Debates of June 11th, 2009

Opposition Motion—Pensions

[Jim Maloway, NDP, Elmwood—Transcona, MB]

Madam Speaker, the problem here is the whole issue of the investments. The problem began several years ago as the stock market boomed. We started allowing pension funds and other government entities to invest in equities when in fact they should have been sticking to GICs and government bonds, and if the return was not high enough for the required payout, they could simply increase the contributions to make up the difference. The government allowed the managers to start investing in equities, and of course, that is the root of the problem. Everyone can make money in good times, but problems occur in bad times.

I can recall a few years ago when a New York newspaper, I believe it was, set up a contest between a monkey and a number of stockbrokers. I think the member may recall this. Over several weeks the monkey and the stockbrokers picked a basket of stocks. Over the course of a month or so, the monkey won. Three or four years later, the process was repeated and the monkey won for a second time.

That shows what can happen when professional stockbrokers are hired with huge salaries and given extreme bonuses to get better results. Statistically, a monkey can do just as well.

We know that investing in just basic GICs might not provide great returns over the long haul, but at least the capital base will still be intact at the end of the day. That is the safest way to go.

We have a public insurance corporation in Manitoba. Just four or five years ago the Conservative government started allowing the corporation, for the first time in almost 30 years, to invest in equities. I guess right now they probably have some very bad results on their books because of that.

[Yves Lessard, Bloc, Chambly—Borduas, QC]

Madam Speaker, my colleague is absolutely right. I think that the problem, where things went wrong over the years, is that people managing pension and investment funds to ensure the financial security of retirees should have been more concerned about those retirees than about profit for profit's sake, with all of the risks that entails.

Someone told me a story. I do not know if it is true, but I will share it with you anyway. A man went to see his banker. He was not rich and wanted to take a loan for something basic and very useful. The banker refused to give him the loan. The man would not give up, so eventually, the banker made a proposal. The banker said that before deciding whether to grant the loan, he would ask the man a question. The banker had a glass eye, and he told the man that if he could tell which of the two eyes was the glass one, he would get the loan. The man immediately answered that it was the left eye. The banker asked the man how he had guessed that it was the left eye. The man said that he had noticed a little more kindness in the left eye than in the right one.

When people are responsible for managing funds that are supposed to guarantee the financial security of others, they must do so responsibly. The system falls apart when managers who do a terrible job are rewarded with excessive bonuses, while companies pressure workers to give up their pension funds.

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

Madam Speaker, I want to commend the Bloc member for his ongoing commitment to workers and their families, and of course, to our seniors.

The motion today speaks about a private insurance guarantee fund. In the workplace today, defined benefit funds are under attack and some employers see them as a significant liability. From the standpoint of the workers, though, if they had an insurance program that could capture the assets should a company go bankrupt, they would probably be in a far safer position.

We know the forestry industry in Quebec has been devastated.

I would like the member's comments on the insurance plan.

[Yves Lessard, Bloc, Chambly—Borduas, QC]

Madam Speaker, there is insurance for all kinds of things. Pension funds should usually be self-insured. These funds must be secured given that employers and employees contribute to them and they are often managed by both or by one or the other, depending on their mandate. Sometimes they take the easy road, like when the government dips into the pension fund or fiddles with the employment insurance fund to pay for other things.

Considerable amounts of money that will serve as income security in the future are used for other purposes. People often take the easiest road. If the company experiences a temporary difficulty, it is given a contribution moratorium to deal with the problem. Or the employer's contribution is made over 10 years rather than 5. That is currently happening at Air Canada. The union agreed that contributions for some employees would be spread over 10 years. This makes the pension fund insecure. That is not the right thing to do.

Some things should remain sacred and pension funds are among them. Individual human beings— workers—keep the economy going and give value and meaning to our society. Yet they are the first to lose their assets when corporations and banks get into trouble. Often, it is not the workers who are at fault. It is a question of poor management.

[Jim Maloway, NDP, Elmwood—Transcona, MB]

Madam Speaker, I want to note that the market value of retirement savings held in employer-sponsored pension funds declined by $58.1 billion, or 6.7%, during the fourth quarter of 2008 to $810 billion. This was attributable mainly to a fall in the market value of stocks and equity funds, which, by the way, we would not have if they were in GICs and fixed-income funds. The drop followed a decrease of $82.7 billion in the third quarter, which is the largest quarterly decline in a decade.

In my own portfolio, which is somewhat smaller than the numbers that I am indicating here, I have an absolute increase. I have zero losses because of the meltdown last year, only because I resisted the urge to invest in equities over the last seven or eight years, although I was chased around by lots of salespeople whose duty, they thought, was to try to encourage people.

