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.

Topics

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4:20 p.m.

An hon. member

And reminded.

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4:20 p.m.

Liberal

Maria Minna Liberal Beaches—East York, ON

--and reminded that this is the wish of the House.

Given the fact that the provinces are part of this, I want to ask my colleague if he has a suggestion as to how, at some point in the future, we might engage the provinces as well, to ensure that the two orders of government that are responsible for the Canada pension plan and for the investment fund reinforce this kind of message.

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4:20 p.m.

Liberal

Dennis Mills Liberal Toronto—Danforth, ON

Madam Speaker, engaging the provinces on this issue should not be that difficult. Based on my experience with any of the provincial premiers I have either talked to or listened to, I do not think they would be really against this. I think the provincial houses would share most of what the member is saying as well. Again, it is a matter of balance. I think what the member for Winnipeg Centre should do is take the Hansard at the end of today, pass it on to all the provincial premiers, and ask them to use their influence to support all of us in the House in sensitizing the board so that it essentially shares the view of the House.

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4:25 p.m.

Canadian Alliance

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

Madam Speaker, I have more of a request for information because I would like the hon. member who just spoke to clarify something.

When groups such as the Ontario Teachers' Federation, and other groups like that across Canada, engage someone to invest their pension funds, does the member have any idea what kind of criteria goes with that, how are they represented on the board, and is there some form of direction that they give to the firm with which they deposit their funding?

For instance, I noticed that across Canada there are several groups, such as the Ontario Teachers Federation, that have moved their funding or moved their investment from one institution to another. Does the member know the criteria by which that is standardized?

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4:25 p.m.

Liberal

Dennis Mills Liberal Toronto—Danforth, ON

Madam Speaker, the member referred to the Ontario teachers' pension fund, which has more money than the treasury of Canada. It is quite an amazing thing.

As we know, that fund does have a policy. For example, in the real estate sector, it has to spend about 10% of its annual return on real estate. I think that is part of the reason why that association owns most of the real estate in this country.

However, if I had my way, I would ensure that the Ontario teachers' pension fund shared a lot more of its pension fund activity across the country. We respect the Ontario teachers' pension fund as a great organization, but it is not above being challenged in terms of how it operates. All of the money flows into that pension fund tax free.

When we give a tax credit or a gift to a corporation, there should be a quid pro quo, and it should be one that has a national positive effect. I would just like to prick the conscience of the Ontario teachers' pension fund to ensure that this huge pot of money it has is serving the whole country and not just southern Ontario.

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4:25 p.m.

NDP

Pat Martin NDP Winnipeg Centre, MB

Madam Speaker, maybe by asking the hon. member a question, I might be able to help answer a question from over here.

The Canada pension plan trust document specifically excludes or prohibits taking into consideration anything other than getting the maximum rate of return, whereas ethical investment funds, such as OPSEU, the Ontario Public Service Employees Union pension fund, which is a jointly trusteed pension plan, stipulates that the funds should earn a reasonable rate of return.

That is the type of thing that we are recommending. If we were to lighten up on the language a little in the Canada pension plan trust document, we would be able to take into consideration other issues and still get a reasonable rate of return. It would not give licence for the trustees to make a bad investment simply because they are ideologically in favour of it, but it would allow some latitude.

The Ontario-based hospitals of Ontario pension plan, which is another massive plan, has four major ethical criteria. Its president, Mr. Ed Baker, said:

In order to meet the actuarial assumptions, you don't need the biggest returns. What you need is a return that is reasonable and done in a very responsible manner.

Socially responsible investments is what we are pushing.

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4:25 p.m.

Liberal

Dennis Mills Liberal Toronto—Danforth, ON

Madam Speaker, I find myself agreeing with the member, but at the same time, we should also know that we have a number of Government of Canada initiatives that promote corporate social responsibility or social ethics codes: passing the corporate accountability bill on June 12, 2003; establishing a code of ethics for Canadian business; creating the national contact point; providing the sustainability reporting tool kit developed by Industry Canada, Environment Canada and the Department of Foreign Affairs; and providing information and guidance on practices related to corporate sustainability reporting. The aim of the tool kit is to help Canadian businesses meet their reporting needs by providing a guide to what to consider when developing a sustainability report.

All of these are supposed to sensitize that board. I am sure we can do better.

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4:30 p.m.

NDP

Bev Desjarlais NDP Churchill, MB

Madam Speaker, I am pleased to have the opportunity to have little more time to speak on our motion today. Heaven knows there has certainly been enough fodder going around throughout the day that I will be able to reply to a good number of points.

The New Democratic Party and the majority of Canadians want to see responsible investments through the Canada pension fund. The majority of Canadians, if not a very large majority, absolutely support the Canada pension plan. In most cases, it is the only pension that a good number of Canadians will receive because they have not made the dollars to put additional money into RRSPs. It is the pension of choice because it is the only pension there for them. They may receive CPP and then OAS on top of it simply because of the nature of the dollars they are going to receive.

