House of Commons Hansard #17 of the 37th Parliament, 3rd Session. (The original version is on Parliament's site.) The word of the day was ethical.


SupplyGovernment Orders

10:45 a.m.

Canadian Alliance

Maurice Vellacott Canadian Alliance Saskatoon—Wanuskewin, SK

Mr. Speaker, I do not recall the member making reference to the situation in Sudan. We had a situation where a large major Calgary oil company, Talisman by name, was in Sudan for too long. Finally it has backed out of that situation The profits went into the war. Oil revenues were used to the hurt of the southerners in that country. The Khartoum government was using it in a very bloody, brutal and awful way in genocide of the people of the south.

For a long time I had great concern and consternation because of the fact that our pension funds were actually invested with Talisman, which in turn was then used to fuel this genocidal war in Sudan.

I would appreciate the member's comments with respect to that.

SupplyGovernment Orders

10:45 a.m.


Pat Martin NDP Winnipeg Centre, MB

Mr. Speaker, the hon. member raised a recent and graphic demonstration of exactly the point I have been trying to make.

In my view what we consider bad behaviour on the part of a corporation should not be rewarded by investments from our Canada pension plan. This is the type of thing, were an ethical screen put in place, that the investment probably would have been screened out. Again, we would not screen out every oil company on the basis of that bad actor.

We would have what we call the best of sector strategy. We would look at the oil and gas sector, an area in which we may want to invest and should perhaps as the Canada pension plan, and invest only in the actors in that sector that were practising best practices, the highest ethical standard possible in that sector.

Hopefully this would be the carrot approach that other industry players would seek to elevate their standards so they could also attract the massive investment. We are talking about $100 billion in the near future. The only people to gain so far have been the stockbrokers who have yielded $500 million worth of brokerage fees for moving our money around.

I thank the member for his question. It is a legitimate recent example that I believe helps to make our case that we can and should be more selective and more careful in our strategy. I hope I have demonstrated by example that we do not have to compromise profitability in doing so. The empirical evidence is to the contrary. We can match or even in many cases surpass standard indexes through ethical investment strategies.

SupplyGovernment Orders

10:50 a.m.

Brome—Missisquoi Québec


Denis Paradis LiberalMinister of State (Financial Institutions)

Mr. Speaker, it is my pleasure today to speak to a motion introduced by the hon. member for Winnipeg Centre, which deals with the investment policies of the Canada Pension Plan Investment Board.

First, I would like to provide all hon. members with some background on the Canada Pension Plan Investment Board and explain some of the measures it has taken to protect the sustainability of our pension system while promoting the values of Canadians.

The Canada Pension Plan Investment Board is the product of the need to ensure that the Canada pension plan will continue to provide the vital benefits that allow our seniors to enjoy a comfortable, indemnified retirement.

The Canada pension plan was created in 1966. The then government realized that Canadians needed a public pension plan that could be carried from job to job, and from province to province.

The answer was the Canada pension plan, a compulsory earnings based national plan set up jointly by the federal and provincial governments to which nearly all working Canadians contribute.

The CPP provides all wage earners who paid into the plan with retirement income. It also provides financial assistance to their families in the event of death or disability. The Canada pension plan was designed to complement, not replace, personal savings and employment pension plans.

The Chief Actuary of Canada predicted that the assets of the Canada pension plan, the equivalent of two years of benefits at the time, would be depleted by 2015 and contribution rates would have to be increased to more than 14% by 2030, for the plan to remain viable.

The federal and provincial governments subsequently released a discussion paper and held Canada-wide consultations on the CPP in the mid-1990s.

In joint public hearings from coast to coast, Canadians sent governments a clear message. They wanted them to preserve the Canada pension plan by strengthening its financing, improving its investment practices and moderating the growth costs of benefits.

Canadians expressed their desire to see the necessary changes made to the Canada pension plan. During these hearings, governments heard not only from one or two interest groups, but from Canadians who truly represented the public. They heard from seniors, young people, social planning groups, pension experts, actuaries, chambers of commerce, and from a great many ordinary Canadians interested in and concerned about the CPP.

Following these consultations, the federal and provincial governments in 1997 adopted a balanced approach to CPP reform so that the plan could meet the demand in the coming years when the baby boomers would be retiring.

All changes to this federal-provincial program must be approved by at least two-thirds of the provinces representing at least two-thirds of the population.

Those reforms included a rapid increase in CPP contribution rates, a buildup of a larger asset pool while baby boomers were still in the workplace, its investment in the markets at arm's length from government for the best possible rates of return, and administrative and expenditure measures to slow the growing costs of benefits.

All together, those measures ensured that a contribution rate of 9.9% could be expected to maintain the sustainability of the plan. The federal and provincial ministers concluded, in their most recent study in December 2002, that the plan was financially sustainable and would be able to pay benefits to future retirees.

The new market investment policy was a key element of CPP reform in 1997. The Canada Pension Plan Investment Board, which is the subject of today's debate, was set up in 1998 to implement this new investment policy.

Created as a professional and independent investment board, its mandate is to invest on behalf of contributors and beneficiaries and to maximize the return by reducing the risks of unjustified losses.

Before the board was created, the CPP's investment policy was for funds not immediately required to pay benefits to be invested in provincial government bonds at the federal government's interest rate. This represented an undiversified portfolio and an interest rate subsidy to the provinces.

Now, under the new policy, funds that are not needed to pay benefits and expenses are transferred to the CPPIB and are prudently invested in a diversified portfolio of market securities in the best interests of contributors and beneficiaries.

I would like all of my colleagues to know that the new investment policy is consistent with the investment policies of most other public sector pension plans, including the Ontario teachers' pension plan—which is a major pension plan—and the Ontario municipal employees' retirement system. The CPP Investment Board operates under investment rules similar to those of other public sector pension plans in Canada.

These rules require the plan's assets to be prudently administered in the interest of plan contributors and beneficiaries. As well, like all other public plans, it is subject to the foreign property rule restricting investment in non-Canadian companies to 30% of the portfolio.

I would now like to address the content of the motion presented by the hon. member for Winnipeg Centre. Our position on this has always been clear. Canadians are entitled to know why, how and where their CPP contributions are invested, who makes the investment decisions, what assets are held on their behalf, and what the yield is on their investments.

It is essential that the board be fully accountable to Canadians and to federal and provincial governments, and this is indeed the case. It is also essential that Canadians' retirement funds be managed to the highest professional standards and at arm's length from government, with highly qualified, professional managers making investment decisions. And this too is the case.

As many of my colleagues are aware, the framework of governance established for the investment board is designed to ensure total transparency and accountability. I will go into detail on that if I may.

The CPP investment board keeps Canadians well informed of its policies, operations and investments through quarterly financial reports, an annual report tabled here in parliament, regular public meetings in each participating province, and of course its website, where its financial results and investment policies are posted.

A robust process with strong checks and balances that is in place for identifying and appointing CPPIB directors also assures full accountability of the CPPIB. Directors are chosen from a list of candidates recommended by a joint federal-provincial nominating committee after consultation with provincial finance ministers. As a result, the board includes individuals with strong business, financial and investment expertise.

Independence from governments in making investment decisions is critical to the CPPIB's success and public confidence in the CPP investment policy. I should point out that the independence and the quality of the CPPIB board of directors have received strong support from the public and pension management experts.

Some Canadians, including the hon. member for Winnipeg Centre, are concerned that the CPP's assets are being invested in companies or countries whose activities or policies are contrary to their own convictions. In the context of promoting socially responsible investments, they feel that we should take advantage of the power represented by our investment portfolio to influence factors that do not relate to investments.

However, there are other Canadians, some of whom use socially responsible criteria to make their personal investment decisions, who feel that we should focus on the return of the investments, since the financial security of the pension plan is in itself a major social policy goal.

It may be easy for an individual or a group of people who share the same ideals to make investments that pursue social goals. However, it is rather difficult if not impossible to do so for an institutional investor who represents over 16 million CPP contributors and beneficiaries whose personal convictions are extremely varied.

The legislation that regulates the board's activities specifically prohibits it from engaging in any investment activities other than maximizing investment returns without undue risk of loss. Consequently, the board does not select or exclude investments through the application of positive or negative screens based upon religious, social, economic, political, or personal criteria, or any other non-investment criteria.

The board's social investment policy, approved in March 2002, considers as eligible for investment securities of issuers engaged in a business that is lawful in Canada; and securities of issuers in any country with which Canada maintains normal financial, trade and investment relations.

The policy further states that the board will not accept or reject investments based on non-investment criteria. However, it will generally support corporate policies and practices and shareholder resolutions that would result in the disclosure of information that could enable investors to evaluate whether a corporation's behaviour will enhance or hinder long-term investment returns.

The board has also established mechanisms to promote sound corporate management and proper accountability on the part of corporations whose securities are part of its portfolio.