I think what we have here is a retail market that catches fire and feeds on itself. People who have interest in making money out of these funds, because it is all about making money, will go to people and say, “Your fund is not doing well because you have been sticking with GICs all these years. Look at the other funds that are getting ahead of you. You have to hire me, the manager, who will get you into all kinds of fancy financial instruments that will make up for what you supposedly have lost”. In reality, they have not lost anything, because at the end of the day when the market crashes, the fund that was high comes down to a low point.

One can play around with private funds but not with--

[The Acting Speaker, NDP, Denise Savoie]

I apologize for interrupting. I will give 40 or 50 seconds to the hon. member for Chambly—Borduas to respond.

[Yves Lessard, Bloc, Chambly—Borduas, QC]

Madam Speaker, my colleague touched on a very important point. We sometimes place too much faith in the institutions or money managers we ask to manage pension funds. The mechanisms in place to prevent missteps are not enforced or are poorly enforced. Consider the small stock market crash of the early 2000s, when pension funds and registered pension plans dropped considerably, but they regained their value in four to six years. This was normal, because the funds were appropriately invested in relation to the businesses or markets that could regain their value.

The problem, and we saw this with the Caisse de dépôt et placement du Québec, is that the so-called experts invested in securities that could collapse without having any basic value. Commercial paper comes to mind. Commercial paper is an obvious example. That is why it is important to secure pension plans above all. RRSPs might need to be treated differently. We need legislation to ensure that workers are the first creditors in line in the event of bankruptcy.

[Bill Siksay, NDP, Burnaby—Douglas, BC]

Madam Speaker, I am pleased to have this opportunity to speak in the debate today on an NDP opposition day motion regarding pensions.

At the outset, I will be sharing my time with the member for Vancouver East.

I want to pay tribute to my NDP colleague from Hamilton East—Stoney Creek for bringing forward this motion today. It is very timely. When we consider the worries of Canadians during this economic crisis, at the top of the list we have to put seniors, who are very concerned about their retirement incomes.

I want to review the text of the motion, so folks are clear on what we are talking about in this debate. The motion reads:

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.

This is a very comprehensive motion and it comes from the member for Hamilton East—Stoney Creek's work on this issue and his work across the country with seniors and pensioners to discuss the issues that are important to them. It places him clearly in the long line of New Democrats and CCF members who worried about pension income, income security and dignity of our seniors, people like J.S. Woodsworth, who was around for the creation of pension programs, and Stanley Knowles, who spearheaded the fight to protect pensions, to expand and improve them and to ensure that there was dignity in retirement, that there was dignity for seniors and that there was income security for them in their later years and in their retirement.

That is a long tradition from folks in this corner of the House, and the member for Hamilton East—Stoney Creek stands firmly in that tradition.

The first component of the motion today centres on expanding and increasing the CPP, OAS and GIS to ensure that all Canadians can count on a dignified retirement. It is very clear that many seniors in our country require stronger support measures than are currently offered through these very important programs. We want to ensure that people do not live in poverty in their retirement. We want to ensure they have comfortable lives, that having worked hard all their lives, they are provided for in their retirement. These pension programs are a key way that Canadians collectively seek to support each other as we age.

It is very important that we regularly review and improve these programs. They were not cast in stone. They can always be improved, according to the situations of the day.

It is also important to remember that in this time of economic crisis, where we talk about measures to stimulate the economy, improving CPP, OAS and GIS has a major effect in terms of stimulating the economy. We know that every dollar put into these programs will actually be spent in the economy, that seniors living on pension incomes spend their incomes in the communities in which they live. They purchase services and goods. This money goes directly to support our communities and support other working people in those communities. It is a very effective way of ensuring that, dollar for dollar, we get good value for any kind of stimulus package. This corner of the House has always maintained that this should be part of any economic stimulus program.

It has been said in the debate this morning, and in other fora, that a $1 billion increase in OAS and GIS would virtually eliminate poverty among seniors in Canada. Now, $1 billion sounds like a lot of money, but I think in the context of having the outcome of eliminating poverty for seniors in Canada, it would be well worth that expense. I believe there is that kind of room in the government's planning. It would mean not going ahead with some of the corporate tax cuts that it has announced for down the road.

We could easily find that $1 billion a year to dedicate to our seniors and to get economic value for that kind of investment. This is eminently possible should we have the political will and the wherewithal to move down that road. The benefit is huge.

Another aspect of expanding this kind of pension and old age security coverage would be to ensure immigrant seniors could qualify sooner for the old age security program. We know the 10-year wait for immigrant seniors often causes great hardship. Again, it is a hardship that is inappropriate in our society. Should they have that money in their pockets, we know that would go into our communities and would be well spent. That is another area where we could ensure an appropriate expansion of the old age security program.