We strongly support the Canada pension plan. As a result we want to see it survive. We do not want to see it wiped out.

In no way would we suggest that we put in place an investment policy that would not support the pension plan. That is foolishness. I can tell the House that even though my colleagues in the Conservative Party will say that the NDP is tax and spend and waste money, the reality is not so.

I suggest that those members get back to their history classes and do some real studying on exactly how the debt has been incurred. The debt was not put there by the New Democratic Party. They need only look at the federal government and the fact that Liberals and Conservatives have been the governments, and we are in debt. It was not because of the NDP.

I say to them that they should be reasonable in their assessment of things and be honest with Canadians because it is not accurate. Where we have been at fault, we will accept responsibility. However, on the whole tax and spend attitude and the wasting of taxpayers' dollars, it is just not the case. I want Canadians to understand that we do not want to see a problem with the Canada pension plan. We want to see it supported.

There is documented proof that ethical funds could be profitable. In the documents prepared by the Library of Parliament with regard to the Canada pension plan, ethical funds can be supported. It summarizes the fact that they do not make any more money or do not lose any more money than investing otherwise. Therefore, it is possible to have ethical investments.

I know we can get into arguments about what is ethical and what is not, what is based on religious views, and what is based on one person's interpretation of a social justice or a social conscience issue. However, I am sure that we can come to an understanding as to what is okay to invest in and what is not. In those areas where we do not come to an understanding, then we do not go that route.

We recognize that pension dollars should not be invested in companies that are producing landmines. We have a treaty that says we should not be doing that. It is reasonable to suggest that we should not be investing in companies that use child labour in other countries.

I would like to think that we do not have child labour in Canada, but heaven forbid, if that were the case, I would hate to see money invested there. Certainly, in other countries where it is hard to control those things, it does happen. If we know it is happening, then we should not be investing in those companies.

One of my colleagues said that when Talisman moved out of Sudan, it moved under pressure because its stocks were dropping. A company is there now and we do not know what it is doing. Here is the reality. We do not know what it is doing but the Canada pension plan could be investing in that company. Does that seem reasonable? Talisman moved out because it was getting pressure, but somehow it is now okay for the Canada pension plan to invest in a company that might be doing the same thing. I am not suggesting it is, but if the proof were to come out, would we be saying that it is okay? I do not think that is acceptable.

I mentioned earlier that cloning is not allowed in Canada. There is a law against cloning; however, we have the Canada pension plan investing in companies that are doing cloning. How is that right? What about a situation where we do not allow the sale of organs within Canada and we have a company in China that is organizing the sale of organs, should Canada's pension plan be able to invest in that company?

Those are the things we are talking about. We are not for one second suggesting that just because I, as a New Democrat, have certain issues with a particular company that there should not be any investment. That is not the case. We generally know that there are some companies out there that are doing illegal things.

Wal-Mart comes to mind. Wal-Mart, in the U.S., knew that it had a number of illegal workers working in its stores. There is proof; it was in the papers. It was documented and investigated through the immigration department in the U.S. which laid charges. It found that Wal-Mart had up to 300 workers who were not registered workers in the company. That is a wonderful company, right?

It is a good, community-minded company here in Canada, supporting teams and handing out Mac certificates. However, it had 300 illegal workers that it was hiring on contract through private firms and paying them less than the minimum wage. Wal-Mart knew and there is documented evidence. Should the Canada pension plan be investing in Wal-Mart? It does not have to, of course. Wal-Mart makes a fortune even though it has been criticized at some point for using products that come from unscrupulous areas and people make a conscious decision whether or not they are going to support Wal-Mart, or whoever.

That is just a general example, but we know that there are companies that are doing things wrong and they do not respond to public pressure. I do not see anything wrong with suggesting to members that if we want to know whether or not Canadians support it, we should ask them. We should ask them to indicate it.

We do tax assessments every year and StatsCanada does surveys. I just went through another StatsCanada three-quarter hour long phone call. We all kind of cringe and I will cringe even more when Lockheed Martin will be doing them. I may not even do it then, but I sat on the couch and did the StatsCanada survey. Maybe we should ask Canadians if they think their pension plan dollars should be spent in ethical investments. Do they think it is okay to invest in companies that build landmines? Do they think it is okay to invest in tobacco companies that are using the tobacco to encourage smoking?

A colleague from across the way, the member for London--Fanshawe, suggested that the situation in Mexico was much better, that we had criticized the Maquiladoras and the whole bit, and somehow it was much better for Mexican workers. I have spoken to those workers and it is not better. There may be more jobs out there and maybe more people are working in some rather nasty situations, but overall, it is not better. There have not been great improvements in South America either. That is why some countries in South America are not open to this whole trade deal because they are concerned about it.

