Debates of Jan. 30th, 2012

Pooled Registered Pension Plans Act

[Mike Wallace, Conservative, Burlington, ON]

Mr. Speaker, I thank the Minister of State for Finance for his speech today. It is an indication of the seriousness the government takes on the pension programs when we create a minister of state to deal with those pension items. Never before in Canadian history have we had a minister of state specifically looking at what the issues are when it comes to pensions and helping seniors in our communities.

I also thank the minister for pointing out that any changes to CPP require provincial agreement. We can talk in this House all we want about changes to CPP but if the provinces are not on board, nothing will happen.

In talking about the PRPP, lower costs for Canadians and cost effectiveness, could the minister tell us how he believes this new pension plan would be a low cost solution for retiring seniors?

[Ted Menzies, Conservative, Macleod, AB]

Mr. Speaker, I welcome my hon. colleague from Burlington back to this House. I am sure he spent much of his Christmas also consulting with his constituents. I know he has had some prebudget discussions with them.

The pooled registered pension plan has taken a lot of time to design. We have looked at models all around the world, in Australia, New Zealand and Great Britain. In fact, Great Britain is now developing its NEST program that it had hoped to put together in a matter of months. It has actually been about three years now. It is a challenge to put one of these programs forward.

We have taken all of the good points out of those programs and put them into this framework with the primary purpose of keeping low costs. That is why we are opening this up to any valid potential provider, whether it is a financial institution, a pension fund or an insurance company, that can provide strong oversight and can carry out the fiduciary duty to be responsible to the plan members, the employees, to ensure that it guarantees the safety of those funds in the plan.

Competition and the volume of plans that will be involved in the pooled registered pension plan will keep the costs low, lower than we have seen in this country. That is why this will be successful. That is why businesses are coming to us and thanking us for putting this forward. Businesses to which I have spoken in the last two days have said that they will take this and provide it to their employees.

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

Mr. Speaker, I am pleased to rise today to offer the New Democrats' perspective on Bill C-25. However, before I do that I want to refresh the memory of the House and Canadians who may be watching.

In June 2009, the House unanimously passed an NDP opposition day motion that laid out how the House should address the pension crisis that was rising rapidly at that time in our country. We will no doubt remember that the motion spoke of the need for a national pension insurance plan to protect workers' deferred wages; that their pension plans would be protected if their companies were to collapse. We also started a conversation at that time regarding a phased-in increase with the goal of doubling the Canada pension plan.

In that opposition day motion, but first in the platform of the NDP in the May election, was an increase to the guaranteed income supplement, a significant increase to raise seniors on GIS above the poverty line. That was for 250,000 Canadians, most of them women. Our party ran an election platform that showed Canadians what our s intentions were for Canada's retirement security program. Nowhere in the Conservatives' platform was there a plank that indicated to Canadians that, once elected, the Conservatives would be changing the eligibility for old age security from 65 years old to 67 years old.

Last week, at the Davos convention, the Prime Minister told Canadians, along with a stunning PMO release, that many Canadians would need to work an extra two years before receiving old age security. Seniors pay taxes all of their lives expecting to have OAS as part of their retirement income. Now, the Prime Minister, apparently, wants to move the goalposts on them. What about single unemployed women? Those are the women who live in poverty under the GIS. They will now need to stay on some sort of provincial assistance for an additional two years because they are already in poverty and need Canadians' help.

I wonder if the government has considered the statistic that people in the bottom 20% of the workforce pass away five to six years earlier than those in the top 20%. In fact, that very condition exists between Ancaster—Dundas—Flamborough—Westdale and Hamilton East—Stoney Creek where the life expectancy differs because of people's poverty rate. Did the government consider that half of all low-income men will collect OAS-GIS cheques for only a short period of 10 years? Raising the retirement age would clearly have a negative impact on those persons aged 65 who are in poor health and unable to continue working.