The second element of the motion today would establish a self-financing pension insurance program to ensure the viability of workplace sponsored plans in tough economic times. We have heard major concerns about the viability of pensions, given the economic situation. We see that as being a major factor in negotiations around support for industries that are suffering in this economic decline.

There are some fairly straightforward solutions to dealing with that concern. Just like we have taken measures to ensure bank deposits, through measures like the Canadian Deposit Insurance Corporation, we could take similar measures to ensure the viability of workplace sponsored plans through a pension insurance program that followed that same model.

This has been done in other countries. It has been done in the United States. We have that model. It has also been done in Japan, Switzerland, Sweden and Germany. It is not a new idea, nor is a radical one. It is an idea that would give people a measure of security for their pensions and could be a significant measure for relieving some of the worries about the ongoing viability of our pension plans. We already employ a particular model around savings in banks and it could easily be applied in this circumstance as well.

The third element of the motion today would ensure that workers' pension funds would go to the front of the line of creditors in the event of bankruptcy proceedings. This is something New Democrats have pressed for regularly in this place. In a recent Parliament measures were passed on the wage earner protection plan, which features some of these kinds of measures. Legislation was passed in Parliament and became law to put workers' wages at the front of the list in the event of a bankruptcy and at the front of the list of creditors when back wages were owed at the time of a corporate bankruptcy. It seems only fair, and I am glad it passed Parliament at that time. The argument is very clear that workers should have their wages paid in those circumstances.

This is a place where pensions need to be factored into the equation. We need to ensure that people's pensions and their pension plans are at the top of the line at the time of a bankruptcy.

Finally, on the practices of the CPP Investment Board over the last 10 years, if it had invested prudently, even in government bonds, it would have earned $13 billion instead of losing $24 billion in this past year alone. The practice of paying huge bonuses to the managers of that fund, $7 million in bonuses in a year, when they lost $24 billion, when they lost the equivalent of four years' contributions to the plan, is inexcusable. I think all Canadians are offended by that.

The member for Hamilton East—Stoney Creek called it an obscene situation. As parliamentarians, the government has to address that situation and ensure the practice stops. There is no excuse, particularly at a time when the management of the fund has been so colossally unsuccessful. We need to address that quickly and soon so people have confidence in the management of the CPP.

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

Madam Speaker, I thank the member for his generous remarks at the beginning of his speech. They are certainly appreciated.

There is not a member present in the House that has any lack of caring for our seniors. When I started my remarks today, I talked about the fact that this was the opportune time for all parties to come together. Oftentimes in this place there is a certain cut and thrust to the debate and once in a while it drifts into the personal. However, in this case I rest assured that hon. members here all take the concerns of seniors very seriously.

I would like to ask the hon. member about beefing up CPP, allowing more access to it and by allowing some of the people who run small businesses to be a part of it. This is part of what we are talking about today. We think it is an important way to inject some immediate funds into the system.

A lot of people on OAS and GIS have partners who have passed away and that is all they have. There must be more we can do there. Could the member comment on that area?

Could he also extend his comments somewhat on the defined benefits? If we have an insurance plan that supports them, then there will be more encouragement for companies to set those up with their employees.

[Bill Siksay, NDP, Burnaby—Douglas, BC]

Madam Speaker, in his speech, the member for Hamilton East—Stoney Creek talked about the private member's legislation on which he is working. This legislation will address many of those issues. I would encourage the government to steal his work. I am sure he would be thrilled if the government stole some of those ideas, took them off the order paper and introduced them as government legislation, as an omnibus bill to deal with pensions in Canada. I am sure we would all be thrilled if some of the work of the previous speaker from the Bloc was taken by the government on how we could improve the pension situation of Canadians.

I do not think we have extended or plumbed the depths of how Canadians can work together to support our seniors and ensure they have security in their old age. I do not think we have plumbed the depths of how appropriately we can support pensions and ensure they allow people to live with dignity in their retirement. We need to do that work as a Parliament.

I hear there is support in all four corners of the House for these kinds of measures and this kind of resolution. It is a great idea. It is a good sign about how we work together in the House. It is not every day we see that kind of consensus built in this place. I am glad we have found that way today, where we can work on an issue together that is of major concern to many Canadians.

[Jim Maloway, NDP, Elmwood—Transcona, MB]

Madam Speaker, I am looking at the bonuses page of the CPP Board executives. David Denison the CEO received $2,361,022 and three members of the board received equally high amounts. The government is abrogating its responsibility, saying it will send a letter to the board, chastising it.

Would the member suggest some stronger means? We know the government can be as tough on this file as it wants to be. It just does not want to take the action to get these members to give the money back. It is time it did.

