moved that Bill C-445, An Act to amend the Income Tax Act (tax credit for loss of retirement income), be read the second time and referred to a committee.
Mr. Speaker, I hope that you do not get the feeling that I am always talking, since I just spoke during another debate. I want to say that this bill is particularly close to my heart and that I am moved today as I speak to this issue, not only because this is my bill, but because a number of people worked on this bill. These people deserve our consideration, and that is why we drafted such a measure.
I will briefly explain Bill C-445, An Act to amend the Income Tax Act (tax credit for loss of retirement income). This enactment amends the Income Tax Act to provide a refundable tax credit to a taxpayer in respect of whom an employer and the employees failed to make the contributions required to be made to a registered pension plan. It was introduced at first reading on May 17, 2007. Today, nearly one year later, we are ready to debate it at second reading. It is making good progress. We hope that the bill will move quickly through Parliament so that the people affected get what is coming to them.
I will give a brief account of how this bill came to be. In my riding, the Jeffrey mine, a chrysotile mine, went bankrupt, throwing many people out of work. Unfortunately, their retirement fund also disappeared like snow in the sun because there was a loophole when the company went bankrupt. People lost a great deal of money in all this. For years, Jeffrey mine retirees used every possible means to obtain some compensation. The Government of Quebec gave a certain amount of money at a given point, but it was a one-time contribution that did not cover their losses.
What could be done? These people came to see me to determine what could be done. At the same time, retirees from Atlas Steels, in Sorel, also went to see their MP, who will speak in a few moments. We worked together, along with the member for Chambly—Borduas who worked very effectively on this file, to see what could be done at the federal level to help these people.
Mr. Gaston Fréchette, chair of the Jeffrey Mine retirees subcommittee in Asbestos, in my riding, represents more than 1,000 retirees who worked at the mine. There are about 1,200 in all. In addition, Mr. Pierre Saint-Michel is the chair of the Atlas Steels retirees group, which has just under 300 members. These people and their supporters—there are many—truly worked with us. Mr. Fréchette came up with the idea of a tax credit. We met with them here and we held press conferences in Asbestos and in the riding of the member for Bas-Richelieu—Nicolet—Bécancour, who also participated in these discussions. Together, we came up with the basis for Bill C-445.
When I said that this was an issue close to my heart and that I was moved speaking about the bill, it is because I saw these people wrack their brains, approach us and ask what we could do to help them. And then they worked on the bill with us so that we could introduce it. I would therefore like to thank not only Mr. Fréchette and Mr. Saint-Michel but all those individuals and retirees who helped out. I would like to extend a very warm thank you to the members for Bas-Richelieu—Nicolet—Bécancour and Chambly—Borduas because, without them, there would not be a bill.
I would like to briefly explain what this bill will do once it comes into force. As I was saying, it would create a refundable tax credit for loss of retirement income. Many retirees have seen their income drop because their retirement fund was running a deficit when their company ceased operations. That is what happened to people who retired from Atlas Stainless Steels, which belongs to Ontario's Slater Steel, and from the Jeffrey mine in Asbestos, closer to home. To help retirees caught in this situation, we propose creating a refundable tax credit for loss of retirement income.
This refundable tax credit, which would amount to 22% of lost income, would not affect retirees' income, whether or not they pay income tax. The credit would also be transferrable to a surviving spouse and would apply to both money purchase and defined benefit plans. Accordingly, a retiree whose income drops from $30,000 to $20,000 would receive 22% of the $8,000 lost, which would be a non-taxable amount of $1,760.
We do not believe that retirees should have trouble making ends meet because they are not receiving the retirement income they contributed to for years. That is what happened to retirees from Atlas Stainless Steels in Sorel-Tracy, whose income has dropped between 28% and 58% since July 1, 2005, and is still dropping.
Passing this bill will make it possible for all retirees caught in this kind of situation to recover part of the money lost. Take, for example, retirees from the Jeffrey mine. Since 2003, they have lost $55 million from their pension fund and $30 million in benefits.
Of course, this bill would not be retroactive. My colleagues should understand that when it comes into force, this bill will apply to the previous tax year. We will not be able to go any farther back than that.
Retirees whose complementary pension fund is smaller than it should have been will be compensated, as will surviving spouses, when they are entitled to part of the income.
The tax credit is 22%. Some may wonder where we came up with that figure. It corresponds to the federal marginal tax rate that applies to the middle class. For people whose income is between $36,000 and $72,000, the tax rate is 22%. That is where we came up with that percentage.
The tax credit is refundable so that everyone can take advantage of it, even those whose incomes are very low and who do not pay taxes. It is a matter of social justice for us. We thought about this. I know that this morning, a ruling was unfortunately made concerning royal assent. From what I understand, if the tax credit had not been refundable, the decision would have been different. We are bound by the royal assent, but I hope that the government will listen to reason.