Under these instructions for proxy voting, the board uses its right to vote as a mechanism for encouraging corporations to provide information on their corporate code of conduct and ethics. This can help investors determine whether the corporation's conduct is a gauge for good long-term results or a risk to their return.

As a rule, the board believes that companies that respect the environment, human rights, fair employee practices, community relations and otherwise act in an ethical manner tend to perform better over the long run. We as government wholeheartedly agree with that principle, but in recent months the board has shown that it is prepared to go further on these issues relating to public concern over its investment practices.

When allegations were raised that companies currently being helped with the CPPIB's investment portfolio were involved in the manufacture of anti-personnel mines, the board undertook its own investigation in the matter. After consulting the specific companies directly and conducting its own investigation through third party sources, the board has reported that it has not found any evidence to support these claims.

Moreover, the board told my colleague, the Minister of Finance, that, if one of these corporations it invests in were found to be conducting such activities in Canada or abroad, the board would sell its shares in this or any other corporation conducting this type of activity, pursuant to its policy on the social aspect of its investments.

The results of the board's investment strategy speak for themselves. In 1997, the Canada pension plan had a deficit of over $6 billion and many believed the CPP would not satisfy the needs of the next generation of Canadian workers. For the hundreds of thousands of Canadians reaching retirement age, this was hardly good news.

A little less than seven years later, the plan has undergone nothing short of a spectacular turnaround. The plan's reserve fund is currently worth more than $64.4 billion. What is behind this turnaround? Without a doubt, the decision to increase the contribution rate to 9.9% has a lot to do with it.

However, we must not underestimate the role of investment income from the board's activities in explaining the dramatic improvement of the plan's finances. Retired Canadians will be able to count on the CPP for many years to come. Despite equity and bond market fluctuations, the board's prudent investment strategy will continue to pay dividends to Canadians of all ages.

If current estimates prove correct, the reserve fund will reach $80 billion in 2007, and nearly $160 billion ten years from now. These figures support the statements of the Chief Actuary of Canada, who said publicly that the CPP is sound for at least the next 75 years.

This means that all the members, their children and even grandchildren can expect to receive the CPP benefits to which they will be entitled. In this uncertain world, this is a very remarkable achievement.

In conclusion, I want to quote the President and CEO of the Canada Pension Plan Investment Board, John MacNaughton, in a speech he recently gave to the Calgary Chamber of Commerce.

He said that no investment strategy is—or should be—written in stone, and undoubtedly further adjustmentswill take place over time in line with shifting market conditions and portfolio needs. For now, weare proud of what we have accomplished, and we are confident we can meet Canadians’expectations, fulfill our mandate, and keep our promise.

The promise is nothing less than the right of all working Canadians to collect pension benefits to which they are entitled, and to enjoy a comfortable and dignified retirement. They deserve nothing less.

For these reasons, I cannot support the motion of the member for Winnipeg Centre as written. However, I thank the hon. member for having raised this important question.

SupplyGovernment Orders

11:05 a.m.

Canadian Alliance

Gary Lunn Canadian Alliance Saanich—Gulf Islands, BC

Mr. Speaker, I am very pleased to stand as the critic for the Conservative Party and deal with today's NDP motion:

That, in the opinion of this House, the Canada Pension Plan Investment Review Board should be guided by ethical investment policies which would ensure that our pension investments are socially responsible and do not support companies or enterprises that manufacture or trade in military arms and weapons, have records of poor labour practices, contribute to environmental degradation, or whose conduct, practices or activities are similarly contrary to Canadian values.

It is a nice warm motherhood statement. It has lots of fuzzy language but it does raise a number of concerns. First and foremost it would create another administration, another level of bureaucracy that would make it very difficult for the Canada Pension Plan Investment Board to actually operate.

When it makes investments, its first and foremost concern is to ensure a fund is there that is going to grow and meet the needs of the demands that are going to be placed upon it. We will get into those details a little more but I am not too sure the motion is practical. Again, it is nice, warm, fuzzy language and something they may want to think about in some cases but to put this forward I am not sure is the right approach.

If members of the NDP really want to target corporate corruption, if they really want to improve some of these labour and environmental standards, they should be going after companies like Canada Steamship Lines that refuses to fly the Canadian flag and flies a flag of convenience to circumvent these issues. One would have to ask if they believe that the current Liberal government has any interest in actually doing this when the Liberals see the Prime Minister, the leader of their party has actively engaged in this through CSL.

In any event, since we are going to be talking about the Canada pension plan, it would be helpful to discuss some of the historical problems with the CPP. There is no question there are problems inherent in the CPP investment system and certainly the Liberals have not helped them. The Liberal solution to the problems has been merely to bilk Canadian workers and employers out of billions of dollars. This is well documented. The facts are pretty straightforward.

The Canada pension plan began to founder in the 1990s. In 1996, 30 years after its inception, the plan was going bust. More than 10 million Canadians were paying $11 billion into the plan but three million were being paid $17 billion in benefits. The $6 billion difference obviously had to be made up out of general revenues.

Of course, at that time it was the Chrétien government and the Liberal solution, the member for LaSalle—Émard, the current Prime Minister, was the minister of finance. Their solution was nothing more than the largest tax grab in Canadian history.

Beginning in 1998 they raised Canada pension plan premiums. They were jacked up from 5.6% for an average industrial wage to 9.9%. It was almost double. It represented a 73% increase. Again it was the largest tax grab in Canadian history. The 9.9% was matched by the employers. For the self-employed it was even worse because they had to pay both contributions. It was terrible.

Every Canadian can expect to get an average benefit of $5,500 a year at age 65. The highest payout available under the Canada pension plan is $9,000.

However the worst injustice by the Liberal government and its CPP was the tax grab. It did not look at the real problems of the Canada pension plan. It saw that it was not sustainable and that it would go broke but Canadians had come to expect this pension. They had been paying in for all those years. Of course when they were paying into it, it was to fund the people who were receiving the benefits at that time. Unfortunately, our younger generation, those just graduating from university and heading out to work, will, without question, be hit the hardest.

Let us look at the realities of the plan. Every worker who was born after 1980, people who are in their early twenties today, will only ever receive a 2% return on their retirement investment. Those who retired in 1995 are receiving a 9% return on their investment. There is a huge inequity.

We are absolutely committed to ensuring that retirees receive their benefits but the government of the day, I would argue, should have looked into other possibilities, other opportunities, other structures where there may have been greater opportunities for young Canadians to have some input into the decisions made on their investment plan because it looks very bleak for them.

One of the issues that convinced me to run for Parliament was the so-called brain drain where our best and brightest were leaving the country to seek employment elsewhere. I would argue that it is still a huge problem.

The Liberal government has often said that we have a brain gain. The raw numbers may show we have a brain gain but the very best and brightest, the future CEOs and entrepreneurs, are the ones who are leaving. They are the ones who should be creating the jobs and the economic wealth so that we have a large tax base and so we can fund social programs like health care and CPP.

Without that strong economic base, all these programs are put into serious question. Yet the government absolutely ignored this generation 100% when it became apparent that the Canada pension plan was not sustainable. All it did was double the premiums, which was another big tax grab, as opposed to looking at the real problems. Of course, we have seen this too often from the government.

This painful and expensive Liberal solution has left the Canada pension plan with an unfunded liability of half a trillion dollars. It is the same as the national debt which has an unfunded liability of some $500 billion, a half a trillion dollars. How can anyone comprehend a number like that? Even worse, this unfunded liability is not shrinking. It is growing at a rate of 6% per year.

I come back again to the NDP motion. This is a serious problem. However, in its warm and fuzzy latent left way, it has completely ignored any kind of reality and has come up with a warm and fuzzy statement without addressing the real problems that need to be looked at.

The Canada Pension Plan Investment Board invests funds. It is delivering right now roughly 2.6% annualized performance, slightly better than TSE for the same period. However there is absolutely nothing being done to address the growing unfunded liability. Quite simply, it is not making enough money on the investments to cover the liabilities.

If we were to put further restrictions on the investment board of the Canada pension plan it would really tie its hands. I am sure there are times when we would say no, that this is not be a good place to invest, but we should leave that to the responsibility of the investment board.

The additional cost and burden of creating another bureaucracy, another administration, another level of all these approvals would not be reasonable. Furthermore, opportunities would be lost because of the extra administrative burden of having to do reviews to ensure the investments meet all of the guidelines when in many cases they would be acceptable investments.

The NDP motion would also place further limits on the investment board. One question I would have to ask is whether the NDP has done an economic study to determine what impact it would actually have and whether there is even a problem where they are suggesting there is one.

There is no question that some investments would be made. However some people might argue that a company, such as a forest product company engaged in harvesting the forest, would not qualify because of the environmental consequences. Others might argue that for proper forest management one has to harvest the timber when it matures because it is susceptible to the pine beetle which goes into different areas.