What about the cost? The latest actuarial reports on the OAS-GIS project that the number of recipients will increase from 4.9 million today to 9.3 million by 2030. I think the opposition and the government agree on that statistic. However, the increase to the projected total cost is much more modest, which is from 2.4% of GDP to a peak of 3.2% of GDP by 2030, and that is because the economy is expected to grow.

However, we need to think about this for a moment. We have a government that, since taking power, has decreased corporate taxes by $16 billion a year. That is $16 billion taken out of the fiscal capacity of this place to make determinations for things that Canadians need and there is nothing Canadians need more than old age security protection.

Therefore, it should be of no surprise to anybody that, if the moneys coming in are removed, somewhere along the line we need to face the problem of what we need to pay out. We should never ever put that burden directly on our seniors, as suggested by the Prime Minister last week.

One may ask what all this has to do with Bill C-25. That is a fair question. The NDP believes that seniors' retirement income security is about far more than one plan or another option. We believe that we need to have a broader conversation on pensions and that Canadians want us to look at pensions as a whole. It is not to cut them but to ensure they are there to protect our seniors in years to come.

I will now speak specifically and more directly to Bill C-25. I would suggest that Bill C-25 appears to have been hastily put together. In fairness to his work, I know the minister of state did travel the country, as I did, listening to seniors. However, there also was a corresponding campaign across this country coming from labour, seniors groups and political parties, most notably the NDP, talking about increasing the Canada pension plan and the need to build the foundation because 12 million Canadians today do not have any savings or pensions and we need to build that foundation to protect them in the future.

The proposal in Bill C-25 would not even guarantee an actual pension. I would suggest that, at best, we should be referring to this as a pension scheme, not a pension plan. It is true that it would be a savings scheme that would pool the funds of members' accounts to achieve lower costs in relation to investment management and plan administration. However, a cautionary word must be put into this at this point. The fees to be applied by the plan managers would not be capped by this legislation. The experience elsewhere in the world is that the fees often erode pension savings to the point that they do not even keep pace with inflation. Clearly, the bill is designed to appeal to the self-employed and workers at small and mid-sized firms, companies that often lack the means to administer a private sector plan.

Another caution is that this plan would be just another kind of defined contribution plan. Employees would contribute a portion of their salary into the retirement scheme where it would be invested in stocks, bonds and mutual funds. Does that sound familiar? It sounds like an RRSP to me. Some companies with a clear conscience that want to see that their employees are well taken care of, although they are not required to do so, may choose to make matching contributions. However, I would suggest that in the climate of the business community today they cut every corner they can.

I want to caution again that this defined contribution plan would in no way guarantee how much money would be left when people retire. As with an RRSP, the market risks would be borne entirely and solely by the individual or the employee. PRPPs would be managed at a profit by regulated financial institutions like banks, insurance companies and trust companies.

As I already cautioned, Bill C-25 places no caps on administration fees or costs. It is flawed in that it merely assumes lower costs will emerge through competition in the market. Did people's telephone bill go up? Did their cable bill go up over the last 25 years since the market was deregulated? Of course they did. PRPPs allow for but do not require matching funds from employers so I believe they simply will not contribute.

Another caution for Canadians is that, unlike CPP, PRPPs would not be indexed to inflation. Provinces and territories would determine whether it would be mandatory for employers or employees of certain sized companies to offer PRPPs. Pooled registered pension plans, as envisioned in Bill C-25, would fail to protect retirement security because they would encourage families to gamble even more of their retirement savings in a failing stock market. If that market goes up, yes, they go up, but if it goes down, they go down with it.

Anybody who has watched their RRSPs plummet over the past year knows exactly how risky savings tied to the stock market can be. Telling families that investing in the same system that is already failing them shows how out of touch with Canadians the Conservatives truly are. The NDP has for the past three years championed a suite of retirement income security proposals, the first, as we have indicated, being that they should increase the Canada pension plan over a period of time that would double the benefits to $1,920 a month in 30 years. Growing the CPP is simply the best, lowest cost pension reform option that is available to us today.

