Mr. Speaker, I thank my colleague for his consideration in this matter. It is good to have clarity.
Canada is unique among OECD countries in terms of the effectiveness and sustainability of our retirement income system. We are proud of that and rightly so.
Canada's approach to ensuring income security among seniors has been built on a multi-pillared foundation of a diversified retirement income system based on a mix of public and private pensions.
First, there is the basic income support through old age security pensions and the guaranteed income supplement. These benefits ensure a minimum level of income to over 4.2 million Canadian seniors, providing them with almost $32 billion each and every year.
There are earnings related pensions and insurance benefits provided under the Canada pension plan and Quebec pension plan. According to the chief actuary of the Canada pension plan, the CPP is financially sustainable. It will be there for seniors for at least the next 75 years. This is a solid plan that our seniors can count on.
In addition, both the old age security and the Canada pension plan are already fully indexed to inflation. This ensures that the value of public pension benefits are not eroded by inflation.
In addition to this and bearing in mind the motion we are debating today, and also recognizing that federal surpluses in excess of $3 billion may arise, the Government of Canada has indicated its openness to consider options to allocate unplanned surpluses and in particular, to discuss with the provinces and territories the possibility of introducing legislation authorizing the allocation of a portion of unanticipated surpluses at fiscal year end to the Canada pension plan and the Quebec pension plan.
This would allow unplanned surpluses to be used for the future benefit of Canadians to improve intergenerational equity. There is not just one group in society for whom we need to think about fairness, but all segments of society, and possibly allow for lower contribution rates in the medium term. It is always nice to have lower taxes.
The third pillar of Canada's retirement income system is tax deferred private retirement savings, which include registered pension plans and RRSPs. These plans are important because they provide Canadians with real incentives to save for their retirement and to help bridge the gap between public pension benefits and their retirement income goals.
I would like to expand for a moment on this third pillar, because the protection of pension benefits is an important issue to the federal government. Canada has a solid regulatory framework in place to ensure that the rights and interests of pension plan members, of retirees and their beneficiaries are protected. This new government is committed to further improving the regulation of private pension plans to ensure that these rights and interests continue to be protected.
Based on responses received from a consultation process launched last year and in light of the funding challenges facing some private defined benefit pension plans, the federal government has recently proposed measures that will help re-establish full funding of these federally regulated defined benefit pension plans to re-establish full funding in an orderly fashion while providing safeguards for promised pension benefits.
We are determined that seniors and those who will become seniors will be able to count on this income support, on these savings, on these programs in their retirement years. We will not just sit back and see what develops. Our government will continue to actively monitor the issue of defined benefit pension plans to ensure that these plans continue to be viable. The government will therefore consider any further action that becomes necessary.
This new government is working to ensure that our retirement systems are sustainable for the future. However, this government is doing so much more to help Canadians, particularly low income Canadians, which includes low income senior citizens.
First, we are reducing the goods and services tax by one percentage point as of July 1, Canada Day. This is a tax reduction for all Canadians, including those whose incomes are too low to pay any income tax. This will provide immediate tax relief starting July 1, 2006. We have also committed to a further tax relief by reducing the GST a further percentage point in a future budget.
Second, budget 2006 reduces the lowest personal income tax rate from its currently legislated rate of 16% down to 15.5%. As well, the budget includes a basic personal amount that is tax free so that it grows each year and remains above currently legislated levels for 2005, 2006 and 2007.
Budget 2006 contains a measure of particular interest to Canadians receiving private pension income. Budget 2006 doubles the maximum amount of tax free pension income that can be claimed under the pension income credit, now up to $2,000. This measure, effective for this year and subsequent taxation years, will benefit nearly 2.7 million taxpayers receiving eligible pension income. That is a lot of seniors and a lot of future seniors. What is more, it will remove approximately 85,000 pensioners from the tax rolls.
This is the first time in more than 20 years that the pension income credit amount has been increased. It was originally introduced as a $1,000 deduction in 1975.
Many seniors are regular users of our public transit systems and to encourage public transit usage, budget 2006 will provide a tax credit on the purchase cost of monthly public transit passes or passes of a longer duration. This is once again effective on Canada Day. A lot of good things are happening on Canada Day. This measure will encourage public transit use by providing millions of dollars and will benefit approximately two million Canadians who make a sustained commitment to use this environmentally friendly mode of transportation. All transit users, including seniors, will qualify.
In summing up, seniors have made Canada what it is today. Seniors deserve, not only our respect for this work, but our support to allow them to continue to enjoy their later lives after a lifetime of contributing to our society. This new government has taken additional action to provide that support. We are committed to ensuring that programs and services for Canada's senior population continue to be fair and help meet their needs.