The point I am making is that all this administration and all this hand tying would not be a wise decision.

The other issue is that by the time the baby boomers begin to retire in 2012 the fund will have in excess of $140 billion, a very large amount to invest. The Canada Pension Plan Investment Board would be unable to trade freely and smaller funds will delight in playing off the investment board's positions. It would only be to the detriment of Canadians. The more restrictions we put on the Canada Pension Plan Investment Board, the less it would be able to do its job, and it obviously would get a smaller return on its investments. I do not think the extra administration, the extra bureaucracy that it would have to go through would be healthy at all.

As I mentioned earlier, how the Canada pension plan scheme basically operates is that those who are working today pay into the fund and obviously they do not have the investments built up to a point where it can cover those who have retired. In other words, what they are paying today only covers those who are retired now.

The problem is compounded because people are living longer. The pension eligibility age is 65 and life expectancy, because of recent advances in medical technology and because of health trends, is almost 80. Therefore people will be collecting their pensions for around 14 years but nothing has been built into the system for this. The bottom line is that we will end up with an enormously underfunded Canada pension plan. It is not sustainable when it is underfunded by a rate of a half a trillion dollars, not unlike our health care system. Under the current government's policies, both those programs will collapse under their own weight in the coming years because they are not sustainable. Those are the programs on which we should be focusing our energies right now.

We should be looking at other things as well. We should be looking at doing away with mandatory retirement ages. Mandatory retirement ages merely encourage people to walk away from the workforce which has a serious negative effect. It stops CPP payments from coming in and it puts more pressure on people to draw on the account.

We should also be looking at reforms but, first and foremost, we should be looking at reforming the Canada pension plan so our younger generation will have a fair and equitable pension plan. The older generation, which has paid into the plan for many years, has planned their retirement on it and are expecting a certain pension. We are committed to supporting that pension. However it is the younger generation, the 20 and 30 year olds, who are paying the large premiums and yet the government is doing nothing to ensure they will have a pension when they retire.

The plan will be crushed under its own weight. We should be looking at structures where individuals would have more input into investment decisions. The first step would be to give them the opportunity to be more active in developing their own pensions and watching them grow. The second step would be to ensure the sustainability of the plan. Any actuary looking at this plan would say that it is not sustainable, not unlike our health care system.

The NDP motion has nothing to do with the sustainability of the plan. It has nothing to do with individuals having any kind of input and it has nothing to do with young people having a say in their investment decisions. The motion is silent on all that. It just makes warm, fuzzy statements. I call them the Layton left statements. That is not a healthy thing to do.

I want to switch gears here and talk about the present. We put a great deal of faith in the Canada Pension Plan Investment Board. The Conservative Party believes that the people on the board, as far as we know, are doing a good job with the resources they have. However we should try to institute reforms and looking at the sustainability of the plan would be the most important part.

The NDP motion is the latest in a string of misguided attempts to force CPP investments into the NDP's societal values. It should be voluntary from the board. We have to trust its judgment. Micromanaging the board would only be asking for more problems.

If the NDP is really serious about dealing with some of these issues, I encourage it to start at the top of the list and go after companies like Canada Steamship Lines. CSL flies flags of convenience so it can avoid any type of environmental regulations and avoid employment regulations here in Canada. It is no wonder we have problems on all these fronts when Canadian companies, such as the one the Prime Minister owned in the past, have a direct involvement in the plan. The record speaks for itself.

I cannot support the motion because it would do nothing for the sustainability of the Canada pension plan, which is an important issue that needs to be addressed. The motion is a nice, warm, fuzzy, motherhood statement, but it should look at the harsh realities.

SupplyGovernment Orders

11:25 a.m.

Canadian Alliance

Howard Hilstrom Canadian Alliance Selkirk—Interlake, MB

Mr. Speaker, I am concerned, of course, with the sponsorship scandal that is going on around here, with the government giving out contracts for little or no work being done and in particular with the crown corporation allegations, the latest allegations that came out of the Auditor General's report. I remember when the legislation went through in regard to the Canada pension plan being set up, as to actually having the money in the bank to invest as opposed to the government just dumping it into general revenues.

I wonder if the member could tell us if there is any concern about Liberal appointees being put onto this Canada pension plan investment team and about the direction of it. Could he tell us if the Auditor General has the authority to look at the Canada pension plan, how it is handled, where it invests the money and its operation? Who does it report to? Does the member know that offhand?

SupplyGovernment Orders

11:25 a.m.

Canadian Alliance

Gary Lunn Canadian Alliance Saanich—Gulf Islands, BC

Mr. Speaker, the member has raised a very good question in light of these recent scandals and the level they have risen to. We have seen this scandal rise to a level such that it is the darkest day in Canadian political history. We have never seen this level before. It is a very, very sad day for the Canadian taxpayer.

Unfortunately, this is a Liberal Party problem. This was brought on by the Liberal Party of Canada, with money laundering schemes and absolutely the most unbelievable acts. People should go to jail for what has happened.

There is a tragedy in all of this scandal that the member referred to and, of course, he brings it back to the Canada Pension Plan Investment Board. I have no idea if the investment board is involved or not. I suspect it is not. The simple fact is that in this government it would seem that four crown corporations, such as the RCMP, have been involved. The simple fact is that the government has brought the reputation of all these agencies into disrepute, and unfairly. I have no doubt in my mind that there are tens of thousands of the hardest-working civil servants, the most honest people. Unfortunately, the political masters of the day are not, and now Canadian taxpayers are left to wonder who in the public service they can trust.

I will emphasize this. I am sure that tens of thousands, the vast majority, virtually all of them, are the most honest, hard-working people. It is absolutely shameful that this government has put their reputation in question or on the line. People just do not know. People are very cynical right now about sending any tax money to Ottawa as they hear on the news that spouses of people in very senior political positions, elected or not, would go on a shopping spree with an executive from an ad agency. The ad agency's credit card would pay for everything and then the bill would be turned back to this government to have the bill paid. It is outright theft, not a scandal.

We must have some confidence in the people. I have no doubt that the people at the Canada Pension Plan Investment Board are very qualified and very good people, but there is no question about the anger and mistrust. This recent scandal has left a very foul taste in virtually every Canadian taxpayer's mouth. They just do not know. The Canadian people deserve better than these people who put those people in charge. It is simply not okay for them to wash their hands and say, “It is not our problem. It was the previous administration”. It is the very same people.

SupplyGovernment Orders

11:30 a.m.


Pierre Paquette Bloc Joliette, QC

Mr. Speaker, I wish to inform you that I will be sharing my time with the hon. member for Verchères—Les-Patriotes.

We have before us a motion that is worth reading again. The motion, which has been put forward by the NDP, reads as follows:

That, in the opinion of this House, the Canada Pension Plan Investment Review Board should be guided by ethical investment policies which would ensure that our pension investments are socially responsible and do not support companies or enterprises that manufacture or trade in military arms and weapons, have records of poor labour practices, contribute to environmental degradation, or whose conduct, practices or activities are similarly contrary to Canadian values.

Generally speaking, we are in agreement with the spirit of this motion. We know it is not votable. Still, it opens up a subject of debate we think is very important, especially when are discussing the savings of thousands of Canadians. We know that Quebec has a different system, the Caisse de dépôt et placement, which manages the collective savings of Quebeckers.

I find it interesting that the NDP has introduced this motion, since it asks a fundamental question: should a public system or money managed in a pension fund have financial profitability as a goal, or should it not also aim for social, environmental and ethical benefits?

In my opinion, the question ought to be debated and the answer is that it is of no benefit to the people of Canada—nor of Quebec—to have a vision for their invested savings that focuses strictly on short-term profit.

What use would it be to have a satisfactory pension fund but live in a completely polluted environment where the rights of workers are ignored, and where we are indirectly supporting child labour in many Southeast Asian countries? The Canada Pension Plan Investment Board, like the Caisse de dépôt et placement and all pension funds, has a very important example to set in this respect.

We know that half of the money going through the Canadian system comes from the workers' pension funds. In Canada alone, this means $600 billion: that is not insignificant.

As a result, as soon as the Canada Pension Plan Investment Board adopted an ethical position on its investments, with a certain number of guidelines to be discussed by its members and then made public, it seems to me that this would generate the necessary pressure to ensure that the investment strategies of our public funds and our pension funds strike that balance between short term profitability—for we must not delude ourselves, it is short term—and social conscience.

I emphasize the words short term because, when there is pollution, it costs money sooner or later, to clean up that pollution. Overall, the net return for society can quickly become negative. Even in the throne speech, the new Prime Minister mentioned that it was important for the federal government to assume its responsibilities and decontaminate the lands it had itself contaminated over the years.