A comment was made about members of the Canada investment board and that these are credible people, people who know about investments and business, and about doing the right thing. They are business minded people. Well, the executives of Enron and Worldcom were business minded people and what did they do? What did those really credible businessmen do who were above reproach because they were executives and business people who knew about investments? They ripped off pensioners. No one is above that. Values and principles are important; ethical investments are important. It is not okay to be doing that. Canadians expect more.

I say to my colleagues from the Conservative Party, they swear up and down that everybody just wants to make a buck out there. The people I know would be sickened to know that their pension dollars were supporting some of the things we talked about here today.

People would be sickened to know that their pension dollars were supporting a company that, in this day and age, locked in its employees, that the place burned down and the employees were killed. Those things are still happening. We do not see it as we sit here in Ottawa and maybe we do not see it in Thompson, Manitoba, but I can say that it is still happening in some places, and possibly even in Canada. It is not acceptable.

We hear of the stories in other countries. We hear of the child labour, of young people pulled into prostitution and used in certain areas. A company could somehow be tied to that and is involved in pornography and that is okay? Are my colleagues from the Conservatives saying that it is okay that the Canada pension plan should invest in those companies if we know that they have been tied to this?

They are criticizing us for discussing this issue today because there is a really important issue out there and darn tootin' it is important. It is important that the government had a situation where taxpayers' dollars were being misused to the tune of hundreds of millions of dollars; darned right it is important. It talks about an unethical approach, an approach with no values. It talks about no principles, using taxpayers' dollars without recognizing that people work day in and day out to make those dollars, to support their country and all the things we believe in.

We are being criticized because we are discussing this today because we want the support of a pension fund for ethical reasons. We have suggested different ways. We are not suggesting for one second that the plan be set up so that it would lose money. We do not want that. We support the plan wholeheartedly. We would never for one second suggest that we invest so that money is lost and we are not able to support the pension plan.

I would challenge the House, the government and my colleagues over there in the Conservative Party to look at what the investment would be if we invested in our communities instead of going into private partnerships with companies to make money off of building our roads, schools and hospitals. How about using those pension funds and maybe putting the dollars back into the pension fund instead of using a private company? Let us put it back. Let us make an investment in Canada. In that way we would get the work done as well and the taxpayers would not constantly be ripped off for more money strictly for profit rather than a commitment to our nation.

Our country was built because someone had a vision and said we would work together and that we would make it work. Somewhere along the way it was decided that we had to be able to make a profit off everything, that if we could not make a profit from it, it should not be allowed.

Now there is this push where hospitals will be built by private companies. We are going to pay to use the hospital and pay for privatized services because somebody wants to make a profit from health. We have a wonderful health system in Canada, a system that is viewed by people throughout the world as what they want. They want it because we have the best system where dollars are not wasted on excessive administration, on HMO costs and all those things.

Should we sell that out because some company is not able to make a profit by providing those services? That might be one of the values of the Conservatives, or of the government because I have not heard the Prime Minister say that he is going to oppose for profit health care. I have not heard that come out of his mouth but I hope Canadians have him commit before the next election. I hope they say, “Let us hear it once and for all Mr. Prime Minister. Do you support for profit health care, making a profit from someone's ill health?”

That is not what we are about. I am not going to feel any shame that I do not think it is okay to make a profit from ill health. I read a saying once that we rationed health care in Canada based on need and in the U.S. it was rationed based on greed. That is what it is about. It is about providing services for profit as compared to working together to provide it because people need it. That is what is important.

I hope my colleagues who have listened to the debate throughout the day will take the time to see that this is not just the NDP saying that it wants an ethical investment and it does not want an investment in this or that and it is just willy-nilly flapping all over the place without having checked into the facts. Ethical funds can be profitable.

Most investment companies will have an ethical segment. There are some people who, when they go to get their RRSPs, not even their CPP, will ask if the company has an ethical package. If the company does not, they may then decide to put their RRSP funds elsewhere.

There are people who maybe do not have to make a huge profit off their investment because they already have the tax deduction, so they are okay with not investing if it is not ethical. People can make those choices. I think people should have the right to make the choice.

If we went to the people who have paid into the Canada pension plan, or if Statistics Canada did a survey and found that 85% or 90% of Canadians wanted ethical investment, would it not be worthwhile to listen to Canadians? We listen to them in the polls. It is so important that we listen to everything that comes out in the polls. Why not listen to what Canadians tell us about ethical investments?

I come from western Canada and I will challenge my colleagues in the Conservative Party that the people in Saskatchewan, Manitoba, Alberta and B.C. will not think it is okay to invest in landmines. They will not think it is okay to invest in pornography. They will not think it is okay to invest in tobacco companies that induce children to smoke. I think they would be ashamed to hear their elected representatives say that it is okay to do that because they just want to make the most profit possible on the pension plan, without considering anything else. There is more to life than the dollar.

