That, in the opinion of the House, in light of the legitimate concerns of Canadians that pensions and their retirement security may not be there for them in their retirement years, the Government of Canada should begin to work with the provinces and territories to ensure the sustainability of Canadians’ retirement incomes by bringing forward at the earliest opportunity, measures such as:
(a) expanding and increasing the CPP/QPP, OAS and GIS to ensure all Canadians can count on a dignified retirement;
(b) establishing a self-financing pension insurance program to ensure the viability of workplace sponsored plans in tough economic times;
(c) ensuring that workers’ pension funds go to the front of the line of creditors in the event of bankruptcy proceedings;
(d) in the interest of appropriate management of the CPP that the Government of Canada immediately protect the CPP from imprudent investment practices by ceasing the practice of awarding managers performance-based bonuses; and
(e) take all necessary steps to recover those bonuses for 2009, ensuring managers in the future are paid appropriate industry-competitive salaries.
Mr. Speaker, I want to thank my friend from Outremont for seconding this important motion.
I am most pleased to rise today to speak to the NDP motion and the reforms needed to protect and enhance the lives of Canada's seniors as they live out their sunset years. I am, at the present time, crossing Canada on a listening to seniors tour, and Canadians have been quick to tell me accounts of their fears and their concerns for their futures.
While I was in St. Thomas, I heard from Vanda, who told me how she had to start paying $90 a month for a prescription that her husband, who had recently had a stroke, needed, because it had been delisted by the province of Ontario. As a result, they did not know where the money was going to come from. Especially when people are on fixed incomes, that can be almost a tragedy.
I also heard from Joyce in Elliot Lake, who related how hard her life had become due to the fact that on a yearly basis, she had to pay almost $2,100 a year for her hydro.
Today, far too many seniors are forced to live this way, just one crisis away from a financial catastrophe. Many seniors are also worried that their private pension plans will not be there for them when they retire, as in the case of Nortel. They wonder if they will have any pension at all.
Seniors are also quick to condemn the bonuses being paid to Canada pension plan executives. They have seen the media reports, such as the case of CEO David Denison, who saw his pay triple since 2005 by taking home bonuses amounting to $7.4 million. That is in addition to a $400,000-plus yearly salary.
Seniors are also quick to tell anyone who will listen how unforgivable those bonuses are when so many seniors across Canada are living near or in poverty. The bonuses during good times are already viewed by the public as symptomatic of financial industry greed. Today, given the frightful economic times that we are living through, the fact that the same managers, who lost $17.2 billion, are expecting and accepting massive bonuses is not only indefensible, it is obscene.
We in the NDP believe in removing bonuses from the administration of CPP and taking away the incentive plan for managers. The one they have now causes them to take potentially unacceptable risks in the investments they make. I do not quarrel with anyone who proposes appropriate industry standards for salaries, but having said this, the game afoot today across the corporate community is to load up salaries with performance bonuses, retention bonuses and other perks.
I recall in the 1970s, when I first joined Bell Canada, talking to a manager regarding our pay practices at Bell. He had a saying, and it is very true, “A fair day's work for a fair day's pay”. I agree with that notion and Canadians agree with that notion, but I would suggest the corporate community, especially the financial community, has forgotten just what fair is. Never mind that according to economist Toby Sanger, in the last 10 years, the CPP fund would have made $13 billion more than it did if it had been invested in government bonds, rather than in a diversified portfolio of equities, real estate and bonds.
These managers have not been producing value-added returns above risk-free bonds, and over the past four years, they have not achieved the returns required for the long-term sustainability of CPP.
These managers have repeatedly defended their bonuses by pointing out that their performance is graded according to a rolling four year average of the fund's performance. My reply to them goes like this. In the fiscal year 2009, the losses in the fund wiped out four years of contributions, and the fact that senior managers are still in line for bonuses is simply not acceptable.
Recently at the House finance committee, Phil Benson from the Teamsters Union said:
The performance bonus should be, “Guess what, folks? We're in a recession, tough times, but don't worry. Your pension is still there”. That's a performance bonus.
One thing I am sure of is that Canadians will appreciate the section of today's NDP motion which demands that government secure the repayment of those bonuses.
The genesis of my seniors tour came about when I was visited by a prominent seniors group. One of my guests stated to me that seniors feel invisible to their government. This group was also wondering why their government has given $14 billion in yearly corporate tax breaks while doing nothing for them.
Last fall I told another story in this House that is worth repeating. It is the story of a senior who came into my office with a letter in his hand from the government saying that his pension had increased by 42¢. He was so upset he had tears in his eyes. He said that not only does the government not give a damn about seniors, but it goes out of its way to insult them.