Had that been our view at the time—granted, environmental awareness was less developed than it is now—we would not be having to spend that money now and it could have been used to meet social objectives to meet immediate needs: health, post-secondary education, social housing, and the like.

Another thing—and the reason why I have already said that all guidelines for this investment and this ethical investment policy must be made public—is that the investment policy or strategy of many pension funds these days is not known to the contributors.

Workers are not informed of these strategies. They are not involved in making the decisions. So the board has a responsibility to show the way on this. It is absolutely essential that all of our pension funds have transparent investment policies and that the contributors be aware of those policies.

This is even more the case for Quebeckers, because often, very often, too often, pension funds are administered out of Toronto and reflect Canadian values, which are not necessarily always values Quebec society shares.

I believe it is also important to point out that, with the NDP motion, we would be showing how important it is to pay attention to the positive achievements of companies, to show that economic performance and social performance are not mutually exclusive. Far from it; they often go hand in hand.

We know that, in the past, investment strategy decisions based on ethical values have had an impact. For example, an international campaign was conducted in South Africa to disinvest the money from the pension plans of workers in Canada, Quebec and many other western countries. The international community agreed that the apartheid regime should not be supported through foreign investments. The campaign produced excellent results. As we know, the apartheid regime is now history, largely because of that campaign, which promoted an ethical form of investment by boycotting investments in South Africa. I remember that a large number of Quebeckers participated in that boycott.

Still, I want to take this opportunity to point out a danger. With investment protection clauses such as those found in the North American Free Trade Agreement, particularly in chapter 11, a campaign such as the one that was conducted by the international community against investments in South Africa would not be possible.

It is important that, at the international level, pension plans, savers and investors must clearly be allowed to choose where they want to invest, not only on the basis of revenue generation, but also on the basis of socially or ethically acceptable values. We must keep this in mind. We should make sure that investment protection clauses do not include criteria that prevent the introduction of an ethical investment policy.

I gave the example of South Africa. I could also mention Nike, a shoe manufacturer. In fact, Nike does not manufacture shoes; it sells sport shoes and all sorts of other products. That company does not manufacture anything at all: it uses 736 subcontractors in 51 countries. It indirectly employs over half a million people, mostly in Asia.

In 1998, there was a campaign to protest the fact that several of these subcontractors were using solvents extremely harmful to the health of their workers, particularly women. There were also children working for these subcontractors, several of whom were resorting to anti-union practices, with the company's blessing. This situation resulted in a boycott of Nike's products.

In one year, the company's profits went down by half, which meant that it had no choice but to agree to a certain number of things, particularly involving child labour, health and safety and the freedom to unionize. At the same time, the company engaged external auditors, PricewaterhouseCoopers, to verify the changes. Obviously, it is not yet perfect, far from it in fact, but we can say that in comparison to its competitors, such as Adidas, the company has made a great deal of progress.

So we see that ethical investment and making savers and consumers more responsible can yield results in terms of changes in corporate behaviour, encouraging them to adopt responsible behaviour.

It is not only true in southern nations. In the United States there have been many violations of workers' rights, especially in the agricultural sector in California. Here in Canada, we know that there are still companies that resort to hiring scabs during legal strikes, and that they do so with the Liberal government's blessing.

I think this motion not only has the merit of provoking debate, but ought to be supported by every member of this House.

I will close by saying that the Bloc Quebecois shares exactly those worries. One of our colleagues, Stéphan Tremblay, introduced a bill to oblige pension fund administrators to be more transparent, so that savers could have some input into investment strategies, to make investment more responsible. We will have no problem supporting this motion.

SupplyGovernment Orders

11:40 a.m.


Stéphane Bergeron Bloc Verchères—Les Patriotes, QC

Mr. Speaker, it is a pleasure to speak on the motion by our colleague from Winnipeg Centre. Perhaps you would permit me to read it one more time because I think that each word is important:

That, in the opinion of this House, the Canada Pension Plan Investment Review Board should be guided by ethical investment policies which would ensure that our pension investments are socially responsible and do not support companies or enterprises that manufacture or trade in military arms and weapons, have records of poor labour practices, contribute to environmental degradation, or whose conduct, practices or activities are similarly contrary to Canadian values.

First, I want to thank our colleague from Joliette, not only for the brilliant speech he just gave, but also for having agreed to share his time with me. I also want to mention this colleague's tireless work on issues related to globalization.

For many years the Bloc Quebecois has considered the humanization of globalization a fundamental goal. It is not about being for or against globalization. The Bloc leader has repeatedly said that asking ourselves this question is a bit like asking if we want the earth to stop turning. It is not about being for or against globalization, it is about benefiting from it while simultaneously trying to limit the negative impacts of a phenomenon that seems totally inevitable.

What does the humanization of globalization mean? Obviously, it means a globalization where the decisions would be made by people representing the public. Currently, many decisions made at the international level are beyond the democratic control of elected representatives. Decisions are made by a small conclave that meets behind closed doors. These decisions affect the daily lives of people around the world.

It is important for us to be able to participate in such decisions. We want a globalization that would respect certain parameters. The absence of parameters means that many things happening on international markets are totally beyond our control.

That is the very purpose of the motion presented by our colleague from Winnipeg Centre, in other words, to allow us, at least at the Canadian level, with respect to retirement funds, to establish a certain number of parameters for Canadian investments abroad.

I was listening carefully to the speech by our colleague, the Secretary of State for Financial Institutions, a few moments ago. I was not very surprised at what he said, but I was somewhat troubled by it. I have taken another look at the dogmatic position the government has taken since 1993 with respect to any measure or proposal coming from the opposition.

The current Prime Minister told us during his swearing in ceremony that he intended to listen more carefully to what is said or proposed here, in this House. Yet, we continue to encounter the same attitude, which seems to say that if it comes from the opposition, automatically it must be suspect and should be opposed, which is a little surprising.

My colleague from Joliette made reference to an initiative by one of our former Bloc Quebecois colleagues, now a member in the National Assembly, Mr. Stéphan Tremblay. In his numerous speeches on the subject, he asked the then finance minister, who is now the Prime Minister of Canada, about the issue of ethical investments. It is surprising that the finance minister at the time, the current Prime Minister, seemed to be very much receptive to the arguments presented by my former colleague, Stéphan Tremblay. He said he fully agreed with the basic principle behind what the member said. It is surprising today to see the government oppose the same principle by using a number of fallacious arguments that I will come back to in a moment.

It is even more surprising to see the government continue to oppose the motion put forward by my colleague from Winnipeg Centre, a motion that makes sense. This motion did not come out of nowhere. It did not just spring out of his imagination.

This motion is based on practices in effect in a number of other industrialized countries with the same kind of values as Canada, and above all with important trade relations with us, such countries as the United Kingdom, France, Australia and Germany.

As a result we must acknowledge that, despite the arguments used by our colleague, the Minister of State for Financial Institutions, it would appear that there are other industrialized countries that have chosen not to buy into such arguments, but are instead of the same opinion as my colleagues from Winnipeg Centre and Joliette, who have just spoken.

In the arguments just given by our colleague, the Minister of State for Financial Institutions, he stressed the plan's viability. I must, in passing, congratulate his speech writers, as he has managed to say virtually nothing with this torrent of words. He stressed the plan's administrative mechanisms, the mechanisms for appointing the board members.

It was quite an amazing speech. We would have liked to have seen him devote more time to speaking to the substance of the motion, the values he claims to be Canadian values, and to ethics, but no—although hearing anything about ethics from this government at this time might be a bit annoying anyway.

Nevertheless, we would have preferred that he spend more time in his speech addressing the fundamental principles of this motion rather than talking about mechanics.

He also insisted on performance, saying that the board had to keep this in mind, so that the benefits to which our children and grandchildren are entitled will be there.

Has he considered the kind of world our children and grandchildren will want to live in? The hon. member for Joliette has reminded us that young people today have an increasingly well-developed environmental and social conscience. In my opinion, we should take that into account when we claim we are acting for their needs and their future expectations. We must consider the world in which they will want to live tomorrow and the day after. We must also take that into account.

The Minister of State for Financial Institutions also emphasized the fact that the code of ethics now being applied by the board will adequately guarantee that investments will respect the spirit of the motion made by the hon. member for Winnipeg Centre. He also emphasized the independence of the board—and it is odd to hear him talk of independence here in the House.

Since when has the government worried about setting guidelines? This is not a government that typically worries about setting guidelines, or later ignoring them.

What about so-called Canadian values, the values we share, democratic values, good governance, respect for human rights, sustainable development and peacekeeping? What about those values?

Like my colleague from Joliette, I believe that we can combine profit and respect for such values, an idea that seems to elude our colleague, the Minister of State for Financial Institutions.

Since my time is almost up, I want to say that at one time investments depended on trade. Increasingly, trade depends on investments. As a result, the focus needs to be on what will become the centrepiece of international trade in the future, meaning investments.