[Bill Siksay, NDP, Burnaby—Douglas, BC]

Madam Speaker, the government could take tougher action. If it feels constrained by the legislation, then it could bring in new legislation. I am sure there would be lots of goodwill in this place to get those changes immediately and quickly through this place so we could address this obscene gesture, these obscene bonuses.

I am saddened that the Prime Minister seemed to excuse these outrageous bonuses at a time when the fund lost so much money. He was quoted in the Toronto Star as saying, “I actually noticed, by the way, that the board, in fact, did drop a total compensation for its executives by 31 per cent last year”. That 31% down in bonuses to almost $7 million is really hard to believe. It points out the need to address this, and Canadians would really want Parliament to deal with that issue.

[Libby Davies, NDP, Vancouver East, BC]

Madam Speaker, I am very pleased to speak in support of the motion put forward by the NDP, specifically by the member for Hamilton East—Stoney Creek, and I would like to thank that member for the tremendous work he has been doing. As he told us when he spoke this morning, he has been travelling across the country talking to seniors about this important issue of pensions. We congratulate him for his very fine work.

It has been a good debate this morning. The motion before us is very comprehensive. It deals with the inadequacies of the pension system that many seniors are now facing. It deals with the inadequacy of the system in that people are not covered. It deals with the issue of the need for insurance. It deals with the outrageous bonuses that have been paid to the executives of the investment board that runs the Canada pension plan, and I will get into that later.

New Democrats are very proud to bring forward this motion. Our party has had a very long history of championing social policy, dating as far back as when J.S. Woodsworth first fought hard for the Old Age Pension Act, which was passed in 1927. We have a very long record of bringing forward issues that are based on social security, social equity. It is a value that very much represents Canada and what this country is all about.

We believe this is a key opportunity to examine our pension programs and to figure out what is failing, why they are not working properly and why so many people are not covered. I am certainly very happy to have this opportunity to speak to the motion.

In my community in east Vancouver, when we get case work, people coming to our travelling community offices, when I speak to folks at community events or I go to different meetings, this issue comes up all the time. We have so many seniors in our community who rely on the old age security and the GIS. They have very small Canada pension plan contributions because they are often immigrants who do not have a long record of making contributions to the plan. They may be women who have made very small or no contributions to the plan. Seniors in my community absolutely rely on the old age security and the guaranteed income supplement. These are not people who have thousands of dollars in personal savings, in RRSPs. I hear every day how tough it is for people to get through the month.

Even if seniors are lucky enough to own their own homes and they are paying their taxes, it is really hard to get through the month with the cost of living. We hear those stories every single day in my community. The aspect of the motion before us today that looks at the need to expand the Canada pension plan and the GIS is something that is really important. This is a priority.

We know from research that has been done by the Canadian Labour Congress that it would require about a $1 billion investment to increase OAS and GIS to ensure it would virtually eliminate poverty among seniors. I know that sounds like a lot of money, but in terms of the federal expenditures in this place, and when that is compared to the corporate tax reductions, the bailouts, to many other expenditures that happen around here, it is actually a very small investment. How do you put a value on the benefit it would have in terms of the ability for people to live with a sense of dignity and respect in their older years? It speaks to the fundamentals of what this country is all about.

It is something that is very, very important. I hope very much that when this motion is approved, as I believe it will be, that this will receive great attention, particularly for older women. We know the gravity of the situation facing women who are unattached, who are single, who are living on these very small pensions. Often they are renters; they may not even own their own home, and they are living below the poverty line. Women in these positions are often almost invisible. They are not necessarily seen at the food banks or other social services. They see themselves as very independent, and yet they are really struggling.

The vast majority of Canadians would say that is not the way it should be. Women and men, pensioners generally, should be able to live with a sense of security and dignity as they are aging, and they should not have to worry every single day whether they have enough money to put food on the table or pay their phone bill or hydro bill.

The other aspect that is very important in the motion is the fact that our existing pension plans, whether the Canada pension plan or private pension plans, really do not deal with people who are self-employed. It surprised me at first, but it does not surprise me now.

I have heard about this issue probably more than anything else, the number of younger people who are now self-employed. Because of the economy and the way the economy has changed over the last decade or so, there are many more young people who are self-employed and basically have no pension plan at all. They do not make contributions to the CPP; they do not have the money to set aside for RRSPs. These are people who might do quite well in terms of contract work and self-employment, but then they have other occasions where it is very difficult to survive.

I think it is a serious issue that we have a whole generation of self-employed people, who are independent, self-sufficient, contributing to society, and yet as they approach their later years they know they are facing greater and greater risk as they do not have that income security.

We know that only 38.5% of Canadian workers have pensions from the workplace. That is actually very low. I am sure a lot of people would be surprised to hear that. We know that nearly one-third of workers have no retirement savings at all. These are people who are not even able to contribute economically to private pension contributions like RRSPs. This is very serious.

