dire predictions of the member for Burnaby--Douglas for the capital markets do not come true. When he points to the Enrons and the WorldComs he is pointing to some of the most egregious examples of corporate governance offences. In the U.S., we are seeing the Sarbanes-Oxley act, a strong action by U.S. government to enforce and bring forward concrete action to improve the corporate governance framework in the U.S. In Canada we are seeing absolutely nothing. There is talk, but there is no action.

There is the recent appointment of Harold MacKay as the chairman of yet another task force, and the government loves task forces, to study the corporate governance issue, when there are some tangible steps that could be taken to improve corporate governance in Canada today. I think that the federal government should be working with some of the provincial governments. For instance, for 30 years there has been discussion on the notion of a national securities commission.

I say to some of my colleagues from the Bloc about the issue of a national securities commission that I recognize wholly that securities regulations are within the provincial jurisdictions, but the fact is that there could be greater cooperation between the various provinces with the federal government playing a leadership role in working with the provinces to ensure that there are across Canada very uniform approaches to securities regulations. That would benefit people on the buying side of the market in terms of raising capital. It would also benefit us in the long run, by greater resources, focus and expertise, with a greater protection of investors. These investors, whether they are in Quebec, Nova Scotia or Ontario, are concerned about the future of their retirement holdings. They want to know that the greatest efforts are being made across the country to ensure that securities commissions have the level of expertise and resources required to enforce consistent, uniform securities regulations and to be able to do so forcefully.

Currently, we have about 10 securities commissions in Canada. Many of them are underfunded and underresourced such as, Nova Scotia, P.E.I., Newfoundland and New Brunswick. The Canadian capital market is only 1.5% of the global capital markets. For us to divide those capital markets into 10 or 11 securities commissions does not make a great deal of sense. What it means is that we do not have the resources or the expertise at the provincial levels to do as good a job as we would if there were a national effort.

I recognize the inherent complexities of these proposals but I submit to my colleagues from the Bloc that it bears consideration in the interests of all Canadian investors, whether they live in Quebec, Ontario or British Columbia. The best possible expertise and resources must be committed in a uniform way across Canada to ensure that the WorldCom and Enron type of debauches do not threaten to further damage trust in the capital markets. Currently the capital market issues are surrounding trust. Not seeing action taken by the Canadian government, while we see such aggressive action taken by the U.S. government, is something that is purely unacceptable. I am concerned as well.

Mr. Harold MacKay presented an excellent report, as head of the task force on the future of the financial services sector. That excellent, objective, thorough report was butchered by the government. It was more interested in plucking the politically palatable from it and ignoring some of the important public policy parts of a report that might have been controversial but which would have furthered the interests of the financial services sector in Canada.

One of the things that work well in Canada is our financial services sector. That is a sector which has the capacity to lead globally, yet we have taken the perverse steps in Canada of handcuffing our financial services sector while at the same time exposing it to foreign competition. Whether it is in the banking sector, the insurance side or the trust companies, we do not have a financial services sector that fears foreign competition, but there is significant trepidation about the notion of being exposed to foreign competition and having their hands tied behind their backs. That is exactly what our current financial services regime in Canada is doing. We have significant concerns about that.

In addition to supporting the direction of this legislation, I would hope that the government does not delay developing and implementing policies to improve the confidence of Canadians in the capital markets. The corporate governance issue is critical and we must address that in Canada. The U.S. government is affecting change in that regard and taking dramatic and important steps. I would hope the Canadian government would do the same.

I would hope the government would also increase flexibility with RRSP limits and reduce foreign content limits, which would help Canadians save in their RRSPs. Further, the government ought to consider the notion of helping Canadians, through their EI contributions, further augment their retirement savings and ultimate security.

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12:35 p.m.

Oak Ridges Ontario


Bryon Wilfert LiberalParliamentary Secretary to the Minister of Finance

Madam Speaker, my colleague across the way made some comments which, as I had indicated in my speech, I want to reinforce because I was concerned there was some suggestion about the politicization of the CPPIB board of directors.

I want to make it clear to the House and to this member that the board of directors is independent and accountable. The ministers of finance federally and provincially appoint directors with high qualifications. There is consultation with the provinces. The directors are chosen from a qualified list of candidates recommended by a joint federal-provincial committee, one from the federal government and from the nine participating provinces. The criteria that is used for this nominating process is a public document and is out there for the public to see.

In making the appointments it should be emphasized that the directors must have proven financial ability and relevant work experience for them to carry out the objectives of the CPPIB. As a result the people who sit on that board of directors have extensive business, financial and investment expertise.

I want to emphasize the independence and the quality of the board because the hon. member implied that somehow there may be government, that is, Liberal Party bias in the selection. That is of course nonsense given the fact that nine participating provinces and the federal government are nominating a list of candidates. Both Conservative and New Democratic governments as well are nominating. It is important for the public to know that the independence is there.

I am sure that this was maybe an oversight by the member, but I wanted to emphasize this on the public record and any comment that the member might make. Otherwise I was pleased with his comments about the direction of Bill C-3. I also want to emphasize that these proposals have the support of all of the provincial and territorial governments involved and the changes are now before the House.

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12:40 p.m.

Progressive Conservative

Scott Brison Progressive Conservative Kings—Hants, NS

Madam Speaker, while the member describes a consultation process with the provinces, the ultimate decision in terms of these appointments comes from the PMO.