Given that half of the funds invested in international money markets come from retirement funds, it is important that Canada, in keeping with the values it claims to uphold, set an example and join those countries, such as the United Kingdom, Germany, France and Australia, that have already implemented such measures.

It is unfortunate that this is not a votable motion. This is all the more surprising given that this government is holding to its position of opposing for the sake of opposing.

SupplyGovernment Orders

11:50 a.m.

Canadian Alliance

Roy H. Bailey Canadian Alliance Souris—Moose Mountain, SK

Mr. Speaker, although the motion deals with the ethics of the investment of the CPP, for most Canadians and most members of the House when we think of the CPP we think of constituents coming to our offices. These constituents feel they are qualified to reap some of the benefits of the CPP, but then there is the long paper trail that follows after that. I would like to believe that the decisions made as to those who qualify are the same regardless of what province they may reside in.

I have personally experienced this on many occasions. Someone who comes in at 62 years of age is likely to be accepted because they are only three years away from getting the OAS, and then they are disqualified. However, if they are younger people who are totally disabled, at 51 or 52, let us say, I find myself saying to these people, out of pity, that I cannot believe it: they cannot qualify because they are unemployable, but then it starts with papers and doctors, and doctors and papers, and finally there are hearings and so on. It is the most un-Canadian thing that I know of.

I know this is not really the topic, but I would say to my colleague, and to other colleagues in the House too, that maybe this is the time for us to say, number one, we want uniformity and, number two, we want some consistency that has nothing to do with age. When someone is a beneficiary of this program, he or she should be allowed to receive it.

I have insurance on my house. If something happens through a storm or something, I know I am going to get something. People who pay into the CPP and then become disabled do not know, and in many cases they will not receive any assistance.

Perhaps this does not deal directly with the investment part of the CPP. However, as far as Canadians are concerned, what I am speaking about right now is the most important part of this plan.

SupplyGovernment Orders

11:50 a.m.


Stéphane Bergeron Bloc Verchères—Les Patriotes, QC

Mr. Speaker, I thank my colleague for his question. As he said himself, this question does not deal directly with the motion being debated today. That said, I will nonetheless take a few moments to answer it because I think this is a very important question.

I understand that what my colleague is saying is based on a sense of generosity, compassion, and of course a desire for uniformity and a desire to avoid the downside that comes with a plan of this breadth. I sense that he too is driven by generosity and compassion. It is this same generosity and compassion that I want to invoke in order to encourage this House, if possible, to support a motion such as the one put forward by our colleague from Winnipeg Centre.

Naturally we should be concerned about the daily lives of our fellow citizens in Quebec and in Canada. Yet, we must also realize that in a world of globalization we are increasingly less foreign to citizens of Gabon, the Central African Republic, or Argentina.

We also have to be concerned about their well-being since, as I am so fond of pointing out, one job in four in Canada depends directly on foreign trade. It is therefore important for us to worry about the well-being of people outside of Canada because sooner or later they might be consumers of products we make.

We have to be concerned about this, especially since, as we have seen in Quebec, the tendency is to think that giving companies more freedom will improve matters. We have to realize that someone earning $7 an hour pays less income tax than someone earning $11. Consequently, the state is unable to intervene effectively to ensure the best redistribution of wealth and the betterment of its citizens.

SupplyGovernment Orders

11:55 a.m.


Sarmite Bulte Liberal Parkdale—High Park, ON

Mr. Speaker, in his motion the hon. member for Winnipeg Centre argues that the Canada Pension Plan Investment Review Board should not be “contrary to Canadian values”. We on this side of the House also agree. If the hon. member even took a furtive glance at the Canada pension plan of today and the investment board which manages an increasing portion of its portfolio, he would quickly discover a program that fully meets the values of an aging Canadian population.

The first value is security. On this priority we have come a very long way from the uncertainty of over a decade ago. In the early 1990s the chief actuary of Canada warned that the CPP's assets, the equivalent of two years of benefits, would be depleted by the year 2015 and that contribution rates would have to increase to more than 14% by 2030 if the plan remained exactly as it was.

Those concerns needed to be addressed. Future generations of Canadians, including our children and grandchildren, needed assurance that the plan would be there for them at a cost that would not overwhelm them as well.

Indeed, the government responded. In February 1996 the federal and provincial governments announced that joint cross-country public consultations would be held on the Canada pension plan to find out what Canadians, the Canadians the hon. member refers to in his motion, wanted to see done.

What did Canadians want? They wanted their governments to preserve the Canada pension plan by strengthening its financing, improving its investment practices and addressing the growing cost of its benefits. As a result, in 1997 the federal and provincial governments adopted a balanced approach to CPP reform so that the plan could meet the demand of the coming years and when the baby boomers would be retiring.

Changes to the plan included limited changes to benefits and their administration, a moderate increase in CPP contribution rates and the building up of a larger asset pool while baby boomers were still in the workplace. The asset pool would be invested in financial markets and managed at arm's length from the government for the best possible rate of return.

All together these measures ensured that a contribution rate of 9.9% would be sufficient to maintain sustainability of the plan indefinitely. These reforms, which were endorsed by federal and provincial finance ministers seven years ago, will help ensure that Canadians have a pension plan on which that they can rely.

I am pleased to say they certainly can. The Chief Actuary has repeatedly confirmed the long term viability and financial sustainability of the CPP. Last year in fact he estimated the CPP, in its current form, was sound for at least 75 years.

I should stress that this long term sustainability comes at a time when other nations now face the harsh reality of significant pension plan reform. The World Bank in fact has offered high praise on Canada's current CPP system as a model for other countries to adopt. I trust the hon. member for Winnipeg Centre can take great comfort in this international recognition.

However, there is another Canadian value that the government has addressed in its commitment to creating a durable pension plan. That value is independence. Canadians must be assured that their retirement savings will be managed prudently and responsibly and not subject to the changing political winds of the day. The government has ensured that this will not happen.

A new market investment policy to be implemented by an independent organization, the Canada Pension Plan Investment Board, was a vital element of the CPP reform. The Canada Pension Plan Investment Board was set up in 1998 and began operations the following year.

Before the CPP Investment Board was established, the CPP's investment policy dictated that all funds not immediately required to pay benefits and administrative costs had to be reinvested in provincial government bonds at the federal government's interest rate. This represented an undiversified portfolio of securities and an interest rate subsidy to the provinces. In other words, the retirement nest egg of Canadians was not working for them so the government once again responded with the CPP Investment Board mandate to invest in the best interests of CPP contributors and beneficiaries and to maximize investment returns with undue risk of loss.

The CPP Investment Board reflects a fundamental policy change in investing CPP funds. Today CPP funds that are not needed to pay benefits and expenses are transferred to the CPP Investment Board and prudently invested in a diversified portfolio of market securities in the best interest of Canadian contributors and beneficiaries and not governments.

For example, it operates under similar investment rules requiring the prudent management of pension plan assets in the interests of plan contributors and beneficiaries. It is free to hire its own independent professional managers. It is subject to foreign property rules just like other pension funds.

This brings up another value. Canadians have made it clear that this value is accountability. For a moment I would like the hon. member to consider the diverse ways the CPP Investment Board informs Canadians of its operations, investments and its policies.

First and foremost, it makes all of its investment policies and financial results public. Second, it releases quarterly financial statements. Third, it publishes an annual report which is tabled in Parliament. Fourth, it holds regular public meetings in each participating province at least every two years to allow for public discussion and input. Fifth, it communicates all of this on a very informative website. It is a very useful site and I would encourage the hon. member to visit it and to visit it often.

Full accountability is also assured through a robust process with strong checks and balances that is in place for identifying and appointing CPP Investment Board directors. Individuals who sit as directors have extensive business, financial and investment expertise. I am pleased to say that the independence and quality of the CPP Investment Board of directors has received strong support from both public and pension management experts.

Federal and provincial governments are currently completing the final steps of the CPP reform launched in 1997, transferring all the remaining CPP assets managed by the federal government to the CPP Investment Board over a three year period. This consolidation will put the CPP on the same footing as other major public pension plans, providing fund managers with the flexibility to determine the best asset mix and investment strategies to manage risk and optimize returns.

Analysis undertaken by the Chief Actuary of Canada indicates the CPP assets fully invested in the market will be expected to earn a greater return and grow more rapidly for the benefit of present and future CPP contributors.

Now this brings up another value that I believe all Canadians hold dear. It is one I certainly demand, and that is results.

Let us look at how CPP assets in fact are performing. As a future recipient of CPP benefits, I think the hon. member for Winnipeg Centre will be pleased with its performance.

During the nine months ending December 31, 2003, assets available to the Canada pension plan earned $8 billion, producing a rate of return of 13.9%. That is all CPP assets, including the $35 billion in fixed income securities currently administered by the government. During the same period, the portfolio managed by the CPP Investment Board earned a return of 26%.

