Mr. Speaker, it is my pleasure to rise today to speak to Bill C-226, an act to amend the Pension Benefits Standards Act, 1985. The intent of the bill is to have an administrator prepare a report each year setting out the social, ethical and environmental factors that were considered in the investment of the money in the fund each year.
I am in total support of this private member's bill and I believe the NDP is as well. The NDP is in solid support of any measures which would strengthen and deepen the transparency and accountability of public pension funds.
Canadians depend on the viability of their pension funds. It is clear and simple. We need them for our old age and for times of vulnerability. Whether it is QPP or CPP Canadians with disabilities depend on these funds to provide them with income support when they are no longer able to work. We must have confidence that the investments which our pension managers are making are effective and we must ensure that they are ethical.
I agree with the member for Drummond that we must have a rigorous and regular reporting on how our funds are being invested because our future depends on it. This is in fact our future nest egg as a nation and as a people.
Recently my colleague from Winnipeg Centre spoke about Bill C-3, the act to amend the Canada Pension Plan and the Canada Pension Plan Investment Board Act. He spoke about the alarming state of the Canada Pension Plan Investment Board. He asked the question which needs to be addressed by all parliamentarians: Is it a good idea for us to be investing on the open market with Canadian pension plan savings?
If we look at the actual experience in the last period of time since the Canada pension plan board was struck and put in charge of investing our hard earned pension contributions, the experience has in a word been terrible. One could have done better by playing pin the tail on the donkey when it comes to the stock market investments it made.
Unfortunately, the investment board chose to enter the stock market at exactly the wrong time. It was seduced by the high earnings in the bubble that took place in the high tech sector when people were getting returns of 20% and 30% per year on their investments. The board wanted a part in that but in fact entered at the wrong time and lost a fortune. It was our fortune.
Originally the board was given $11 billion to invest on our behalf. In the first return that came back it had lost $1.5 billion. Not only did this management board manage our funds badly but it then proceeded to reward the chief administrator of the fund. In the first quarter financial statement the board doubled the CEO's salary even though he lost $1.5 billion in the first venture in the stock market. It also doubled his performance bonus. His performance bonus went from $140,000 a year to over $200,000 a year. If the board rewarded bad behaviour so generously I wonder what it would do if it showed a profit?
We seem to have adopted the worst corporate models in the structure of this board but not the best practices or some of the unique structures that we must have in place now to manage the money of Canadians. This is taxpayers' money being invested on the private market.
The fund has grown not because we have made smart investments but because the rate of contributions has been massively increased. It is now at $53 billion in spite of the fact that at the next quarterly report the board reported a loss of $800 million. In the quarter after that it lost $1.5 billion. In the quarter ending in September 2002 it lost $1.3 billion. The fund is hemorrhaging. We are making bad investments. The people we have put in charge of our retirement savings are investing badly on our behalf.
Whether it is a good idea or not to be involved in the stock market, we cannot argue with the fact that if we had not gone down that road there would be billions of dollars which would not be lost and would at least be sitting there and could in fact be invested in other ways. It could be invested in municipalities, in provinces, or in low interest infrastructure loans that would benefit Canadians. It would not have been invested offshore, which is the experience we have now.
The NDP promotes socially responsible investment of workers' benefit funds, such as the Crocus Fund in Manitoba. We support this bill. We support the call for any regular critique of the social, ethical and environmental considerations involved in the investment of our public funds. We support the idea of an ethical screen for the CPP investment fund through public hearings and consultations with those who have developed ethical screens in the private and cooperative sector. We support the ban of CPP investment in industries that harm people, such as big tobacco industries.
The considerable experience with ethical screening has shown that introducing an ethical screen when making investment decisions does not mean earning a lower rate of return on investment. Experience has shown that ethical investments not only enhance social capital but are financially wise investments as well.
The NDP is committed to continuing a publicly funded pension plan because it works. Our public pension system is the cornerstone of Canada's retirement system. The CPP has brought most Canadians seniors out of poverty and allowed them to retire in dignity.
We support Bill C-226 and the safeguards it would put in place to protect the ethical, environmental and social standards. I regret that so far the bill has not been made votable because it would have a considerable impact on strengthening the public pension plan structure.