The government must also amend federal bankruptcy legislation to move pensioners and long-term disability recipients to the front of the line of creditors when their employer enters court protection or declares bankruptcy. We have seen company after company across the country take the savings of its workers and treat it is as a secondary fund to pay off its bills.

As I said in my opening remarks, the bill seems to have been hastily thrown together in response to pressure from labour and other groups. However, according to the Conference Board of Canada, something we must keep in mind is that 1.6 million Canadians live in poverty and 12 million Canadians lack a pension plan. By OECD standards, Canada's CPP/QPP system is relatively miserly. Other countries similar to Canada provide far more generous public guaranteed pensions. Social security in the United States has benefits of about $30,000 a year. The maximum benefit in Canada is less than $12,000 per year. Even if we add old age security to that, which is, at a minimum, $7,000 a year, the total is still far below U.S. social security. Most workers have no RRSPs because they cannot afford it. In fact, only 31% of eligible Canadians actually use their ability to invest in RRSPs.

Meanwhile, the latest numbers for the return on CPP investments show that the CPP barely lost ground by 1%, while the stock market fell by 11%. There goes the pooled retirement pension plan down 11%.

The Minister of State for Finance stated that one of the places the government studied was Australia. Australia had a similar plan to PRPPs, but the plan was mandatory, with an opt-out provision. The Australian super fund required employers to enrol their workers in one of the many defined contribution plans offered by the private sector. A recent review commissioned by the Australian government, after 12 years' experience, reported that the Australian super fund did not even match inflation, again, because the fees being charged were eroding it.

For six years, the Conservatives have done next to nothing by way of securing retirement for Canadians. Bill C-25 is yet another hastily thrown together half measure in lieu of real action. Canadians want and deserve better. The government, once again, with these fees, almost like bonuses to the executives, has put the interests of Bay Street ahead of the interests of hard-working Canadian citizens.

We on this side of the House often hear comments about our ability or our chance to govern. If the NDP were to govern, it would ensure that our pension plans would be there to give retirement security to seniors, as they deserve. Canadians do not want their retirement savings subject to the market. If they did, they would invest in RRSPs. It is very clear they need protection.

For some of the reasons that I have just spoken of, New Democrats will not support this savings scheme, because the Conservatives are offering it up instead of taking real action on both protecting existing pensions and enhancing retirement security for those who lack a workplace pension plan at all.

PRPPs are not pensions. While the government claims a PRPP will provide Canadians with lower fees to potential economies of scale that do not exist with RRSPs, there is no data that proves that. In fact, less than one-third of the people entitled to contribute to RRSPs do not do so.

Over 24% of those surveyed use the TFSAs for retirement savings. Yes, that is one tool in the toolbox. However, it is time for the government to take real action to provide retirement security for those 12 million Canadians I referred to earlier, the 12 million who have no savings, who have no pension and who, God bless them, have a very bleak future. Canadians do not need yet one more private plan: a voluntary savings scheme. Voluntary savings have not worked, for a lot of reasons.

This scheme, if enacted, will do little or nothing to improve the ability of Canadians to foresee their future and live in dignity. Expanding CPP on the other hand, would not cost the government any more than the proposed PRPP. Expanding CPP would not entail transferring huge management fees to private institutions because we have the CPP Investment Board already managing the funds.

The PRPP, as outlined in the bill, fails to extend coverage to those who are unable to afford a pension in the first place. I repeated that several times in my speech because that is the essence of the problem facing many Canadians today. They have very little hope for their future in retirement.

I would like to read from the Calgary Herald, November 27, 2010, which says:

The CPP already covers almost all Canadian workers and thus spreads the risk and management fees. It is fully portable, offers guaranteed income to all retirees, and is the only risk-free investment broadly available to workers. Private RRSPs and employer pension plans have proven much riskier than initially billed. Those who are in company pension plans are likely in a defined contribution scheme, where the amount that goes in is predetermined, but the payout is based on how well the fund is invested and ultimately performs. Nortel workers know only too well how that worked.