I think we have the sense in this country that we have great social programs and things are pretty good, but when we actually examine it more closely, we can see that many people are being left behind.

Therefore, I want to make sure with this motion that there is an examination and proposals that come back that will look at this question of how we ensure there is pension coverage for self-employed people, particularly the younger generations.

This is not just an issue that affects seniors today. It certainly does, but we are also talking about the generation behind and the generation behind that, people who will be moving into retirement years and who will be facing very high-risk situations.

The other point I want to make, as others in our caucus have, is on this quite outrageous situation with the bonuses. We certainly think the motion addresses that. We hope it will pass and that we can make sure those bonuses are recovered.

I think there is a consensus that is growing in the House around this motion today. To help facilitate that, I would like to move an amendment. I move:

That the motion be amended as follows:

(a) in the first paragraph, inserting after the word “forward” the words “for review by the Federal-Provincial-Territorial Research Working Group”; and (b) in the second paragraph deleting “/QPP”.

[The Acting Speaker, NDP, Denise Savoie]

It is my duty to inform hon. members that an amendment to an opposition motion may be moved only with the consent of the sponsor of the motion. Therefore, I ask the hon. member for Hamilton East—Stoney Creek if he consents to this amendment being moved.

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

Madam Speaker, I am most pleased to accept this amendment in the spirit that we have set about this debate in the House today.

[The Acting Speaker, NDP, Denise Savoie]

Therefore, the amendment is in order.

[Bill Siksay, NDP, Burnaby—Douglas, BC]

Madam Speaker, one of the important features of the motion talks about ensuring that workers' pension funds go to the front of the line of creditors in the event of bankruptcy proceedings.

We have seen examples in the past where workers have lost wages at the time of a bankruptcy, but they have also had great concerns about what would happen to their pensions when the company they worked for went into bankruptcy. I wonder if the member could talk about some of the solutions to that kind of situation.

[Libby Davies, NDP, Vancouver East, BC]

Madam Speaker, this is indeed one of the elements in our motion today: to ensure that workers' pension funds go to the front of the line of creditors in the event of bankruptcy proceedings. One might wonder why we had to put this in. Back in 2007, the wage earner protection program act was passed into law. It was given royal assent; unfortunately, it was never proclaimed.

This is still very much an outstanding issue for workers who lose wages or pension contributions as a result of bankruptcy. This is something the NDP fought very hard for in the 2005 budget negotiations. We got this provision because it was an issue back then as well. It is even more so today, with the number of bankruptcies we are seeing and the increase in those.

It is an important part of the motion to ensure that workers receive at least some minimal protection where there is a bankruptcy. We are not talking about anything grandiose here; it is very minimal protection. But at least they go to the front of the line to get their wages and pension contributions covered, which we think is very important.

[Dean Del Mastro, Conservative, Parliamentary Secretary to the Minister of Canadian Heritage]

Madam Speaker, it is my honour to speak to this motion. I will be splitting my time with the member for Wellington—Halton Hills.

I want to congratulate the member for Vancouver East and the member for Burnaby—Douglas on their amendment, which represents the goodwill that has been established around this debate.

I have just received my copy of “Canada's Economic Action Plan, A Second Report to Canadians”. The headline of that economic action plan is that 80% of it already has been implemented. I really wanted to point that out and celebrate that. It is a tremendous record of achievement, something I am certainly very pleased with.

I will address the portion of the motion with respect to ensuring appropriate management of the Canada pension plan, or CPP, and specifically that the government protect it from imprudent practices.

First, let us be clear. The Canada Pension Plan Investment Board, or CPPIB, which manages the CPP, is not run by our government, nor was it run by the previous government. Rather, it is an arm's length crown corporation with a mandate to invest in the best interests of CPP members, maximizing the rate of return, and obviously to protect the fund from undue risk of loss. This mandate is consistent with other private and public sector pension plans in Canada.

The CPPIB is governed by a board of directors consisting of 12 experienced professionals appointed by the federal government in consultation with the provinces. We consult with the provinces. This is not something that the federal government does unilaterally.

Parliament itself, under the previous Liberal government, voted to give the CPPIB that independent mandate, and there was goodwill around that, as well. Listen to the words of the former parliamentary secretary to the finance minister, the current member for Richmond Hill. During the era of the previous Liberal government, he said:

It is imperative that the CPPIB be fully independent of governments.... This independence is critical to the board's success and for the public confidence in the CPP investment policy.

I agree with that.