We benefit overall from having a clean environment and other services. In the costing of it, we probably ultimately would save money. I am quite comfortable in saying that. I would challenge anyone to show me differently. I would challenge them to show me how investing in our future, in a clean environment, in healthy living, how that would not ultimately save us money as a country. It is not okay to just say it is an NDP issue and we are not going to listen to it. This is an important issue.

I was involved in the last discussions when changes were being made to the Canada pension plan. We pushed for having an ethical screening within the Canada pension plan. We tried at that point and did not get anywhere.

My colleague from Winnipeg Centre mentioned that it is not a matter of saying we cannot invest in anything. It is about changing a few guidelines and giving more flexibility. Right now even if the Canada Pension Plan Investment Board wanted to invest ethically because it saw that as a more important factor than investing in a tobacco company that was seducing children, the board could not do that because it would not get the best return on profit.

I watched a program years ago. It could have been just a show that was made up, but it talked about World War II and how the British were somehow investing in the rockets the Germans were going to use to attack the British. It always stuck in my mind. That is the kind of attitude I am hearing today from my colleagues in the Conservative Party who say we cannot have an ethical screening if we are going to make money and we are only going to worry about making money. That is the extent of it, not the fact that it is going to be detrimental to our nation, or the world for that matter.

It is crucially important that we go beyond the rhetoric. I am not suggesting, nor are my colleagues in the NDP suggesting, that there be no profit from the Canada pension plan. We want to see it profit because we need those dollars to provide the pensions that we so rightly believe in for the majority of Canadians who only have the Canada pension plan. That is what we want to see happen.

I would encourage my colleagues to go beyond that. It may not seem important today, but in the future it will be. It will be important if we hear of a situation where the Canada pension plan has invested in something and it comes around and bites us in the butt, because that is the reality. I would encourage people to go beyond the rhetoric and get on with supporting a very good motion.

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4:50 p.m.

Liberal

David Kilgour Liberal Edmonton Southeast, AB

Madam Speaker, I would like to thank the member for Churchill for a very thoughtful speech. I realize she was going after colleagues from the Conservative Party, but I would like to ask her a number of things although she may not want to deal with all of them.

Does she think that the CPP should invest in Ivanhoe? As she knows, Ivanhoe has a mine in Burma, Myanmar, where 50 people were killed last May, with bamboo poles I understand, not very far away from the Ivanhoe facility. I remind her that Canadians, including Albertans, got Petro-Canada to pull out of Burma and perhaps persuaded Talisman to sell out its interest in Sudan. I would like her to comment on that.

On corporate social responsibility, would she let CPP invest in a fabric company, if there is such a one, in Bangladesh? She undoubtedly knows there are about two million people, primarily women, in Dhaka who earn their small salaries every day from making garments that come into Canada under special arrangement.

If there is time and if she wants to deal with it, a constituent of mine complained recently that he has a wife and three children on a single income. On a $45,000 income he pays about $12,000 in taxes and CPP. What would she say to him when he says he is paying too many taxes?

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4:50 p.m.

NDP

Bev Desjarlais NDP Churchill, MB

Madam Speaker, the hon. member reflected on a lot of issues that I do know about and which I have great concerns about. There is a need for ethical investment.

I will respond to the last question about Canadians who feel they are paying too many taxes. When we include taxes and CPP, I have a hard time with that, quite frankly. When constituents talk about CPP or EI and not getting money back, I always remind them that it is a pension plan or an insurance policy. The money that people pay is deducted off their income taxes, which is a plus right there.

I do not see it in the same way. It is by far the most reasonable pension plan investment we can make. We will not get a pension plan at that cost anywhere. We will not get a privatized plan at that cost and get the kind of benefits we get from CPP. I would like it to be better, but it is not there.

People just a bit older than I had the real challenge of fighting very hard for some of these programs. I had the benefit of all of them. I have said this before. I have had the benefit of a pension plan, health care, maternity benefits, education and support for my children. I have had those benefits and I did not have to fight for them. As a result, Canadians forget how much those things cost. They forget that sometimes, because of this attitude from the reform, alliance and now it is the Conservatives that we are spending all this money and we are not getting anything.

I suggest to each and every Canadians to do what I did. I had three children. They went through 12 years of school. Their health care was provided. We had our roads and all those things. Canadians should break that down into what they would be paying if they were paying a privatized company for those things.

I got my dollar's worth out of my tax dollars and I think all Canadians will. I do not begrudge my taxes because I have benefited from them. I believe most Canadians feel that way. They want to pay their own share. It is when there is abuse of tax dollars that it becomes a problem. When we see some corporations making huge amounts of money and not paying any taxes, that is when it is a problem. However most Canadians do not mind paying their fair share.

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4:50 p.m.