Professor Jon Kesselman, Canada Research Chair, Public Finance, Simon Fraser University School of Public Policy, says:

Expanding the CPP is the best option for improving Canadian workers’ retirement income security; it can ensure results that none of the many alternative reform proposals for private schemes can provide.

CARP, which has made many presentations to our finance committee over the years, and the director of political advocacy at CARP, Susan Eng, writes:

CARP remains committed to improving retirement benefits for the current crop of seniors, including increasing CPP, OAS and GIS payments, getting a moratorium on RRIF withdrawals, making access to Tax-Free Savings Accounts retroactive and lobbying to remove the HST on seniors’ energy bills.

At this point I will stop with the other commentary and add that the government has been clearly and repeatedly on notice in the House, since 2009, of a crisis situation for the pension security for Canadians going forward. It is not that this was a surprise out of the blue.

We heard commentary earlier today from the member for Burlington, who talked about the fact that we needed the agreement of the provinces in order to move forward on the Canada pension plan. It is smoke and mirrors because we do need a majority of the provinces. Going into Kananaskis, six finance ministers from across the country wrote to our finance minister in support of expanding the CPP.

There are issues for the provinces, but in the last round of talks between the finance ministers and the Minister of Finance, there was very little said or done on the Canada pension plan. There is room for action on the Canada pension plan and very clearly the NDP believes that is the vehicle of choice and it is the most secure vehicle for moving forward.

[Shelly Glover, Conservative, Parliamentary Secretary to the Minister of Finance]

Mr. Speaker, I also want to welcome my colleague back to the House after the break. I take issue with a few of the things that were said and I would like some clarification by the member if possible.

First and foremost, trying to put words in the Prime Minister's mouth is really not acceptable. What was mentioned certainly was not what was said in Davos.

Aside from that, when we talk about the provinces and their jurisdiction over pensions, we mentioned several times the need for provinces to be on board in expanding CPP. The Canadian Pension Plan Act says very clearly that two-thirds of the population in two-thirds of provinces and territories must be on board and we do not have that, and the hon. member knows that. Therefore, when he cites different provinces that wanted to consider it, there was some room for consideration, but without meeting the criteria of that plan it was not possible. Therefore, I would hope the hon. member would correct his previous statements.

Is the hon. member's party suggesting that we expressly ignore the will of the provinces and territories, which have said very clearly that they want the PRPP, particularly in Quebec which has been our strongest ally in putting forward the PRPP? Is that what the member is suggesting?

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

Mr. Speaker, I also welcome the parliamentary secretary back. I clearly said in my remarks that the Prime Minister spoke in Davos, and I referred to the PMOs issuance that was given to the media. That is where the conversation began on changing age eligibility for OAS from 65 years to 67 years. The Prime Minister spoke on pensions as a whole and it was a combination of that. I am sure that all government members are hearing from their constituents that this is how they understood it.

As far as consensus on the CPP is concerned, I realize what the legislation says. I am saying that the finance minister should sit down with the provinces and talk to them and work through this. The Minister of Finance indicated in the House last June that he was prepared to do it. I asked him at an emergency meeting of finance committee and he said that now was not the time, and I agree.

If we get the go-ahead to change the CPP, there would be a three year window before it would be implemented and then a seven year phase-in period, which would allow companies and workers ten full years to adjust to those changes.

It is clear we have a different view, but we have to maintain communication with the provinces.

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Mr. Speaker, late one night in the Manitoba legislature a group of retired teachers appeared before committee with a passionate plea. They talked in detail about the impact of their pension program and pleaded with the government to do more.

Over the last couple of days people have come to me again emphasizing just how important the pension issue really is. They have also emphasized the importance of having the ability to communicate their messages.

I listened to the member. NDP members may be a bit offside in the sense that they do not necessarily see a role for the private sector to play in helping with pensionable income.

There is an overall retirement issue, whether it is the retirement pensions of teachers, RRSP contributions or contributions to CPP. There is a mixture out there. The OAS, the CPP and the guaranteed income supplement make up the core, and the government has really fallen short in this regard.