What is more, under the Canada Pension Plan Investment Board Act, an act passed by Parliament, it clearly states that the board of directors sets the compensation for the CPPIB, not the government, not the finance minister. Indeed, the current Liberal finance critic, the member for Markham—Unionville, confirmed that interpretation, stating just on May 28, “It was a Liberal government that set up the Canada Pension Plan Investment Board as an independent agency independent of government.... It's not the role of the government of the day to micromanage this entity”. Once again, I agree with that.

The CPPIB is not run by politicians. Politicians do not make the CPPIB's day-to-day operating decisions or guide investments, something most Canadians appreciate should not be subject to partisan debate.

Moreover, the federal government cannot unilaterally alter the CPPIB or its mandate. In fact, changes to the Canada Pension Plan Investment Board Act require the approval of the federal government and at least two-thirds of the provinces representing at least two-thirds of the population.

I heard hon. members, and I have heard the debate that is going on today, suggest that we could bring forward a bill, we could pass it immediately and we could get on with changes. In fact, we know that the Canada Pension Plan Investment Board Act specifically prevents that action because this is a partnership with the provinces.

Nevertheless, we realize the issue of executive compensation is something we have heard a lot about lately in the news, especially coming from the United States. Recently, we have also heard concerns raised here in Canada, albeit to a much different and lesser degree. Our government agreed that this is an important matter and one that merited examination. That is why we have already taken action on that front.

My colleague from Macleod, the Parliamentary Secretary to the Minister of Finance, has said in this House that compensation must be reasonable. I agree with that. I think all Canadians agree with that.

As members are likely aware, the finance minister recently wrote to the chair of the CPPIB, along with all similar crown entities, to order a review of all their compensation practices. This review will ensure their practices fall in line with Canada's international commitments on this matter, specifically the Financial Stability Forum's principles for compensation practices that were endorsed by all G20 leaders this past April.

These very comprehensive principles, which are part of the worldwide effort to fix the global financial system, laid out firm standards with respect to executive compensation practices that require: first, that boards of directors play an active role in the design, operation and evaluation of compensation schemes; second, that compensation be aligned with prudent risk taking and not reward excessive short-term risk taking where risks are realized over long periods; and third, that there be clear, comprehensive and timely public disclosure of information about compensation. We know in this case there certainly has been public disclosure and I believe it is clear and comprehensive.

Our government believes these principles are the appropriate response that will guide both private and public sector financial institution compensation practices, helping ensure they are consistent with long-term goals and prudent risk taking. That is why Canada, alongside all other G20 countries, endorsed these principles. It is why we ordered the CPPIB and all similar crown entities to examine their compliance with these very principles.

After entities such as the CPPIB report back to the government, we will judge their compliance. If we feel they do not comply with any of the principles which I have just outlined for the House, they will have to correct those non-compliant practices as quickly as possible.

I am sure that most members, putting partisanship aside, would agree that this is a measured and appropriate response to this issue, a response that ensures the CPPIB and its pension investment decisions are not subject to the political interference, as some members in the House are advocating.

The NDP has a history of advocating explicitly for political interference in the CPPIB. That is inappropriate. It is not beyond its right but, personally, I think it is inappropriate. Without getting into it, there are several members in the NDP who have specifically recommended guidelines for investment.

I want to point out some of the principles that the CPPIB follows. The CPPIB has a policy of responsible investing related to environmental, social and governance factors. For the people watching this debate, it is publicly available online at www.cppib.ca. Moreover, the CPPIB is one of the signatories to the UN Principles for Responsible Investment, the Carbon Disclosure Project, the Enhanced Analytics Initiative, the Extractive Industries Transparency Initiative and more. We can see that the CPPIB is very responsible.

Nonetheless, the NDP's position begs the question: Do Canadians really want politicians directing CPP contributions into investments that they deem to be in line with their interpretation of Canadian values? We have great debates in the House and we work hard for agreement, although we do not always find it. Therefore, I do not think we should be directing the CPP as to what its values should be. We realize the NDP would seemingly like politicians to control the CPP fund, but the current framework, endorsed by Parliament, ensures pension investments will not be subject to political interference.

I represent the riding of Peterborough. Some members would suggest they represent a lot of seniors. I am certainly no exception. I have a very large riding with a population well in excess of 120,000. Demographically, we are where most of the country will be at 2020, so the population of my riding is a little more advanced in age. It puts special strains on the health care system as well.

I have concerns about single or widowed seniors and the challenges they face because they have a little less pension income than married seniors do. I have concerns around that. Those concerns are shared by all politicians. We all want to make sure that our seniors are well cared for. That is why we make the contributions we do.

[Jim Maloway, NDP, Elmwood—Transcona, MB]

Madam Speaker, 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.

Why are CPP investment managers being paid millions of dollars in bonuses based on any of the time periods, one year rolling, four years or ten years? They have not been producing value-added returns above risk-free bonds. In the past four years they have not achieved the returns required for long-term sustainability of the CPP.

