Madam Speaker, I am pleased to have the opportunity to speak to Bill C-290, An Act to amend the Income Tax Act (tax credit for loss of retirement income) that has been put forward by the member for Richmond—Arthabaska. I know the member has tried on a number of occasions to move the bill through the House. In the last Parliament he succeeded in getting it a considerable way through the process, but the early election call short-circuited that effort and unfortunately we have had to start all over again in consideration of this piece of legislation.
I know too that the legislation came out of the member's discussions with workers and retirees in his riding and other ridings in the province of Quebec who faced a loss of income in their retirement pensions. This was one of the solutions that came about as a result of those discussions, those conversations. I commend him for that process and for putting this idea before the House of Commons.
New Democrats believe this is an important idea and that it merits support. New Democrats are supporting the idea although we recognize that it is only a small piece of what needs to be done in terms of ensuring pension security, retirement income security for Canadians. I am sure the member also recognizes that this is only one piece of a much larger puzzle.
What does the bill do? It would grant a refundable tax credit equal to 22% of the reduction in pension benefits experienced by beneficiaries of registered pension plans other than trusts who suffer a loss of pension benefits normally when their pension plans are wound up in whole or in part. It would apply to both defined benefit plans and defined contribution plans.
What exactly does that mean? That is the official description or account of what the bill does. One of the examples of what the bill would actually mean is that if the income of a retiree's pension drops from say $30,000 to $22,000, he or she would receive 22% of the $8,000 loss which would mean a non-taxable amount of $1,760. So it does not go the whole way to recovering the loss someone might experience in their registered pension plan, but it would be of some assistance to the folks who do find themselves in that difficult position. This is a contribution to dealing with the situation of loss in pension income and income security for retirees in Canada.
My colleague, the NDP critic for seniors and pensions, the member for Hamilton East—Stoney Creek, has been working diligently on this issue holding consultations and conversations with retirees and seniors across Canada to find out exactly what would be helpful to them much in the same way that the member for Richmond—Arthabaska has done in coming up with this legislation.
The NDP's pensions critic has come up with a very detailed and broad-based plan to assist Canadians with the security of their retirement income. We know that is very important these days. It was important when the bill was originally introduced, but the change in the economic situation, the recession, has made it even more necessary because more and more people are feeling that pinch and have seen a reduction in their retirement income.
We know there are two facets to retirement income in Canada. There is the private system of workplace pensions, of RRSPs, of private savings. We know those private elements of our retirement income system have taken the biggest hit in this recession with the collapse of financial markets.
The parts of the system that have maintained themselves, that have been rock solid in many people's opinion, are the public elements: the old age security program, the guaranteed income supplement and the Canada and Quebec pension plans. It is very important for us to realize that in planning a public retirement income system we have designed a system that can weather this kind of economic storm where the private system has taken significant hits and retirees who have had significant investment in the private elements of the system have taken a significant hit.
The public system has been there to support people through this kind of crisis. I hope we hold that experience close at hand when we are considering how we might approach security and retirement income in the coming months and years. People put a lot into saving for their retirement and they need to depend on that when they are no longer able to work or choose not to work any longer.
The NDP has put forward a very detailed plan. Part of that plan was passed unanimously in the House back in the spring. Hon. members will remember when all parties in the House agreed that significant action was needed on pension reform and to ensure income security in our retirement. That was good news, although the government has yet to act on that unanimous sentiment of the House and has yet to act in any way to shore up, to expand or to make better our pension system in Canada. We are hoping we will see that kind of movement from the government in the not too distant future.
New Democrats continue to put forward other ideas and expand on those we have already made. One of those ideas is to expand the CPP-QPP for the 93% of Canadians who already are members of that plan and who benefit from it. The NDP is proposing that there be a phased-in doubling of benefits in the CPP-QPP from the current maximum of $908.75 a month to $1,817.50 a month. It would take the pressure off both people's savings and private workplace plans and create a more stable savings environment for people on pensions.
We know there is a cost associated with this. It is estimated that this plan to double CPP-QPP benefits would need to see an additional payroll deduction of about 2.5%. That is often less than the annual administration fees of many RRSPs. Therefore, in that sense, it is a very good bargain for people who are trying to find a stable and reliable source of retirement income.
Our proposal goes on to mention that there could be a tax credit to soften the burden of that increased payroll deduction for low income people. This would go a long way to ensuring stable and reasonable retirement income for Canadians. It would also go some way to increasing the benefit of able people. In fact, this plan would see up to 63% replacement of pre-retirement income for Canadians, as opposed to the current 38% under the existing terms of the CPP-QPP.
It is a great idea and it is one that we could accomplish. It is one that we collectively contribute to and that we could actually make happen if we decided to move in that way. I hope the government will consider this very serious idea.
Another great idea would be to increase the old age security. This is the basic bottom line plan that should ensure that no Canadian senior lives in poverty. The NDP is saying that an investment of $700 million in the OAS program would accomplish lifting all Canadian seniors out of poverty. I know that is a significant amount of money but it is not a significant amount of money when we consider some of the other places in which the current government is spending money, including the $60 billion in tax cuts it is giving to large corporations in Canada. That is $60 billion for the large corporations when $700 million would ensure that no Canadian senior would live below the poverty line.
It seems to me that would be an excellent investment, especially during a recession when we know that anybody who is collecting OAS is spending that money in their community. If we can lift all Canadian seniors out of poverty with that kind of investment, we should go about it and do it right away.
The final piece of the NDP plan is to ensure that there is a pension insurance scheme, like the deposit insurance scheme that we have on our bank and credit union deposits. This scheme would be self-funded. It would go some way to ensuring that if there were a problem with the pension, there would be an insurance program that guaranteed some continuation of that pension. We also think there should be some kind of federal government mechanism to ensure that when a pension plan is falling apart, the government has a mechanism for intervening and ensuring that some continuation of that pension is possible.
We have some specific examples on the table for discussion, which we hope the government will look at carefully. We have costed them out and we think they are cost effective. We think they will help Canadians. Like the suggestion in Bill C-290, we think they are all necessary to move forward in ensuring retirement income security for Canadians, something that is particularly important today during the economic crisis that we are experiencing.