Mr. Speaker, like my colleague, I am very interested in the Canada pension plan in general. I followed very closely the changes that have been made to make it truly sustainable.
There is no doubt that there have been quite dramatic changes in the demographics of the country. I think we all realize not only is the country still growing but the percentage of older people is growing. All the projections suggest that the proportion of senior citizens as a proportion of the entire population will get larger and larger. Therefore a variety of steps were necessary to strengthen the Canada pension plan. I certainly support them.
Like some other colleagues here, from to time I receive complaints from people who ask why the rates are going up and that kind of thing. To make the fund sustainable, one thing we had to do was look at the figures for the next 30 to 40 years, look at what the demands on the pension plan would be and then work out rates that truly reflected those figures, with the new vision we have of the way Canada will age.
We did that in a very fair and balanced way. It was not a huge increase over night. It was gradually phased in. The premium levels are higher but not as high as they would have been had we left the matter, as is often the case in the House, I regret to say. We tend to put things off because of political pressure.
The rates were changed. That has been one of the important ways we have tried to make this truly sustainable so that for generations to come people will know the Canada pension will be there them. This is not just the pension for when we reach retirement age, it also throughout one's life gives the safety net of the CPP disability pension which is also supported from the same fund.
The other measure, the one we are discussing today, is the so-called foreign property rule. We might ask how can we make a pension plan sustainable. One way is to ensure that people put in the right amount of money so that there is a good sum of money for the future.
The other question is how are we best going to use the moneys that we actually have in the plan. That is always a matter of serious debate. Some investments return a great deal but are very risky, some return very little but are very safe and so on. In this case we have a board of excellent, very highly qualified Canadians looking after the investment side of Canada pension.
Also, as a part of the move to make it sustainable, we have gradually brought up the percentage that can be invested abroad. It is now 30%. Not very long ago it was only 10%. I know some people become nervous about that. It is human nature that we have much greater faith in our own institutions and our own businesses than those overseas. If we look at the way we work, invest and trade already, a great deal of our wealth comes from overseas. We are a small country in terms of population, we are relatively wealthy, highly educated and we have remarkable natural resources. I suspect that in one sense we could live behind our fence and subsist better than any other nation in the world. However to keep our standard of living, we to trade abroad.
As a simple example, our farmers are the best in the world. We have an incredible range of climate so we can grow a variety of crops. We have an incredible range of soil so we can grow a variety of crops. We have highly educated, highly sophisticated farmers in every commodity group. We grow not only grapes and corn in Ontario but we also grow kiwi fruit. Farming is very diverse. However, even with all the benefits that our farmers have for this wonderful local environment in which they work, 50% of the farm gate income of our farmers comes from overseas.
I mention that in connection with the foreign property rule which we are discussing. The question really is, why should we invest 30% overseas? The answer is so our CPP fund can tap into the wealth of the rest of the world. We produce 2% of the gross product of the entire world, so we are tapping into the other 98%. That is a very important point.
Having followed this CPP matter with great care, I view it as appropriate at this time, given the nature of the world economy, that 30% of the investments of the CPP could and should be overseas so we can have access to the wealth which is out there. I want to stress though that this is not some novelty or something that we just dreamt up here in Ottawa. This also has been the pattern with provincial and other major pension plans in Canada. Some of those have been mentioned in the debate this morning.
At this level of the foreign property rule, CPP is treated like all the pension plans in Canada. If that were not the case, in a very real sense we would be penalizing all Canadians. All Canadians invest in this pension plan and we would put them at a disadvantage compared to people who invest in other pension plans. They have an opportunity, with their weekly, monthly payments into CPP, to get the benefits of up to 30% foreign investment. That is appropriate and it is fair. It brings the CPP in line with other pension plans. It also creates a balance in another sense. It ensures that a significant portion of tax assisted retirement savings are invested in Canada and provides diversification opportunities for the pension fund and for RRSP beneficiaries.
This is a very large fund. I for one would certainly never support the idea that all moneys in the pension plan be invested overseas in other operations. This is not the intention. I support the fact that 70% of these funds are and should be invested in Canada. The idea with the other 30% allows Canadians, as we do in other forms of trade, to benefit from wealth which can be generated overseas. There is a balance in that sense also.
This was mentioned earlier and I should repeat it for the record. In the initial set of reforms in 1977, expanding the foreign property rule was one of the key recommendations of the Senate banking committee. It was proposed in its review of the amendments to the CPP legislation. The foreign property rule was initially introduced in the 1971 budget, setting a limit of 10% on the value of foreign investment held in tax assisted saving plans such as RRSPs and registered pension plans. As my colleague earlier described, since then the 10% has been gradually relaxed and it is now at 30%. This is a level at which I am comfortable. As the member for Peterborough, I become less comfortable if we move beyond this limit.
I am a strong supporter of the Canada pension plan. I believe it is one of the safety nets which makes Canada a very special place. It is small but it is something which is there for everybody when they retire and it there for every worker should he or she become disabled. It is important for the Canada pension plan to be totally sustainable and the current foreign property rule that allows 30% investment overseas will help make it sustainable.