In light of these results, I would like the hon. member to consider two things. First and foremost is the solid performance produced in this year and in previous years by the CPP Investment Board during one of the most turbulent markets in recent history. The other is what Canadians would have sacrificed had their retirement savings been held completely and exclusively in low return government bonds at a time of historically low interest rates.

In a recent speech to the Calgary Chamber of Commerce, CPP Investment Board president and CEO, John McNaughton, referred to a Canadian proverb that says simply, “The path to success is paved with good intentions that were carried out”.

For the 16 million Canadians who contribute to and benefit from the Canada pension plan, their retirement program today is exactly that. For those who cherish the Canadian values of security, independence, accountability and performance, the reforms made to the CPP leave them with much of which they can be proud.

I believe that hon. members on all sides of the House and Canadians who work a lifetime to ensure a brighter future for themselves and their families can take great satisfaction in that.

SupplyGovernment Orders

12:05 p.m.


Bev Desjarlais NDP Churchill, MB

Mr. Speaker, I acknowledge my colleague's comments about the Canada pension plan. I do not think there is any question that it is an excellent pension plan. It evolved over the course of the social movement over the years, wanting to ensure that Canadians had some pension benefits. We do get great acclaim throughout the world on our pension plan.

There are some criticisms of course. What has happened is there have been restrictions on pension benefits that go to individuals. I think most of us would like to see that when there are extra dollars in a pension plan, benefits would be expanded instead of restricted, making it somewhat impossible sometimes for people who may access those pension plans.

The specific motion talks about the ethical investment of funds. I know the phrase ethical investments might be a tough phrase for some on the other side to get their heads around, but certainly not for my colleague. The bottom line is I think Canadians actually support ethical investments. They are not totally open to this belief that it should be this open freedom of making money at any cost with the pension funds. I think Canadians have more credibility, values and principles than that.

When she talked about members of the board of the Canada pension plan investment fund, I noticed she did not mention principles or values or the fact that they would take those things into consideration. Therefore, it was just going to be done on the basis of making money at any cost. I do not think that is acceptable to Canadians. That is why we brought this motion forward. We want to see a change. We in the NDP consider the investment in Canada, in Canadian municipalities and cities.

Infrastructure within Canada is a very ethical investment and it will be cost effective. We are not saying give the money away. We are saying allow municipalities and cities to access those funds as investments, the same way private companies can access those funds and use them as investments into their companies. They can pay it back with interest. We are not talking about investment in municipal bonds as such. We are talking about an investment in Canada, and that is what we would like to see.

I would like the member's comments as to whether she thinks the investment of Canada pension funds into Canadian communities is a good investment.

SupplyGovernment Orders

12:10 p.m.


Sarmite Bulte Liberal Parkdale—High Park, ON

Mr. Speaker, as the hon. member knows, the Speech from the Throne is quite clear that the government and members on this side of the House are ready and willing to invest in our cities and have a new deal for our communities. As of February 1, we announced that the GST would not be payable by communities, and that was a beginning.

If we also look at the Speech from the Throne, we also said that we would look at other options. One of those options is the gas tax, which we have talked about. I should actually add that the mayor of my city, David Miller who happens to also be a constituent of mine, actually welcomed the Speech from the Throne and praised the government.

With respect to investments, let us make it absolutely clear that the Canada Pension Plan Investment Board has the same federal investment rules that apply to all pension plans. It is also important that there is no explicit requirement in federal law that prohibits any pension fund, including the Canada Pension Plan Investment Board, from investing in specific sectors or companies, provided they operate legally of course.

I also would like to draw the member's attention to the fact that the Canada pension plan has developed a social investing policy, and I would urge the hon. member to check the website where the policy is outlined.

SupplyGovernment Orders

12:10 p.m.


Bev Desjarlais NDP Churchill, MB

Mr. Speaker, in response to that reply from my colleague, I would then ask, why is it that the Canada pension plan is investing in companies that make landmines when Canada is a signatory to the treaty getting rid of landmines?

Are we somehow accepting the fact that we will give those companies money, but they will not use that money for landmines, that they will just make fighter jets or tanks or whatever with that money, and they will use our money for something else? That is not okay.

The rules state that we should not be investing in those companies. Our being a signatory to the treaty for the abolition of landmines is legal. If we accept that as law, why has the government not ensured that the Canada Pension Plan Investment Board is doing that? We know it should not be doing it. Why is it doing it?

Furthermore, should we feel ashamed that our Canada pension plan funds cannot be invested in certain things? I do not think there is anything wrong with that. I do not think we should be ashamed that we will not invest funds in tobacco companies that will go to third world countries and encourage four-year-old kids to smoke, because that is what is happening.

There is proof of those things happening now. Those companies rooked-in Canadians and Americans for years by not telling them they were increasing nicotine rates so people would become addicted. They are doing the same thing. We should be able to say that there will be no investment in tobacco for the purpose of smoking because it is not beneficial to the welfare of humankind.

SupplyGovernment Orders

12:10 p.m.


Sarmite Bulte Liberal Parkdale—High Park, ON

Mr. Speaker, I appreciate the member's comments. I am glad she mentioned the landmines convention because that was truly one of the proudest achievements that this country has undertaken.

With respect to smoking, I could not agree with the member more. It is important that we ensure that our children stop smoking. I smoked for 30 years and quitting was one of the hardest things I ever did. I quit two years ago and it is important that we teach our children never to start.

What is important for Canadians to know, and I did say this in my address to the House, is that the Canada Pension Plan Investment Board operates at arm's length from the government. It is independent from the government. It was specifically set up to ensure that it was not subject to changes in political will. It is subject to investing in only legitimate companies and that is very important to understand. It was what Canadians wanted at that time.

SupplyGovernment Orders

12:10 p.m.


Judy Wasylycia-Leis NDP Winnipeg North Centre, MB

Mr. Speaker, it is a pleasure to speak on the important issue of pensions for Canadians in the House today. I am pleased that my colleagues in the NDP caucus have chosen to bring this matter forward as a matter of considerable urgency and a matter warranting the attention of all members in the House.

As members know, it is not often that we get a chance to talk at some length on one particular public policy matter. It has certainly been the case that we have devoted little time in the House to the future of our public pension system. Today we have that opportunity and the motion before us is intended to raise those general issues of concern as well as to focus specifically on the issues of investing in unethical or less than desirable activities for our society.

We are discussing one of the most important issues facing Canadians, and that is the issue of security for their retirement years. To say it is one of the most important issues facing us all is an understatement.

Our approach to this universal question, just like our focus on public health care, cuts right to the core of our values as a caring society. It pertains directly to our values as Canadians for caring and sharing the wealth. It pertains to cooperation and compassion as a predominant theme and approach in any civilized society. The issue of adequate retirement income is critical to all of us. This is literally our bread and butter after the age of 65.

Today 4 million Canadians receive old age security payments on a regular basis, with more than a quarter of these, 1.15 million, relying to some degree on guaranteed income supplements just to help them get by. Since any other income is deducted from the GIS, we are speaking about bare-bone core income support.

Nowhere is this more critical than when we speak about over half the population in Canada. Women in particular are dependent upon these programs. They are dependent on these programs because many have worked in the home or at part time or irregular employment, and have been unable to contribute to either a Canada pension plan, workplace plan or an RRSP. About 12% of senior women are living with their families and 35% are out on their own. Many senior women are not making it and remain mired in deplorable poverty conditions.

A Statistics Canada survey from last fall showed that fully one-third of Canadians in their forties and fifties felt that they had not made adequate financial arrangements for their retirements, and were even unsure about when they would be able to retire.

What is key to all of this is that Canadians are not reassured that the government's plan will serve them well, or that the government has the wherewithal, the vision, or the motive to address these critical problems to ensure that all people, regardless of their life circumstances and where they live in this country, have access to retirement income and income security in their old age.

Obviously, some Canadians, through their unions, have negotiated workplace pensions. About 79% of unionized workers have workplace pensions as opposed to only 30% of those who are non-unionized. We are talking about fewer than 4 out of 10 workers in this instance. Many more are covered by the public workplace Canada pension plan.

Almost three million Canadians currently receive CPP retirement benefits. Constructed over the years as a pay-as-you-go, self-supporting, publicly administered plan, it has been an example to the world of how to provide a stable, dependable income for our elderly. This plan has not been vulnerable to the whims of the marketplace or to the market's highs and lows. It is this strong base that has limited the impact on the CPP of the overall recent market decline that has had serious consequences for economies around the world. It was not pouring money into corporate banking profits either.

That was a source of considerable aggravation for the present Prime Minister and his corporate buddies. That is, until 1997 when, as finance minister, he caved in to the corporate media hysteria and paved the way for private access to our public funds as the answer to questions about CPP sustainability.