Canadian Alliance

Chuck Strahl Canadian Alliance Fraser Valley, BC

Madam Speaker, I was not sure if I should enter into the debate today but when the NDP spends more time slamming my party than it does anything else I almost have to rise to debate a little.

The member raised quite a few points with which I could easily agree. I personally think that landmines are repugnant, unnecessary and should be banned. I do not think anyone should be involved with them. However with regard to some of the other points she made, I cannot agree with her example of how atrocious it is that private industry would be somehow involved in putting more money into the health care system.

When the NDP was in charge of British Columbia, a good friend of mine spent weeks travelling from Hope, British Columbia to Bellingham on a daily basis for chemotherapy because British Columbia had no facilities to treat his cancer. He was so sick he had to rent a hotel room there because there was nothing close to home.

What did the NDP do? It paid a private health care deliverer in Bellingham for the services that my friend should have had in British Columbia. Frankly, if it had been a private-public partnership that had provided that facility for his treatment, he could have stayed at home and saved all that money. Instead, all that money went not to British Columbia doctors or the health care system, but the NDP gave it to the Americans to provide that service.

While the NDP were in power in British Columbia, heart operations and heart transplants were being performed in Seattle not in British Columbia where we could have had private-public partnerships in order to provide more facilities. It all went south. I think that is what worries people about the motion today.

I tend to support the NDP motion today, in general. It has a good thing that it is trying to do. However the reason there is so much skepticism in other parts of the House is that people are nervous. They know the NDP always means well.

In British Columbia one can still drive by the fast ferries. Fast ferries were going to provide jobs, training and education. There are 450 million hard-earned British Columbian tax dollars tied up at the docks.

The NDP said it would clean up the environment. I think British Columbia is somewhat cleaner because of the NDP, because the mining industry is finished in British Columbia. The environment probably is a little cleaner but there is nothing left of the industry. That is what it did. It says that it will help people receive services but, as we saw during the bingogate scandal, senior members of the NDP were convicted of stealing money from charities that was supposed to go to help poor people.

Although the gist of the motion sounds good, the problem is that in British Columbia we just do not find it credible. When the NDP says that it is here to help, people reach for their wallets, lock their doors and hide their children so that nothing happens to them. Although the gist of the motion sounds good, everybody gets their guard up. Because we have seen it before, we worry when the NDP says that it will do something, which is why we edge into it. We want to support it but the red flags go up as soon as the NDP touch it.

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4:55 p.m.

NDP

Bev Desjarlais NDP Churchill, MB

Madam Speaker, I actually take great pleasure in the fact that my colleague really could not criticize the aspects of the motion regarding ethical investment. What he had to do was bring up some issues that happened in B.C.

Just to counter that argument, I would suggest that when--

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4:55 p.m.

An hon. member

Ask Grant Devine.

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4:55 p.m.

NDP

Bev Desjarlais NDP Churchill, MB

--Grant Devine runs in Souris—Moose Mountain, he should remember the 16 convictions. I think something like 11 people ended up in jail under the Conservatives in Saskatchewan.

What we are dealing with here today is the pension investments. As far as putting dollars into private health care, it is not the answer. We should have invested into the services that were needed. I can say that living in northern Manitoba I am quite aware of us not having all the services available in the north that they have in the south. We try to make the most cost effective utilization of the dollars that we have and try to make it work.

Under the New Democratic government in Manitoba now, we have been able to address some of the issues and improve the services, even to the point of where if there are spaces available in operating rooms in the north, they will actually bring people from the south to try to make the best utilization of services and making those services available to everyone.

It is not a perfect system and the reason the system got so bad throughout the nation, including B.C., was the result of numerous cuts over a length of time by the Liberal government under the present Prime Minister when he as finance minister. That was the start of it.

I am not suggesting that putting money into the system is the only answer, because it is not. However, way back in the early days when suggestions were being made on how to approach medicare, if the government of the day had listened to the NDP to set up community clinics, we would have had the preventive medicine in place and we would not be in some of the situations we are in now.

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4:55 p.m.

Liberal

Roy Cullen Liberal Etobicoke North, ON

Madam Speaker, I congratulate the member for Winnipeg Centre for bringing this opposition day motion forward to the House of Commons. It is a good discussion to have.

What we are talking about is ethical or social investing as it relates to the Canada Pension Plan Investment Board. The motion basically says that the board should be guided by ethical investment policies which would ensure that our pension investments are socially responsible.

We need to go back some years. If we look at the mid-1990s there was a lot of concern that the Canada pension plan was not viable, not actuarially sound, and our government undertook a whole series of consultations. As a result of that, a program was put in place to put the Canada pension plan on a much sounder footing. That included: changing the contribution rates; adjusting, to some extent, the benefits; and allowing the Canada Pension Plan Investment Board to invest, not only in fixed income securities but also to invest in equity investments.