The member for LaSalle—Émard, as a born again ethicist, yesterday introduced a series of proposals in which he described the unbridled power of the PMO, the evil force of darkness from the PMO, and its impact on the appointment process and on individual members of Parliament, particularly on that side of the House.

I am not certain what his future plans are in terms of who he is supporting for the leadership of his party but I would argue that this born again ethicist, the member for LaSalle—Émard, based not on his track record but on his most recent utterances, would be closer to agreeing with me than agreeing with the hon. member that there would need to be a greater level of not just consultation with provinces but parliamentary and committee consultation and ultimately approval of appointments.

It has been some time since we reviewed the appointments to this board, but there was a strong correlation on this board between contributions to the Liberal Party and Liberal Party affiliations in a general sense and appointments to this board. That is not the case for the entire board. In fact, quite specifically, John MacNaughton, who is head of this board, is to my knowledge a non-partisan and an extremely qualified pension manager and investment executive with a great deal of experience.

That being the case, I am sure that in his heart of hearts Mr. MacNaughton would rather the Liberals appoint his colleagues on that board not based on their partisan affiliations but on their true expertise and qualifications as pension and investment executives. Canadians would be far better served by that, while I suggest perhaps the hon. member and his party might not be quite as well served in the short term.

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12:40 p.m.


Diane Bourgeois Bloc Terrebonne—Blainville, QC

Madam Speaker, I listened carefully to my colleague from Kings—Hants, who, by the way, had the fortitude to warn us against the dreadful partisanship that seems to prevail where the management of the Canada Pension Plan is concerned.

I would like to know if my colleague thinks the money is being well looked after by the government? If so, why? If not, why? And how could we make the administration of this fund more transparent?

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12:45 p.m.

Progressive Conservative

Scott Brison Progressive Conservative Kings—Hants, NS

Madam Speaker, there needs to be greater efforts in ensuring transparency, both in terms of the criteria of investments and that all Canadians are aware of what the criteria for investment would be.

By and large with this fund the criteria ought to be the maximization of the retirement assets of Canadians. For example, there have been some representations by some members of the New Democratic Party, among others, that there be ethical requirements in terms of the criteria of this fund. I do not believe that is necessarily appropriate.

Canadians can make those decisions in terms of other investment pools, but really the responsibility here is to maximize their retirement income. So that is one part of it. There needs to be a transparency in that regard.

There needs to be annual reporting of the returns of this fund. From an accountability perspective that is important. The Auditor General ought to have a greater level of scrutiny powers over the fund. This makes a great deal of sense and is consistent with what we have called for in the past.

While I support the discussion about the movement of Canada pension plan funds into earlier stage investments, some of which are outside of the realms of the publicly traded markets, the venture capital industry earlier stage investment, I think that in the long run these are a good idea. They are a good idea for emerging technologies in Canada and will ultimately work out well for the CPP.

When we are getting into these areas of investment the level of expertise at the board level is critical. This is a board that has to be well beyond reproach because of the importance of the mandate that is given here. This is the future retirement incomes of all Canadians. Canadians do not choose this board. It is not like buying a mutual fund where Canadians can evaluate the track record of the fund or the board or the quality of the management team.

That is why the government can do a better job of ensuring that the appointment process is beyond reproach. The fund is the most important fund in all of Canada in terms of a pension fund. We expect transparency, the Auditor General's scrutiny and the appointment process of the board to be absolutely essential. It is unimpugnable.

In a general sense I share with the hon. member her concerns in this regard.

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12:45 p.m.

Canadian Alliance

Scott Reid Canadian Alliance Lanark—Carleton, ON

Madam Speaker, while I agree with the general tenor of the caveats that the hon. member for Kings--Hants has put forward, I do want to express my concern about one thing he said in his latest response to the last question he was asked. This is the question of getting involved in non-publicly traded investments at an early stage.

If we are concerned about the potential for the board to act in a manner that is subject to political ends, that is subject to pressures from outside and so on, then surely the one area we do not want to go into is publicly traded commodities because at that point we are dealing with an area where there is no market price to be established. An oversight, even if there is open reporting, is virtually impossible.

As an historian I have studied pension systems elsewhere. I am unaware of any jurisdiction in the world where a public pension has been invested successfully in this manner and has produced satisfactory rates of return. I was wondering if the member is aware of any to expand our knowledge on this point?

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12:50 p.m.

Progressive Conservative

Scott Brison Progressive Conservative Kings—Hants, NS

Madam Speaker, I thank the hon. member for his perspicacious intervention. I guess he did not completely agree with the tenor of my caveat.

In any case, the investment in early stage opportunities does open up the potential for abuse. That is why it is even more important that the appointment process that selects the board, and the pension management professionals in the Canada pension plan are exceptional.

The member is right. It does open up the potential for abuse, but notionally the idea of Canada pension plan investments, or a portion of them, not a huge portion but a portion, being used to invest in venture capital types of investments is not a bad or wrong-headed approach. In fact if we look in Quebec at the Caisse de dépôt, there are some of these types of investments--

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12:50 p.m.

The Acting Speaker (Ms. Bakopanos)

I apologize to the hon. member but we did run a minute or two overtime.

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12:50 p.m.


Bryon Wilfert Liberal Oak Ridges, ON

Madam Speaker, I rise on a point of order. The hon. member again indicated that there was a direct correlation between Liberal Party contributions and the members of the board of directors. It is very clear that this is not the case. I have documented clearly--