Mr. Speaker, I rise on a point of order. On February 25, 2009, you invited members to comment on whether Bill C-201 would require a royal recommendation. Without commenting on the merits of this private member's bill, it is the government's view that our constitutional provisions and parliamentary procedures require that this bill be accompanied by a royal recommendation.
Mr. Speaker, you have made numerous rulings that bills which change the criteria for a benefit payment or which increase the amount of a benefit payment must be accompanied by a royal recommendation. This is because the change or increase would modify Parliament's previous authorization for payment requiring new spending. Any bills which require new spending must be accompanied by a royal recommendation.
I will explain how these rulings apply to Bill C-201.
Because of the nature of their jobs, many Canadian Forces and RCMP members retire prior to reaching the age of 65. The acts governing their pension plans allow for the start of pension benefits before the age of 65. Pension benefits for members whose age is less than 65 include two parts: a lifetime benefit, which is consistent from the time of retirement through the member's lifetime; and a bridge benefit, which tops up the pension until a member reaches 65 and becomes eligible for Canada pension plan benefits. This is roughly equivalent to what the member will receive under the CPP when he or she reaches age 65.
At age 65, the bridge benefit is eliminated through a reduction formula in subsection 15(2) of the Canadian Forces Superannuation Act, for retired members of the Canadian Forces, and in subsection 10(2) of the RCMP Superannuation Act, for retired members of the RCMP.
At age 65, members are eligible for Canada pension plan payments, which offsets the elimination of the bridge benefit. The total pension amount remains essentially unchanged, but it is received from two sources: the Canadian Forces or RCMP pension plan itself, and the Canada pension plan.
Bill C-201 would repeal the subsections which eliminate the bridge benefit. This would mean that members age 65 and older would collect their lifetime pension benefits, the bridge benefits, and the Canada pension plan benefits. In other words, the bill would result in an increase in pension benefits for members age 65 and older.
By increasing the demand on the Canadian Forces and RCMP pension plans in order to continue paying the bridge benefit to those over age 65, the bill would require new spending.
For the Canadian Forces, this bill would create a one-time lump sum past service liability of $5.5 billion and increase the ongoing annual cost of the plan, amounting to a $74 million increase for the 2009-10 fiscal year.
For the RCMP, the bill would create a one-time past service liability of $1.7 billion and increase the ongoing annual cost of a plan amounting to a $36 million increase for the 2009-10 fiscal year.
There may be a suggestion that these increased costs could simply be paid out of the current pension account and therefore would not trigger the need for a royal recommendation; however, this would not be accurate. The Canadian Forces Superannuation Act and the RCMP Superannuation Act set out pension accounts and provide that benefits payable under the provisions of the acts are paid from the consolidated revenue fund and the respective pension funds on an ongoing basis. The acts also specify that the government must make up any shortfall.
The transactions and balances of the accounts are reported annually in the public accounts of Canada, and the obligation to pay accrued pension benefits is reported as a liability of the Government of Canada. Contribution rates were established for the Canadian Forces and RCMP pension plans to fund the current benefit arrangements and not the more generous benefit that would be created by Bill C-201.
If employee and employer contribution rates are increased in order to fund the more generous benefit, the increase to the employer's portion would necessarily increase demand on the consolidated revenue fund, and if contribution rates are not changed, demand on the consolidated revenue fund would increase since the acts specify the government must make up any shortfall.
In conclusion, the amendments in the Canadian Forces Superannuation Act and the RCMP Superannuation Act proposed by Bill C-201 would clearly require significant additional and distinct expenditures not authorized by the current acts. The bill therefore must be accompanied by a royal recommendation.