What has been the result of all that? If we look at the actuarial report of December 2000, the actuary concluded that the legislative contribution rates, which were 9.4% in 2002 and 9.9% in 2003 and thereafter, were sufficient to pay for future expenditures and to accumulate assets of $142 billion by 2010. In 2050 the assets are projected to be $1.578 trillion, or 5.9 times the annual expenditures.

The actuary went on to say that under the current schedule of contribution rates, the funding level is expected to increase significantly over the next 20 years with a ratio of assets to the following years' expenditures growing from 2.4% in 2002 to 5.3% in 2020.

When Canadians approach me, and perhaps other members of the chamber, and ask if the Canada pension plan will be there for them and their children, because of the actions of our government in 1997, the actuary is saying yes, the Canada pension plan will be there for them. That is after taking into account the demographics where a much more elderly population will be emerging in Canada over the next few decades, but our Canada pension plan will be on a sound footing. To those who have worried about that, I think this gives a lot of relief.

The Canada Pension Plan Investment Board is a board that manages, on behalf of contributors, the portfolio of assets under its administration. It is also comprised of representation from the provincial finance ministers, so it is a joint board that effectively is in the fiduciary capacity of managing these investments.

In the last session, Bill C-3, which was passed by the House, will allow the fixed income securities to be transferred from the federal government and put under the control of the Canada Pension Plan Investment Board.

What have the results been of allowing the Canada Pension Plan Investment Board to get into managing both equities and fixed income securities? We do know that the equity markets went into the doldrums a few years ago and that the Canada Pension Plan Investment Board's portfolio was hit by the same sort of bad news on the stock markets. However if we look at the nine months ending December 31, 2003, we see that 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 and subject to Bill C-3, which will transfer those securities under the control of the Canada Pension Plan Investment Board.

During that same time period, the portfolio managed by the Canadian Pension Plan Investment Board earned a return of 26%. If we look at the benchmarks against which the plan compares its performance against some of the standards in the industry, in 2003 we see that Canadian equities earned 17.3% and the benchmark was 17.5%. It was slightly lower there. In terms of non-Canadian equities, the benchmark was 28% and the actual was 27.6%. In real estate the benchmark was 9.2% and the investment fund actually had a rate of return of 50.7%. Overall, against the benchmarks, the performance exceeded the benchmarks of 20.3% return and it achieved a return of 21.1%.

Why is this relevant? Why is this important? This is important because this board has under its administration some $55 billion that is there earning income and providing benefits to Canadians, now and into the future. It is important the pension fund be sound and that it achieve a good return.

If the CPP is not there for Canadian citizens who retire in the future, they will be looking to the government for other types of support. This is a pension plan funded by employees and employers, so it is important that these trustee funds are managed in an optimal way.

I understand the point of the motion and I know the member for Winnipeg Centre has done some excellent work on this but I do have some difficulty with it.

First, we need to understand that the Canada Pension Plan Investment Board is mindful of ethical investing. It is guided by some of those principles and, from its experience, it knows that those companies that are committed to good labour relations, to a good, strong performance in human rights and to sustainable management in terms of the environment, will be the best investments to make in any case.

The problem I have with the specifics of the motion is when it states:

...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.

Let us just look at the first part of that. That part of the motion says that any company that manufactures military equipment would not be eligible. I question that in the sense that we do know in this world, unfortunately, there is conflict. We do know that there are weapons produced. We do know that companies manufacture weapons. Is it not somewhat naive to say that an investment plan should not invest in companies that manufacture this type of equipment? However abhorrent we find war and conflict to be, this is the reality.

The motion goes on to state that companies with records of poor labour practices should also be excluded. I ask hon. members: Who will decide whether the labour practices are good or bad?

While it would be fair to say that some companies might have a reputation for having bad labour practices, if we could actually measure that, it is very much a judgmental thing. We have certain companies in certain sectors which have very strong unions and some very militant unions, and some companies have very militant management. We have sectors where the margins and profitability are very low so that management takes a very tough stance. We have unions with very strong membership and leadership that produce some very difficult demands in terms of allowing for the enterprise to be economic. Who decides that the company has a history of bad labour practices?

Who decides, when the motion talks about those companies contributing to environmental degradation, that a company has crossed a certain Rubicon, that they are not environmentally responsible?

Perhaps if we looked at every company in Canada or around the world, every company would be guilty at some point in time of having some slip-ups in the area of environmental management. Does that mean that they are contributing to environmental degradation? I suppose by strict definition it would.

Finally, the motion states that those companies should be excluded “whose conduct, practices or activities are...contrary to Canadian values”. Again, who decides that? I think it is very judgmental.

As I said, the board itself is guided by this type of thinking. For example, if a company is a clear violator of human rights and clearly has unfair employee practices, then in the obvious cases I think the board would be guided by that. When we get into this grey area where it would be open to debate and subjectivity, this is where I think the problems with this motion emerge.

