Mr. Speaker, I am rising today to respond to government Bill C-58, an act to amend the Canada pension plan and the Canada Pension Plan Investment Board Act.
The bill's function as stated by the government is 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 employer and union sponsored pension plans in Canada; and fourth, it would deal with assorted housekeeping and technical amendments.
Those are the stated goals of the bill. It has other goals in mind as well, but before I speak to them I will turn to the remarks made by the hon. government House leader with regard to the government's compliance with its obligations under subsection 115(2) of the Canada pension plan. The Canada pension plan says a report of the chief actuary is required when the House is proceeding forward with a bill dealing with the act. Subsection 115(2) states:
--the Chief Actuary shall, whenever any Bill is introduced in or presented to the House of Commons to amend this Act in a manner that would in the opinion of the Chief Actuary materially affect any of the estimates contained in the most recent report under this section made by the Chief Actuary, prepare, using the same actuarial assumptions and basis as were used in that report, a report setting forth the extent to which such Bill would, if enacted by Parliament, materially affect any of the estimates contained in that report.
Moreover, the report must be laid before the House of Commons by the Minister of Finance forthwith. Subsection 115(8) states:
Forthwith on the completion of any report under this section, the Chief Actuary shall transmit the report to the Minister of Finance, who shall cause the report to be laid before the House of Commons forthwith on its receipt if Parliament is then sitting, or if Parliament is not then sitting, on any of the first five days next thereafter that Parliament is sitting, and if at the time any report under this section is received by the Minister of Finance Parliament is then dissolved, the Minister of Finance shall forthwith cause a copy of the report to be published in the Canada Gazette.
This answers the question the government House leader raised as to whether he could submit such a report or whether a report could be submitted while the House of Commons was not sitting. It could be and should be. It is difficult to have an intelligent debate in this place on the bill when we lack the requisite actuarial data from the Chief Actuary of Canada to determine what the likely effects of the legislation would be.
This is no small matter. We are talking about amounts in the tens of billions of dollars. The speaking notes given out by the government indicate that the proposed changes in the legislation would shift the earnings of the fund by $75 billion. That is not pocket change.
This is the result of a material effect on the fund. For those of us trying to come to an intelligent understanding of the legislation, the question arises as to whether the extra $75 billion would allow the 9.9% contribution rate to the fund to fall. This would have a substantial impact on employment prospects for Canadians. A reduction in a job killing payroll tax would be tremendously beneficial.
On the other hand, would it mean the CPP would be unsustainable without the projected $75 billion infusion of cash? If that is the case, what we are really discussing is how to avoid a financial calamity which would deprive many Canadian seniors and all of us of our anticipated pension benefits under the Canada pension plan.
We are discussing the issue in parliament without knowing which of these two situations is the case because we do not have the report of the chief actuary. While the government may not be infringing the law or the rules of the House by bringing forth the bill without having produced a report from the chief actuary, the rules of good governance are very much infringed.
Quite frankly, the bill is before the House at this time for the same reason a flurry of other bills have been rushed forward in the last few weeks. About three weeks ago one of the newspapers, the Globe and Mail or the National Post , published a warning that we could expect a large number of bills to be rushed forward in every department to give the impression the government had something on its agenda while it floundered around trapped by internal controversy over its leadership. Bill C-58 is one result of the government's effort to create an impression of energy and activity or sound and fury signifying nothing.
I am not saying the bill is not an appropriate matter to be considered by the House. It is absolutely necessary that the House consider the bill in a timely fashion when the appropriate work has been done by the authorities delegated to carry out these tasks under the Canada pension plan. I am referring to the chief actuary with whom I have worked in the past and whose office does excellent work when given the chance to so do. I am also referring to the Minister of Finance.
The appropriate course of action would have been for the government to bring forward the bill in the autumn after a report had been done by the chief actuary and tabled in the House. I gather that this will happen prior to committee stage. However second reading of the bill is not being conducted in as informed and intelligent a manner as it should be. We are all the losers for that.
Again, we are not talking about pocket change. We are talking about $75 billion. We are talking about the retirement money that would keep millions of people across the country living at the standard they have been promised. We are talking about money that would be taken off people's paycheques whether they wanted it to be or not, money that could not therefore be put in their RRSPs or used in manners that could allow them to build for their pensions.
When dealing with these vast amounts of money we should proceed with caution and care. We should never put forward legislation for the purpose of making the government look like it has something on its agenda or is more prepared to deal with affairs of state than it is. We could such achieve propaganda goals through less costly means.
I do not know if the text of the bill is substandard. It may be very well drafted. The legislative drafters may have worked closely with the experts. I do not know. I do not have the report to compare the text of the bill and go through that kind of analysis.