David Denison earned a bonus of $2.3 million and the Conservative government said that there is nothing it can do about it. The government said that it should not interfere with investments made by the board. The rules are there so that the managers do not get influence on individual investments, but there is no rule against our making a rule saying that they have to invest in fixed term investments as opposed to equities. The government should look at making a broad rule stating that the board has to stay away from equities. I believe the government could actually replace the board if it wanted to do that.

[Dean Del Mastro, Conservative, Peterborough, ON]

Madam Speaker, I actually believe that the CPP Investment Board is very well managed. It is easy to look in the rear view mirror and say that if the managers had chosen option A instead of option B, we would be further ahead. There are an awful lot of investors right now who, if they had known back then what was going to transpire over the last few months, they would have a lot more money than what they have today. That is the benefit of hindsight, and that is what the member is speaking about.

It is important that the fund be managed by professionals who understand investing, professionals who understand that their duty is to protect the public money that is in the Canada pension plan.

I do not believe the intervention that is being mentioned is appropriate.

We talk about a lot of crown corporations in the House and how they are at arm's length from the government, CBC being one of them. I questioned the CBC on the bonuses that it was paying to its executives while it was laying off some 800 people. I was chastised for just asking whether it felt that was appropriate. Why is there a double standard in this case?

[Jim Maloway, NDP, Elmwood—Transcona, MB]

Madam Speaker, in my home province of Manitoba we have a public insurance corporation which, for its first 25 or so years of existence, was mandated to stay with fixed income investments. That policy was laid out by the NDP government that set up the corporation and that policy was followed by successive Conservative governments. No changes were made at all.

At some magical point about 10 years ago when the equities market started taking off, corporations such as the public insurance corporation were mandated to start looking at equity investments. That is about the same time the federal government made the same move.

All we are saying is that in retrospect, that was the wrong move. We should never have gotten out of the tried and true fixed term investments, GICs and bonds. We should go back to them.

In the meantime, the government should either replace the board or order those people to get out of equity investing, stop taking bonuses, and pay back the--

[The Acting Speaker, NDP, Denise Savoie]

The hon. parliamentary secretary.

[Dean Del Mastro, Conservative, Peterborough, ON]

Once again, Madam Speaker, why the outrage on these bonuses to this crown corporation? Why the double standard? Why can we not have a little consistency on this? Why do we say that some professional boards should not get a bonus, but we say that bonuses are okay for other professional boards that have a similar record, that are under economic pressure right now, that are losing money? That is a double standard.

For example, the Ontario teachers' pension fund is a pretty successful fund that makes a lot of money. In fact, it owns the Toronto Maple Leafs, a team which I happen to follow, a team that I have cheered for my entire life. That fund makes a lot of money. It does not just invest in government bonds and so forth; occasionally, it takes prudent risks. That is what it is about. Investing is always about measuring risk and reward. I would argue that the CPP Investment Board has struck the right chord. It has done the right thing.

We are at a point in time where there is no question that stocks over the last number of months have been challenged, but that is not the future of the market. The history of the market has always shown fluctuation, but over time it becomes stable. When it picks up, the CPPIB will also pick up. I hope that the member then will congratulate the board for the hard work it has done.

[Michael Chong, Conservative, Wellington—Halton Hills, ON]

Madam Speaker, I would like to thank the member for Peterborough for splitting his time with me.

I want to commend the New Democrats for putting forward this timely motion. Clearly the issue of underfunded pension and retirement plans for Canadians is a looming concern and a looming challenge in our country, so the NDP has done some service here to public debate and awareness in putting forward this motion. We may disagree on certain aspects of its proposal, but it is a timely measure and a timely motion on which to have this debate.

Clearly Canada is in the most severe economic downturn in 60 years. We are not alone in this. The International Monetary Fund has said that, for the first time in 60 years, the world's economy will contract this year. This has never happened before, in the last 60 years. This will be the first year in 60 years that global GDP will decline. I think that illustrates the breadth and depth of the global circumstances in which we find ourselves.

That said, I believe our government has acted swiftly on this crisis. Since this crisis started to unfold last autumn, the Government of Canada has reacted quite quickly in the intervening eight months. It has put forward an economic action plan that I believe has mitigated some of the downturn in which we find ourselves.

We have provided approximately $62 billion in stimulus over the next two years. That includes stimulus that was triggered by provincial governments on part of our government's budget. That represents over 3% of GDP in stimulus funding in the next two years. I think that illustrates our government's quick reaction to this crisis, and we are starting to see some of the effects of that stimulus package take hold.

Our good economic position has also been recognized internationally. I quote from World Bank President Robert Zoellick, who said that, by global standards, Canada is in an enviable position. He said:

I think a lot of people would like to change places with Canada.