The Liberals did not go quite as far as the present Conservatives would have liked which would have been to scrap the CPP altogether and have it replaced with a public RRSP scheme. Let us not forget that the change was significant nonetheless.

That brings me to the essence of the motion before us today which is about the Canada Pension Plan Investment Board. The board was set up amid considerable controversy. It was set up to oversee what we would call a gambling initiative. In true fashion of the present Prime Minister, the Canada Pension Plan Investment Board has taken the most rigidly conservative of paths.

I may sound cynical about what has transpired vis-à-vis our public pension system and how money was being invested to ensure security for all of us in old age, but I am still optimistic. I still have great hope for the future. I have that optimism in part because of the ever growing capacity of young people, whom I meet, to learn and to grow.

When I was a child, I had a friend who firmly believed that milk came from the refrigerator. To this person it was obvious and beyond dispute. Today my son, who is 15 years of age, knows exactly where every item of his clothing is manufactured and under what labour conditions and environmental standards.

Our knowledge base is much more sophisticated and extensive, and our awareness is growing in leaps and bounds through debates that we have been having around trade, social justice, globalization, and sovereignty. The labour movement has played a particularly active role in raising awareness of these matters and in raising awareness from its international solidarity contacts. As a result of these debates and these educational programs from trade unions, Canadians now know about interlocking corporate ownership, manufacturing zones set up to bypass regulations, and child labour.

We have seen the TV footage reporting on a garment factory fire in which dozens of women perished because of abominable labour standards and locked doors. We know that someone owned that factory and almost certainly financed it through investment.

We now know more about our world and how we fit in as producers and consumers than ever before. Just as compelling is our desire to apply this knowledge to action to improve these negative conditions. A growing number of us, when we learn about huge multinational coffee corporations exploiting farmers and workers, choose fair trade options over free trade exploitation.

My colleague from Winnipeg Centre has just outlined our $2.5 billion investment in the arms industry. Most Canadians want no part of that. If we gave them the choice, they would not invest in the arms industry.

Similarly, tobacco each year results in the deaths of 45,000 Canadians. That is roughly five times the number of deaths caused by car accidents, suicides, drug abuse, murder and AIDS combined. Even smokers are against it. We have responded with measures to discourage tobacco use and limit its damage.

However, we may still be unwittingly supporting the tobacco industry in its aggressive quest for new markets in places like China through our public pension plan investments. This is truly unacceptable and is what has given birth to a growing list of socially responsible investment funds now totalling an estimated $50 billion in 2002, of which $10 billion was in positively or negatively screened investment.

The CPP, a long time pay as you go plan, got into the investment business in the late 1990s. Its investment arm, the Canada Pension Plan Investment Board, currently controls over $30 billion of the CPP's $66 billion total. Together with other large public sector pension funds, it wields considerable influence and clout.

There is a downside. In addition to its active role in the arms trade, it has other questionable investments on the go. Many Canadians were appalled to learn that the Canada Pension Plan Investment Board was involved in the financing of new triple p hospitals in Ontario. Our national public pension money is being used to determine our most cherished social program when it is fighting for its very survival.

Of course, Canadians' immediate reaction would be to pull out, but what is the response from the CPP Investment Board? The board has taken a rigid position against ethical investment. Why? According to the board chair, maximizing profits should be the one and only goal of our national public pension plan. My goodness, what a high moral standard Canada has today. What an incredibly high standard set by the chair of the pension investment board.

That segment of the corporate community that resists regulation at all costs tends to hide behind these myths. According to them the sky will fall as soon as rules are added. This is not the case. The sky will not fall, and neither need profits, according to many studies that have actually examined the performance of ethical funds.

According to one Canadian study, for example, the ethical growth fund performed as well or better than non-screened mutual funds over a 10 year period, even slightly outperforming the TSE 300. There will be variations along the way, but in the great tradition of pension funding, in the long term, performance is relatively even.

New Democrats recognize the fiduciary responsibilities of the CPP Investment Board. However, other progressive pension funds have managed to define that responsibility to allow for other responsible social behaviour as well.

To suggest we cannot possibly reach a consensus about what constitutes ethical is a line of morality that is outdated. It shortchanges Canadians' sense of common values and our impulse for decency.

No one is saying that a process will be easy; I do not know of any ethical issue that is, but that does not mean we surrender to the highest bidder without even trying. We need national leadership to set in motion the national dialogue necessary to accomplish this task.

This is an issue that affects all Canada pension plan contributors. It has an impact on all of their lives. They have a right to take part in a full discussion on this issue. They should have been full participants from the beginning.

This is no magic bullet. No one on these benches believes this guidance alone is sufficient without the active promotion of better ethical labour and environmental practices where our investment dollars take root, but it is clearly a vital element in 21st century financial management that is long overdue.

We look to labels for information. What we are saying today is that we want labels on our pension investment. Milk does not come from the refrigerator.

SupplyGovernment Orders

12:30 p.m.


Wendy Lill NDP Dartmouth, NS

Mr. Speaker, I was very interested by the comments that my colleague has made.

I just returned from Nova Scotia where there was an enormous blizzard. They refer to it as white Juan, in parallel to the hurricane Nova Scotia experienced in September. It was very clear that what was required during the last five days was that people work together. There was very much a sense that the public good, the welfare of everyone would only be increased and improved if people worked together, planned together and dug out together.

It is very interesting to hear that the Canada pension plan was put in place for that very purpose, to raise the horizons and the quality of life certainly for persons with disabilities, but also for people who reach an age where they need a pension plan. In the late 1990s there were cuts to the Canada pension plan.

As the critic for persons with disabilities, I spend a lot of time trying to figure out how we can get money back into the plan for the people it was meant for. What we are hearing now is not only is the plan not working, that it is broken at the operational level, but the money that should be going to vulnerable Canadians is going into some very unethical investments offshore, with tobacco, with arms and with privatization of hospitals.

What is the process that allowed this incredible reversal, this distortion of what the plan was all about to begin with?

SupplyGovernment Orders

12:30 p.m.


Judy Wasylycia-Leis NDP Winnipeg North Centre, MB

Mr. Speaker, let me at the outset indicate to the member for Dartmouth that we in the House share the concerns that she raised about yet another horrific storm in Halifax. We send our best wishes to the people of Halifax who have had to endure a horrible year in terms of hurricanes, huge rainstorms and now an incredible snowstorm.

The question the member posed is very important as we struggle with an appropriate mechanism for ensuring investment of our pension funds for future generations. The member asked how in the world did it ever happen that we ended up with a process where not only is our money being gambled, but risks are being taken on the open market. The money is being invested in questionable activities where there is no ethical screening in place.

We have to go back to the agenda of the Prime Minister over the last decade. We have to understand that the changes in the Canada pension plan and the establishment of the investment board were a direct result of the present Prime Minister's agenda and his leadership, if we want to call it that. If we want to trace the origins of this questionable path in our history, we have to go right back to that individual.

Today, the Prime Minister continues to condone and encourage a revolving door of corporate lobbyists through his office. This raises the spectre of equally disconcerting programs and developments to occur in the future, as if we have learned nothing from the past.

The present Prime Minister and his Liberal colleagues are so determined to address the wishes of their corporate buddies and to cater to the business community that they have put profit at the top of the agenda. Profit is way ahead of anything to do with respect for people who need security in old age, people living with disabilities and women struggling just to survive. This is an indication of how far overboard the government has gone in terms of its commitment and its responsibilities to the people of Canada. The government puts corporate interests ahead of the public good.

The purpose of our debate today is to try to refocus the agenda, to try to convince the government to put some balance back in the equation. We may now have an investment board we are stuck with, despite our attempts to amend it and improve it and insert an ethical screening process, despite the NDP's efforts to broaden the representation on the investment board to include representatives from the labour movement and other experts in the Canadian community. We are stuck with this mechanism, but we have the opportunity to change it and improve it.

One way we can improve the investment board today is to say together with one voice that there shall be no investment in questionable activities, particularly pertaining to arms production, landmines or tobacco. That is where we can start. Let us instead invest in Canada, in communities, in the infrastructure requirements of this country and receive the double benefit of investing ethically and reaping the rewards of having invested in Canadian communities. In that way we could address the huge deficit in the infrastructure, the needs of our cities, the concerns of the farmers and the rural communities and the growing array of issues pertaining to families everywhere.

The government has a choice today. Let us in fact double our investment. Let us reap the rewards of investing in Canada on an ethical basis.

SupplyGovernment Orders

12:35 p.m.

Canadian Alliance

Randy White Canadian Alliance Langley—Abbotsford, BC

Mr. Speaker, as a person who has invested throughout many years and who knows the market fairly well, I would suggest, I did think that I would like to talk to this. This motion is actually laughable in a way. I will speak to that in a moment.