As we face down the worst economic crisis in 70 years, Canadians have been vividly reminded why we have a social safety net in the first place. I say to members today, now is the most opportune time in our recent history to undertake a complete review of the benefits paid under OAS, GIS and CPP. This must be done with an eye to increasing benefits immediately to raise seniors out of poverty.
Recently an economist at the Canadian Labour Congress reported that an annual infusion of $1 billion would raise all seniors above the low-income cutoff. According to Statistics Canada's 2004 estimates, there were 219,000 Canadians living below the low-income cutoff, which is the way many organizations measure poverty in Canada. An even more sobering statistic is that of the 219,000 seniors living in poverty, more than 60% were single, unattached women. That is nothing short of a national disgrace.
It is clear that with the bailout of GM and our ballooning deficit, this is not a time of business as usual in Canada. I would suggest if the federal government can buy a serious stake in two auto plants, Canada can afford to invest in those plans designed to protect us all in our senior years. We could do so much more and we must do so much more for all Canadians.
Today only 38.5% of Canadian workers have workplace pensions and nearly one-third have no retirement savings at all. More than 3.5 million Canadians are not saving enough in RRSPs for what used to be called their golden years, and 75% of workers are not even participating in a registered pension plan. Clearly, the notion that retirement savings can be adequately accounted for through purchases of RRSPs does not work, and urgent government action is needed.
As a complement to today's motion, I am in the process of tabling other bills designed to promote transparency and responsible investment practices in the management of public related pension fund assets. My private member's bill, Bill C-361, would enhance public disclosure rules and severely curtail the ways in which the assets of public sector pension funds can be invested, with an eye to all but eliminating a fund manager's ability to invest in risky financial instruments.
Another bill I have drafted does the same for the remainder of the federally regulated pension funds. These are the public sector pension funds. I also have been drafting a bill to require federally regulated pension funds to over-fund themselves by 20%. We could think of it as a rainy day fund, so that in the better times we prepare for the downturns that will come eventually. The bill would also amend the Income Tax Act to permit the deductibility of contributions or an excess surplus of, for example, up to 30% of ongoing corporate liabilities.
The last bill I am preparing would amend the Income Tax Act to provide substantial tax incentives to employers who wish to create a defined benefit pension plan for their employees.
The next issue I would like to speak about is that Canada needs a pension benefits guarantee fund. There is a need for this. Federal leadership is urgently required to set about working with the provinces to develop a pension insurance regime to ensure workers actually receive the retirement benefits they have earned, even if their employer goes out of business. We insure our cars and homes and we have deposit insurance for our savings, so why not insure our pensions?
Such an insurance system could be comparable to what exists through the Canada Deposit Insurance Corporation for bank deposits, RRSPs and tax-free savings accounts. The system could be funded by contributions from federal workplace pension plan sponsors administered by the federal government and designed to ensure efficiency and fairness to all parties.
Another notable model worth studying is the American Pension Benefit Guaranty Corporation. Like the Canada Deposit Insurance Corporation, the Pension Benefit Guaranty Corporation is not financed through general tax revenues but through the following measures: insurance premiums paid by the sponsors of the defined benefit plans; assets from the pension plans it takes over; recoveries of unfunded pension liabilities from plan sponsors' bankruptcy estates; and investment income.
Canada may choose not to follow the American model but could create some form of pension insurance uniquely its own or a hybrid of other plans, like schemes from Switzerland, Sweden, Germany or Japan. The Netherlands has chosen to directly guarantee its pension plans with strict investment regulations and requiring that the pensions are fully funded at all times.
A recent OECD working paper put the matter succinctly when stating “no scheme to provide pension insurance can work without adequate funding rules”.
The OECD document stated:
Strict funding and investment rules should be seen as complements to any pension guarantee scheme.
Good funding rules can achieve almost all of what a guarantee scheme is striving for, are arguably easier to design and manage and, especially when combined with other measures.... If a guarantee scheme is successfully combined with funding rules or other protection measures it can effectively perform its task as a 'last resort' benefit protection measure.
Another clause in the motion calls for “ensuring that workers' pension funds go to the front of the line of creditors in the event of bankruptcy proceedings”.
Ken Georgetti of the Canadian Labour Congress recently stated before the finance committee:
Critically, for the sake of genuine fairness, we need to ensure that the full value of workers' pensions is protected in bankruptcy proceedings. If Canadians shouldn't be in the front of the line when it comes to protecting them, who should be?
I would take a moment to remind the House that if the current government were to only enact certain clauses of a bill that is already the law of this land, the clause would be unnecessary. The Wage Earner Protection Program Act, which enacts changes to the Bankruptcy and Insolvency Act and the Companies' Creditors Arrangement Act, was given royal assent in December 2007. The purpose of that act is to ensure that workers' pension funds go to the front of the line of creditors in the event of bankruptcy proceedings. The Wage Earner Protection Program Act sets out provisions to ensure that unpaid wages in the event of bankruptcy are paid to workers and sets up super-creditor status for the unpaid pension contributions.