However, clearly, despite our government's interventions in the economy, private sector pensions and retirement savings for Canadians are an issue, and because of the downturn in global equity markets and global debt markets, many private sector pension plans in Canada are underfunded and many companies are struggling to recapitalize those plans.

It is important for Canadians to realize that only a fraction of the private sector pension plans in Canada are federally regulated. The vast majority of private sector pension plans are provincially regulated. I believe less than 10% of all private sector pension plans in Canada fall under the federal regulator. The balance fall under provincial regulation. As a result of these areas of jurisdictions, we do not have the biggest impact on pensions in the private sector .

That said, within our own responsibility of federally regulated plans, we have taken significant measures to try to mitigate the undercapitalization of retirement savings of Canadians. We have doubled the length of time that companies have to recapitalize their employees' pension plans, from five to 10 years. We have also increased the age, from 69 to 71, at which a Canadian who has an RRSP has to convert that RRSP to a registered retirement income fund.

We have also reduced, as a result of the downturn in equity markets and debt markets, the amount of money that seniors 71 years of age and older need to withdraw from RRIFs every year by 25%.

These are some of the measures we have taken. In addition to these measures, we are engaged with our provincial and territorial counterparts in the discussion of retirement savings and private sector pensions. On May 25, at a provincial, federal and territorial meeting, we struck a working group on retirement adequacy. This group will meet for the duration of this year and will report by the end of the year on the state of Canadians' retirement and pension investments.

In addition, the federal regulator, the Office of the Superintendent of Financial Institutions, is continuing to monitor the situation and has indicated that she will act, if necessary, to protect the private sector pensions of Canadians.

We have done a lot of work to help mitigate the downturn in equity and debt markets globally that has impacted Canadians' RRSP investments, their RIFF investments, and their private sector pension investments.

I think the good news is that on the public pension side, on the public retirement safety net, we are in a very good position. The Canada pension plan is fully capitalized. It is fully there for Canadians. The most recent reports, audits and actuarial reports on this pension indicate that the pension is sustainable for years to come.

We have a generous old age security and guaranteed income supplement regime for Canadians as well. Both of these provide income for seniors that is at some of the best levels internationally. I am quite proud of that, because seniors have worked many years to build the kind of society we have today, and these retirement funds, these public programs, ensure that they will be taken care of in retirement.

I note that old age security and guaranteed income supplement provide up to $14,000 a year for a single senior in Canada, and that the Canada pension plan provides up to $11,000 a year for a senior in Canada. Combined, these three different programs provide up to $25,000 a year for seniors in Canada. Clearly, on the public pension side and in the two programs of old age security and GIS, we have a generous and well-funded social safety net.

I just want to speak briefly about some of the specifics in the New Democrats' motion with respect to pensions and retirement security. One of the five things that the motion calls on the Government of Canada to do is to expand and increase the Canada pension plan, the Quebec pension plan, old age security and the guaranteed income supplement.

While the government may want to consider enhancements to these programs at some future date, I think we also need to be cognizant of the fact that the current generation of working Canadians pays significantly higher premiums into the Canada pension plan than past generations. Canadians today pay a combined employer-employee contribution of 9.9% of their earnings into the Canada pension plan, almost 10% of their earnings. Increasing that amount hurts the current generation of working Canadians and would not be fair across the generations.

So I think we need to be careful about simply proposing to increase Canada pension plan payouts, because we may in fact hurt younger generations of Canadians who are struggling to pay their bills and to make their start in life.

The second thing that the motion demands of the Government of Canada is to establish a self-financing pension insurance program for private sector companies and private sector workers. This is certainly a debate that has started to take place with some of the recent bigger public pension managers in provinces like Ontario. It is debate that could take place through this working group that has been established by federal, provincial and territorial ministers. I think we should wait for the outcome of those consultations and those deliberations at the end of this year.

Let me comment on the third demand, which is to move private sector pension recipients to the front of the line when it comes to the order of creditors. I think we need to be careful about this issue as well, because companies have difficulty accessing commercial paper, raising capital in debt markets, raising capital in equity markets in the context of this downturn. I think we want to be careful not to hurt or affect their ability to raise that capital by changing too quickly or by changing inadvertently the order of creditors, which may have an impact on that ability to raise capital.

I note that the two final requests in this motion concern the Canada Pension Plan Investment Board. I would just say that I think it is important that we do not subject the Canadian pension plan to too much political inference. However, I will conclude by saying that I, too, am concerned that, in recent years, executive compensation packages have, far and away, exceeded the general rate of income growth for average workers in Canada.

When I hear that presidents and CEOs of certain companies are getting compensation in excess of $15 million to $20 million a year, I wonder if that is in the broader public interest.