What really bothers me is that we have found the Liberals in this nation stealing money, virtually, from the taxpayer and handing it out to their buddies and back to the Liberal Party. The country is in chaos over it and the NDP brings up a motion to talk about investing in values in terms of the Canada pension plan: some days I wonder where these guys come from. I guess that is why we threw them out in British Columbia and do not want them back. That kind of philosophy pervades their investment strategy as well as their management style. That is one of the things that gets them into trouble every time they get into government for a very short period.

I do want to talk about this motion. I have to read it for those people who are listening because it really is hard to believe that somebody would present this in the House of Commons.

It states that the NDP wants the House to have the Canada pension plan, and I quote:

...guided by...investment policies which would ensure that...[the] investments are socially responsible and do not support companies or enterprises that manufacture or trade in military arms and weapons, have records of poor labour practices, contribute to environmental degradation, or whose conduct, practices or activities are similarly contrary to Canadian values.

Has anyone in their life ever heard such convoluted logic in regard to an investment? I do not think I have ever heard it before and I have been investing, as I said, for years. I will give some examples of this.

Some time ago, I invested in a company that makes cigarettes. Somebody tried to talk me out of investing in that company just because of a moral value, as these folks are. I actually waffled on investing in that one. I do not know how many thousands I lost on it, but this company had done very well in the market; those people who buy cigarettes, smoke cigarettes. The company had made a great deal of money. Those people who invested in that company did well, and better luck to them.

There are other companies I have invested in and I have done reasonably well. They are companies that have had strikes. The NDP would not invest in companies like that. It wants social values entwined into the mix of economic values when investing in the marketplace.

For instance, for a company whose CEO believes in the traditional definition of marriage, the NDP members would probably see that as coming under “contrary to Canadian values” in their minds if they were to form a government. Could we imagine such a financial decision on the Canada pension plan, on which all of our seniors depend for growth, being made by somebody who said to never invest in that company because the CEO believes in the traditional definition of marriage? Or, heaven forbid, for a company whose CEO is pro-life, it is not within the certain mix that they would consider a social value they like as a government. They would not go with that either. It goes on and on.

This is the party that brought in Bill C-250, if members will recall, that basically was going to outlaw the Bible as a document of valueless means, in its members' minds. With regard to a company run by a Christian or a very successful company that was run on Christian values, would they say no, they could not invest in it because that would be contrary to their “Canadian values”, as they would see them? We cannot mix those kinds of things in this package of investments. The thought process that goes on with the NDP is really something to listen to.

The fact is that the Canada pension plan is the basis upon which people work in this country and retire to at the end of their days. The investment people who are managing the portfolio have to be able to look at companies as to how best they can earn income, make profit and supply that portion of profit to the value that they invest in the plan itself. They cannot look at the values of a particular political party or the labour practices of a company. In whose value is the labour practice perpetrated? A company that is non-union? Is that a bad labour practice in the NDP's mind? Would we not invest--

SupplyGovernment Orders

12:40 p.m.


Bev Desjarlais NDP Churchill, MB

If they're employing four year olds.

SupplyGovernment Orders

12:40 p.m.

Canadian Alliance

Randy White Canadian Alliance Langley—Abbotsford, BC

There we go. That is from the NDP. Basically she says yes. There we go. If it is a non-union company then that would be out of the investment portfolio of the CPP.

Could we imagine those kinds of values being brought in on behalf of our seniors who are waiting to retire and waiting for a certain amount of money to come to them at age 60 or age 65? I just cannot believe that we are facing this kind of logic here in the House today when we have so many better things to do. Quite frankly, this is going nowhere. There is little interest in it.

What we have today is a major catastrophe facing this nation on the ethical values of a government. Yes, we have concern over the funding of the Canada pension plan, yet these people across the way in the Liberal government have basically stolen $100 million or better and thrown it out the door. If we wanted to really do something for the Canada pension plan, we would go over across the way and say to them that if they would just put a little more ethics in their own activities, we would have a lot of money for seniors and could put it in the right direction. To stand here today in the House and to speak to some kind of value process perceived by the NDP in the investment portfolio of the Canada pension plan, I just cannot believe it.

Mr. Speaker, I am splitting my time with the member for Red Deer.

I want to speak about a couple of other things. The greater choice of the future of individuals lies in their ability to invest on the way through life. I would like to say that our party is in favour of looking at better options for investment, not just CPP, but options that perhaps would give better tax options to those who have RRSPs, greater flexibility to an RRSP style of fund, greater potential for increased income in their later years as opposed to reliance on just the Canada pension plan.

As we move into the next decade when we are going to see the Liberals replaced, I think we are going to see more of government potentially looking at seniors and how best they can be treated in terms of the maximization of their income at a fixed income level. I can assure the House and all those who are listening that it does not include a Canada pension plan that is based on investing in companies that have labour practices suitable to the government, contribute to environmental degradation, or whose conduct, practices or activities are similarly contradictory to Canadian values.

I also have invested in a number of environmental organizations over the years. Yes, I think that was my choice because I liked the kinds of products and the kinds of things they were doing in the environment, but also because I looked at the future growth and potential for myself and my family. It was not solely based on the fact that “it is a green plan, therefore I will invest”. There are many companies that are environmentally friendly that could not make a buck if they were in business for 40 years.

I can only say that I am disappointed that this kind of motion has been put forward to the House with such a crisis facing this country. I am also disappointed that some NDP members, if not all of them, are out there saying that this is the kind of logic they would put forward for all of the people retiring in Canada and this is what they would do for them. This program would be broke in a week.

SupplyGovernment Orders

12:45 p.m.


Bev Desjarlais NDP Churchill, MB

Mr. Speaker, we see today why we have two opposing views and two different parties representing different values within the House of Commons. I will comment specifically on what my colleague from the Conservative Party said. Actually, I am really pleased that there is such a difference between our views on things.

He says it is important that we deal with the ethical issues of what the government is doing because of the unethical things it is doing, but if we are going to make a buck it is okay to take Canada pension dollars and invest in unethical practices. Let us take, for example, one of the companies that is being accused or that we are pretty sure received some dollars in an underhanded manner from the taxpayers of Canada. Does he think it is okay that pension fund dollars should then be invested in those companies? How ethical is that? Maybe that is what his principles and values are built on. Mine are a whole lot stronger.

He suggested that it is wrong to believe in investing in ethical funds. I would suggest that if we put this to a vote of Canadians, they would tell him wholeheartedly that they do not want to be part of that, that they do not invest in companies that use four year olds to make rugs. That is reality. This is not something the NDP has made up.

International labour groups around the world have specific guidelines that they work with. If the Conservatives could get their heads out of the sand and stop wanting profit at any cost, they could look at ways that we believe should happen where one can get the profit. We are not suggesting not making dollars off the pension plans. We just think there are better ways of doing it than ripping off young children, than ripping off women and children in the world who are abused and used just because of who they are, so that we have some values. I would suggest--

SupplyGovernment Orders

12:50 p.m.

The Acting Speaker (Mr. Bélair)

The hon. member for Langley—Abbotsford.

SupplyGovernment Orders

12:50 p.m.

Canadian Alliance

Randy White Canadian Alliance Langley—Abbotsford, BC

Mr. Speaker, I must be missing something here. Is there any company in Canada that uses four year olds to make rugs? I am not aware of it. This kind of standard for investment in the Canada pension plan, if that the basis on which the NDP is working, I do not know. I do not know of any company in Canada that uses four year olds as child labour.

The fact of the matter is that the NDP has a disastrous record of investment in this country when it has briefly formed government. Its management style is based on issues like this, where the end result is that not only can it not make money, but it loses disastrous amounts of money and its spending efforts are usually worse than that.

Like I say, it can put this kind of motion to the House today, but there are big things facing this country right now and I wish the NDP would get along with the program and stop with this kind of philosophy where it thinks it is going to change the whole world of investment based on its values, because its values, quite frankly, within the operations and the investment portfolios of this nation, just do not fit.

SupplyGovernment Orders

12:50 p.m.


Bev Desjarlais NDP Churchill, MB

Mr. Speaker, there is no question that we would not fit under those types of guidelines, because we do believe that values and ethics count.

For the record, the Conservative member may not realize this. I was not talking just about Canada, because our pension plan invests outside of Canada. He may not have realized that. It does possibly invest in companies that would use four year olds. It does possibly do that and, quite frankly, there is nothing to stop it from doing that. Under his way of doing things, there should not be.

I use this as an analogy. Let us say that Canada has a law against cloning. However, our pension plan funds can then be invested in firms that are cloning somewhere else. What kinds of values or principles are those? Those are the values of the Conservative Party. They were the values of the Alliance Party. They were the values of the Reform Party. And it is time things changed, because they are not the values of Canadians.