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.