We made this choice thinking of the poorest members of society. We knew that some people had lost their retirement income, and that some of them had even less money than others. A non-refundable tax credit would have benefited only those with more money. Some people would have been eligible, but I think, unfortunately, that most of our retirees would not have been able to take advantage of the tax credit. That might have been a step in the right direction, but I think it would have been unfair to do it that way. That is why we went with the idea of a refundable tax credit in the bill.
I just explained that low-income people would have essentially been left out. The elected members, at least these three members, as well as the people from the two retiree committees I mentioned earlier, felt that the bill should apply to everyone, especially the least well off. I would like to congratulate the members of the retiree committees who were also thinking of their less fortunate colleagues.
We have to determine how many people this will affect in Quebec. I have heard rumours that the government thinks this measure would take a big chunk out of the consolidated revenue fund. I can say that in Quebec, we have found only two cases where the bill would help now-retired victims of business closures. I am referring to the two cases we have been talking about since the beginning of this debate— Atlas Steels in Sorel and the Jeffrey mine in Asbestos. These are victims of very exceptional cases—I do not know if we can call them very exceptional, but exceptional at the very least—that should never happen again.
Take Quebec for example, again. The Quebec government changed its legislation to require improved capitalization of money purchase benefit plans. And there should not be many cases that come up in Canada either. In Ontario, there is a government fund set up to replenish the pension plans of employees who find themselves in a similar situation. Luckily, governments have made adjustments so that there will not be any more situations like those that the retirees in Asbestos and Sorel have had to deal with.
We are now seeing measures like this in a number of provinces. Perhaps there are former workers from the St. Anne Nackawic Pulp Company Limited in New Brunswick who might be eligible—our research service looked into this. We could study the file in committee, since we have not been able to determine if this is the case or not. More examples like this could come up, but it would not involve many workers.
But even though this may not affect many people, we cannot simply wash our hands of it and stop worrying. Quite the opposite. One thing is certain: we are talking about very few cases and about exceptional situations. The fact that they are exceptional does not mean that they are any less important for the people involved.
We are talking about people who contributed to their employer's pension fund their entire lives only to end up with almost nothing once they retire.
The intention of Bill C-445 is not to hand out a lump sum payment, but to provide an annual payment equivalent to 22% of the loss. If we take the actuarial deficit of the two retirement funds for the people we are talking about, we expect this to cost roughly $1.7 million in the first year for Quebec. Obviously, that amount will decrease over the years as the number of former employees decreases. For all of Canada this measure is estimated to cost between $3 million and $5 million, again if we take the example of the retirees I am referring to. More may be discovered with the current provincial measures, and if we look back, but note that this measure is not retroactive. In cases such as Singer and others, retirees have been compensated. At first we thought about including those cases in our bill, but they are different cases. This exception really only concerns two industries, two companies in Quebec and maybe one in New Brunswick.
Why does this issue concern the federal government? The federal government has a constitutional right to legislate while respecting the supremacy of provincial and Quebec legislation, of course, with respect to old age pensions and additional benefits, including survivor benefits and disability benefits, regardless of age. That is one of the reasons. The compensation set out in Bill C-445—and I wish to emphasize this—is provided as a tax credit. It has no impact on other government program benefits, does not interfere in any way in provincial social programs and is therefore very respectful of the division of powers. The Bloc Québécois would never show up with a bill calling on the federal government to interfere in provincial jurisdictions. That is why I wanted to emphasize this, in case that was what anyone was thinking, but that would surprise me. Most parties here understand what I am saying. The government has a say in this type of procedure.
There are other reasons as well. With a monetary policy that produces recurring deficits and a fiscal policy that does not allow the government to build up a surplus in good years, Ottawa is also responsible for providing relief for retirees who have to pay the price. These are good reasons why the federal government has a role to play in this issue.
I should mention that the coverage by the local press has been very interesting, and I want to thank the local media that have taken an interest in the cause. I will give just one example, because I want to give my colleague from Bas-Richelieu—Nicolet—Bécancour a chance to make his speech. The local media in my riding have covered the story of the Jeffrey mine retirees for a long time. They are involved in an ongoing legal battle, but that is something quite apart from what we are discussing today. This is an issue that regularly makes the news.
I want to read from the May 26, 2007 issue of Les Actualités, the Asbestos newspaper, which refers to this issue and gives a good summary of the situation. I am reading from the front page:
The 1,200 Jeffrey mine retirees who have been fighting for four years to obtain redress after losing their group insurance are beginning to see the light at the end of the tunnel. A bill that would create a refundable tax credit for the loss of retirement income has just been introduced in the House of Commons.
This was very good news.
In conclusion, I want to extend my warmest thanks to Gaston Fréchette, the chair of the Jeffrey mine retirees subcommittee, for raising awareness in this House. He decided to send letters—signed also by the president of the Sorel retirees—to all the members to make them aware of this issue. Mr. Fréchette, who is one of the retirees, also called all the members from Quebec, regardless of their party, to ask them to support this bill. That is what I am also doing today. I am calling on my colleagues to do justice to these people and support Bill C-445.