There has been discussion about Talisman Energy Inc. and its work in Africa. Presumably Talisman would not be an ethical investment. Perhaps we in the House could all agree on that; I do not know. With the change of time, though, I would point out that what is good today might not have been good yesterday or vice versa. At one point in time, Nelson Mandela of South Africa was considered a terrorist. Now he is considered a hero.

Too, we have the question about tobacco. Should the Canada Pension Plan Investment Board invest in companies that produce tobacco? Again, we have this hypocritical notion, I might say, and I think we are all guilty of it: we tax tobacco very heavily, which we should do, but then we also allow tobacco to be produced, which gives Canadian citizens the right to choose freely. Could we actually say, then, that companies which produce tobacco---and we are saying in Canada that it is not a prohibited substance, so companies can produce it--would be unethical companies to invest in? It seems somewhat hypocritical to me. If we are going to say it is unethical and contrary to public values in Canada, then maybe we should outlaw tobacco, which I am not necessarily espousing here in the House.

These are the kinds of questions we have. Would we allow, then, the Canada Pension Plan Investment Board to invest in companies that produce liquor? We know that alcohol produces a problem if used to excess.

What about those companies that manufacture birth control products or contraceptive products?

What about those companies that actually cut down trees? Maybe that would be unethical according to some.

Who decides these things?

What about the mining companies? They mine ore and provide jobs and are companies that act in a very responsible way.

While I understand the intent of the motion from the hon. member for Winnipeg Centre and the NDP, I think the motion is flawed.

I recall that some years ago when I worked in the forest sector we were trying to get the forest industry and the forest unions to invest in silviculture. The government then was facing deficits and there was not enough money to replant, so we embarked on an initiative to work with the companies in the industry and with the labour unions.

When we went to the labour unions, we said, “If everyone puts a little water into this vessel we can replant trees, with the industry putting in its share, the government putting in its share and the unions putting in their share”. What we ran up against was the fact that the unions rightly said, “We cannot accept a rate of return that would be less than an optimal rate of return. We owe it to the people. We are entrusted with these funds to earn the optimal return”.

I think that on behalf of Canadians this board is entrusted to earn an optimal return so that we can safeguard our future and our children's future and so that we can have a pension scheme and a retirement income scheme that Canadians can call upon when they retire.

While I believe the motion is well intentioned, I think it would be contrary to the best interests of Canadians who are contributing to the Canada pension plan. By taking this action, we would end up with returns that are less than optimal. It seems to me that all of us in the House should be fighting for those principles and those policies which will ensure that all Canadians have a decent retirement income scheme when that day comes for them. On that basis, I will be voting against the motion.

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5:15 p.m.

Canadian Alliance

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

Mr. Speaker, one thing we have heard all day today during this debate, and which is something my hon. friend opposite has said, is that all Canadians could have a decent retirement package. To my mind and in my reading, CPP was never meant to be the ultimate in pensions. I want to make this point clear. It was the government's way of supporting other pension plans. It was never designed to be the only way. If we combine the CPP maximum with OAS, we still do not have a good income on which to live.

We have been somewhat misleading for the public watching this debate today, in misleading them into thinking that CPP together with the OAS is all a person needed and that it is sufficient. The hon. member will recognize that with today's modern costs, that is not enough upon which an individual could retire.

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5:15 p.m.

Liberal

Roy Cullen Liberal Etobicoke North, ON

Mr. Speaker, normally the member for Souris--Moose Mountain is quite lucid on these matters and he highlighted something important. As we all know, the Canada pension plan is one pillar of a three pillar or four pillar system. There is the Canada pension plan, old age security, registered retirement savings plans, and registered pension plans. The government strives to ensure that the parts of the chair that are holding up the chair seat are all sound.

I would agree with him to the extent that old age security is indexed to inflation, but many elderly people in my riding do not have any other means of income and it is difficult for them. I hope that someday we will be able to revisit old age security. As the member for Souris--Moose Mountain knows, there is a mechanism in place now with the guaranteed income supplement. Those people who are very stressed in terms of income can apply for that.

What we do have in Canada is this pillar, this chair with these legs supporting it so that we have a very sound retirement system for all Canadians, of which the CPP is but one part.

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5:15 p.m.

Liberal

David Kilgour Liberal Edmonton Southeast, AB

Mr. Speaker, I thought I detected some sophistry in my colleague's arguments. Sophistry makes the worse argument look like the better. Did my ears play tricks on me or did he say that because Nelson Mandela was considered by somebody to be a terrorist therefore we should invest in Ivanhoe mines in Burma because they happen to be led by one of the most oppressive governments on the face of the earth, perhaps in this century?

Did he say that the CPP board should be allowed to invest in tobacco companies and liquor companies? Maybe I misheard him, but surely to goodness we could have good returns and better returns by investing in ethical companies. I do not include cigarette companies and liquor companies in that, but perhaps my ears were playing tricks on me.