Elements of the amendments to the above pieces of legislation were enacted by the governor-in-council in the summer of 2008. However, not all aspects of the changes were implemented, leaving some glaring loopholes.
The NDP leader, the member for Toronto—Danforth, has raised this on occasion in the House. He stated:
Mr. Speaker, the truth is that the government will not act even when it is the law.
In December 2007, Parliament took action to protect Canadian pensions by adopting Bill C-12 to amend bankruptcy laws. Section 39(2) prioritizes unpaid pension contributions in the case of bankruptcy. Sections 44 and 131 ensures that the court cannot unilaterally overturn a collective agreement. Section 126 prohibits a court from sanctioning restructuring plans unless all unpaid wage claims and pension obligations have been met. It is the law but the government has refused to put it into force. Why?
As I was considering my remarks for today, it was during that time that we were marking the 65th anniversary of D-Day, the Normandy invasion. We as a grateful nation marked that occasion as we should to show our veterans, their families and the following generations the importance of the sacrifice that generation made for us all. Successive Canadian governments claim to support the generation of sacrifice that we honoured this past week, but this year we heard stories of veterans who are now living in poverty and living in the streets. That is not acceptable for the veterans of Canada, nor any senior in Canada.
This Parliament must find a way to build up and fortify OAS, CPP and GIS so that they better serve the needs of those for whom they were designed. Today's NDP motion is intended to start, in a very public way, a national discussion on the future of our retirement security system. Whether it is CPP, OAS, GIS or private pensions, Canadians know these plans must be looked into to ensure that they are available for them when they retire.
Canadians need to know there will be a level of pension income for their retirement to ensure that they will spend their final years in financial security and with the dignity they deserve.
Before I am even asked, I would like to address the issue of cost. Will this motion not require billions of dollars of taxpayers' money to implement? My response is this: How expensive will inaction be?
The government is already indirectly bailing out pension plans, not to mention that it will soon have to do something for all of those people who have no pension plans. Seventy-five per cent of private sector workers who are not participating in a registered pension plan today have not been able to save for their retirement. Today 3.5 million Canadians are not saving enough in RRSPs. This situation, if unaddressed, will cost taxpayers heavily in the years to come. I would suggest the price of inaction is simply not an acceptable option.
The Conservative government can choose to continue to respond to the developing crisis in a piecemeal ad hoc fashion, or together we can devise a comprehensive long-term strategy that will put Canadian seniors on a more solid fiscal footing.
Over time, with adequate pension funding rules in place, the cost of the guarantee fund would actually be negligible as it would not be needed as pensions would be adequately funded. In the near and interim period it will be potentially expensive, yet failure to act will also cost both in terms of dollars and in terms of lives. There is no escaping the fact the government will have to come up with massive amounts of money one way or the other.
I remind members that CPP and QPP are self-financing. It then becomes a question of whether Canadians are prepared to pay more for security in their senior years and to do so as part of a secure public plan. Canadians certainly face insecurity today in the context where private options, such as RRSPs or defined contribution plans, leave Canadians uncovered and victimized by the market, that is, if they are those who can afford to contribute in the first place. Quite simply OAS and GIS are for those who cannot afford to contribute to the CPP, and that is where the cost may lie.
We accept the fact that as a result of increasing the benefits and increasing eligibility to include currently excluded groups the cost will rise. However, as I said earlier, in an age when the government is spending more than $100 billion to relieve banks of mortgages, that does not seem like much to relieve our deserving senior citizens.
We would also suggest a beefed up CPP is the cheapest way for working Canadians to pool risks, take the burden off individuals and secure their senior years.
Regarding private plan insurance, the proposal in the motion is defined as self-financing. It would require a small increment on top of the contributions to cover insurance premiums. Once we have brought them into the plan, they would remain fully financed by employers and employees but would have the security of CPP.
Never again should Canada's seniors feel invisible to their government. We can take our valued retirement income support system and make it better. Today's seniors have worked hard all of their lives and in my view they have already lived through far too much turmoil and grief.
The worldwide economic crisis has certainly made it clear that it is critical for this Parliament and for the government to adopt a coordinated national plan of action to protect seniors. This is the NDP's call to this Parliament to rise to the occasion of a great national need. Let us roll up our sleeves and come together as Canadians and do the work necessary to confront this critical need.
Here today I say to the opposition parties, to the Prime Minister and to the government, the NDP is here to work for the benefit of all Canadians, especially seniors. Join us. This is the time and place to enhance Stanley Knowles' dream of sustaining and maintaining the dignity of all Canadians in their old age.