However ill prepared the bill may or may not be, from what we have seen of it the bill's general theme is part of a pattern of pension legislation under the government and more particularly the former minister of finance who was responsible for drafting the bill and all the government's prior bills dealing with pension reform. It is a consistent pattern in which the government has said the purpose of pension funds and moneys set aside for pensions is not solely to achieve the best possible return on investment and therefore the best pension income for Canadian seniors and the best security for all Canadians who will one day become senior citizens. It is rather to achieve other political and social goals, some of which may be very worthwhile.
All this will have the consequence of diverting attention from the solitary goal of producing the best possible return on investment and therefore the best level of retirement income for Canadian seniors and the millions of people coming down the pike who will retire, become seniors and depend on the Canada pension plan and various other plans in our pension system.
I will go through a few examples to make the point. There were three key points in the process of redefining the goals of our pension system under the former minister of finance, the hon. member for LaSalle—Émard. First, in 1994-95, early in his tenure, the minister of finance floated a series of trial balloons. Canada faced a tremendous potential shortfall in its ability to raise revenues. We faced enormous deficits. The minister of finance tried to determine whether he could find ways of clawing back revenue from registered retirement pension plans to put it into the hands of the government so it could be changed from tax exempt or tax deferred money into money that was taxable. This would have had dire consequences for those who depend on registered retirement savings plans to take care of their retirement.
In one example, an article in the Financial Post on December 31, 1994 suggested the government might try to place a capital tax on firms through which RRSP investments are made. RRSPs must be invested through a bank, trust company or some other financial institution. The idea was that the capital tax would be placed on these firms based on the invested amounts. It would have been presented as a tax on corporations. It would in fact have been a tax on RRSP capital.
The former finance minister floated another trial balloon in early December which did not work out well or meet with a positive reception. He proposed a 1% capital tax on amounts in RRSPs every year. This would have caused average Canadians to pay a total of $4,141 extra in tax on their RRSPs over the lifetime of the RRSP, with no benefit at the end to reflect the cost. This would have reduced the amount average Canadians had to pay into their RRSPs. It would have reduced their benefits by 36% to give the government a small financial short term benefit as part of its attempt to pay down and eliminate the deficits.
A trial balloon which was successfully implemented was a proposal to raise from 69 to 71 the age at which individuals are forced to roll over their RRSPs into RRIFs. This has a significant impact on people who are still working at age 69 and can reasonably expect to live for many more years and require substantial retirement income.
Second, the attack focused on old age security. Many people have heard that the Canada pension plan has not been properly financed for the past couple of decades. The old age security system suffers from similar problems. The problems are not accounted for in quite the same way and are therefore not as visible and have not received as much publicity. However many billions of dollars of pension income have been promised which may not be deliverable by the federal government.
To deal with this the former finance minister came up with the idea of replacing old age security or OAS with something called the seniors benefit. Fortunately, such a hue and cry was raised by my own party in opposition, the then reform party, and by seniors groups like the Canadian Association of Retired Persons that the bill was killed. The bill's goal was to raise the clawback, the marginal tax rate paid by senior citizens, on money they received through OAS.
Effectively, billions of dollars would be saved or captured by the government, of course captured in the form of reduced income for Canadian seniors. Moreover it would have had the impact of causing Canadians not yet in their senior years to say there is no point in setting aside money in their RRSPs because when they get to retirement age they can expect to see, depending on their income, as much as 90% of the money they put in taxed back by the government through its new hidden clawback disguised under the name of the seniors benefit. That was the second wing of the former finance minister's effort to change the purpose of our pension system from providing the best possible income for Canadian seniors and on to other government priorities like deficit reduction.
His third attempt was the changes to the Canada pension plan. That process was started in 1997 with an act that was passed by the minister raising the payroll tax significantly and creating the Canada Pension Plan Investment Board. The process is being completed today with the current legislation. I want to give some examples of the things that the new board's mandate will cause it to invest money on a basis other than producing the best possible return on investment.
In an article in the Financial Post on July 17, 2000 we read that a number of people were being appointed to the board, including some with excellent credentials, such as a past chairman of the Investment Dealers Association of Canada, John MacNaughton. The article praises that appointment but adds:
The investment board opens the door to demands that collective equity funds be used for collective equity goals--
Collective equity funds are funds in the Canada pension plan investment plan.
--to meet ethical criteria, stabilize the stock market or develop an industrial strategy. And if the politicians so desire, Mr. MacNaughton can be replaced.
No sooner had Mr. MacNaughton announced the board's splendid returns than the NDP finance critic was urging the finance minister to intervene in the board's decision making. He recommended it be instructed not to invest in companies that profit from human rights abuses or threats to health. Mr. Martin replied that Mr. Nystrom's concerns were to be taken “quite seriously”. That is the beginning of a process we are going to see of CPP funds being restricted in how they can be used, being tapped for other uses and when necessary, individuals being appointed to the board who will be compliant in that process.
Another example has been on the former finance minister's mind for a long time. This is from the Toronto Star of January 26, 1990 dateline Halifax.
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 regional funds across the country.
The following is a direct quote from the former finance minister who was a Liberal leadership candidate then as now:
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, Mr. Martin told students.