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5:15 p.m.

Liberal

Roy Cullen Liberal Etobicoke North, ON

Mr. Speaker, perhaps they were bad examples, but the point I was trying to make was that all these decisions about what is or is not an ethical investment are subject to judgment. With the passage of time, something that might appear ethical today might not have been ethical yesterday. Something that appears unethical today might appear ethical in the future or vice versa. I tried to pick some examples. I am not familiar with the particular circumstances of the Ivanhoe mines in Burma.

I was attempting to draw the House's attention to the fact that this is a judgment call. Who makes these decisions on what is ethical and what is not? There is a grey area, in my judgment, and I do not think that people with the best will in the world could reach the same conclusion about what is an ethical investment and what is not. That was the point I was trying to highlight.

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5:20 p.m.

NDP

Brian Masse NDP Windsor West, ON

Mr. Speaker, surely there has to be some judgment in all of this. In these chambers we set national goals, agendas and priorities all the time. They are not judgments. They are policy and they are directives that come from elected members who represent the people of this country. Some of those things include the treaty on landmines, where Canada has been very progressive, but at the same time we are investing in companies that produce landmines. Surely that is not a judgment call. That comes as a directive of an electoral system that has asked us in the House to pass certain laws and legislation.

The member talked about a slippery slope in a sense of where we stop on these things, but I would like to have him respond. Surely where we actually have legislation passed in these chambers and in these halls because people have voted for people who made those decisions, could we not at least rule those companies out first, whether they be landmines or tobacco companies? Those things are clear. They are not judgment calls. They are directives from the people.

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5:20 p.m.

Liberal

Roy Cullen Liberal Etobicoke North, ON

Mr. Speaker, I am sure the member is not proposing that we have a committee of this House that would monitor this type of activity, because that would be a full time job. The committee would have to meet every day because the problem is that this type of behaviour and these kinds of standards and guidelines change, every day I would suspect. One day a company is ethical by his standards, but the next day it is unethical by someone else's standards, maybe even by his own standards. We would have to decide that every single day.

What we are talking about here is an investment board that is charged with optimizing returns. The member cites the example of landmines. What if 5% of a company's total sales is dedicated to landmines and the rest is for other types? Would he make any distinction there? If it produced one landmine, is it automatically off the list? It does not make any sense.

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5:20 p.m.

Canadian Alliance

Chuck Strahl Canadian Alliance Fraser Valley, BC

Mr. Speaker, I would like to just follow up on this point a little for debate. Just to be clear, the motion that we have before the House today is non-votable. Perhaps that is a good way to start this debate.

As I mentioned earlier, I do not find the NDP motion either repugnant or difficult. I find it difficult because the issue is difficult, but in general perhaps this is an occasion when those members of the CPP investment board are going to do a little listening today. I hope they do. I hope they read the transcripts. I hope they wrestle with this a little bit, because I think it is something all Canadians wrestle with and there is no easy answer.

But at least, rather than having a decision of the House, which we are not going to have a vote on today, perhaps it is the best way to start. Perhaps it is best to get out these ideas and concerns that many Canadians have about ethical versus unethical companies. Some of them, as has been mentioned by the member from Edmonton--not Calgary, but Edmonton--seem pretty straightforward. Somebody is involved and their sole business is working a mine in a country with horrendous health, safety and human rights standards. It is pretty straightforward and I urge those people to consider that.

I have a question for the member opposite, though, if he could elaborate a little more. The trouble is that the NDP has said, for example, that General Electric is a merchant of death--

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5:20 p.m.

An hon. member

I think I have one of their fridges.

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5:20 p.m.

Canadian Alliance

Chuck Strahl Canadian Alliance Fraser Valley, BC

--and that is pretty harsh language. It is like this: if General Motors builds a Hummer, does that make General Motors a war machine? Those are the difficult questions. I would ask the member if he would try to evaluate that or to comment on that, because I think that is the crux of the difficult part. Some of it is easy. The difficult part is this: is General Electric really a merchant of death? I do not think so. I would ask the member to comment on that.

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5:20 p.m.

Liberal

Roy Cullen Liberal Etobicoke North, ON

Mr. Speaker, when I listened to the member for Fraser Valley I thought I heard two messages.

First of all, I agree with him that it is important to have this debate, but I still come back to my criteria. The way I see it is that the Canada Pension Plan Investment Board should be looking for optimal returns for the benefit of all Canadians. Should it be guided by the types of considerations that he has highlighted? Yes, I think it should and I think it is.

I do not know how we can have it both ways. I do not know how we can say that on the one hand these companies that are in the defence sector are doing these things but should be not outlawed. I think that is what the member was saying. I am a little confused because I think on the one hand he is saying that perhaps this ethical investing is a good idea, but on the other hand he is saying perhaps it is not such a good idea. Maybe I missed the question.