I am interested in hearing the member's belief in terms of the overall need for a multitude of different types of pension programs that ultimately help supplement income in retirement years.

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

Mr. Speaker, nobody is saying that there is no room for an option, but this option would fail the test. It would not offer any kind of guarantee as to what someone would have when he or she retired. It would be completely at the risk of market fluctuations. Anybody who has had investments in the last two or three years knows how bad the market can be. It is like riding a yo-yo at times. This would be another tool in the toolbox, but as far as I am concerned it would be a tool that would fail.

We have said, and I said again in my speech, that we should look at pensions as a whole. We should balance them. We should also look at the best possible vehicle for Canadians and that is clearly the Canada pension plan.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Mr. Speaker, I would like to re-examine the government's arguments with regard to the proposed plan. The member for Burlington and the Parliamentary Secretary mentioned that the provinces were not prepared to accept enhancements to the Canada pension plan, but that they were prepared to accept the items set out in Bill C-25.

I closely followed federal-provincial discussions about the pension plan and how to deal with the issue. At the time, the provinces were prepared to accept enhancements to the Canada pension plan, but the federal government said that enhancements were not being proposed and that only their proposal was on the table. Could my colleague comment on this?

The second thing that the Minister of State mentioned is the fact that an enhancement would lead to an increase in Canada pension plan contributions, which is unacceptable especially to employers. Nevertheless, the government has no problem increasing employment insurance premiums, despite the fact that the fund already has a surplus. This would also affect employers. This argument therefore does not necessarily apply to the Canada pension plan, a better plan that would provide much greater economic security for retirees. I would also like to hear what my colleague has to say about that.

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

Mr. Speaker, very clearly, there is a difference of opinion between us and the government on this.

However, the government cannot shut the door on its relationships with the provinces. We have an opportunity here to, in a very direct fashion, deal with the provinces and talk to them about the changes necessary. As I indicated, our understanding is that at least six provinces were pushing hard for this. In some place on this, there is room for dialogue.

As far as the cost go, as I indicated, Canadians are willing to pay their share moving forward. They are not able to do so in the situation today where 12 million do not have pensions and do not have savings. However, it implies they need a bit of a nudge to put some money aside.

If we allow Canadians to put that money into the Canada pension plan, the safest vehicle there is for Canadians, then at the end of the day they will have participated in their own retirement fund and will have taken some of the costs away from the Government of Canada and the provincial governments.

If we do not do this, then 12 million Canadians are going to hit a wall and it will be a very desperate situation for seniors.

[Mike Wallace, Conservative, Burlington, ON]

Mr. Speaker, I think we have been clear on the CPP issue that the members opposite are bringing forward that we need the consent of the provinces. We do not have it. We have been discussing it with them.

My question today is, if the NDP members really care about workers and the pensions of seniors, why are they not even voting to get this bill to committee so it can be discussed? Was it not the NDP members' premise that they wanted to have Parliament work and for us to work together to find solutions?

Not even voting for this bill to go to committee is not finding solutions for any senior or future pensioner in this country. Why is the NDP not allowing for a discussion of the bill at committee?

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

Mr. Speaker, the last time I looked there was a majority on the other side of the House.

NDP members will express our opinions in opposition to this particular flawed bill, and the government of the day with a majority will take it to committee. There will be a discussion there.

However, to go back to the member's first point about the cost of the CPP and the consensus required, it does not require 100% of the provinces. It does not require 100% of the representation of the people of Canada.

More importantly, we need the dialogue. We need to go back. The provinces as a whole, including those that object, understand there is a pension crisis in this country. To shut the door on that dialogue by using a flawed excuse that we do not have all of the consensus needed is disingenuous to the Canadian public, which deserves better than to hear that in this place.

The reality is that Canadians need help, and it is up to this place to provide it.

[Judy Sgro, Liberal, York West, ON]

Mr. Speaker, I would like to seek consent to split my time with my colleague, the member for Kings—Hants.

[The Acting Speaker, Barry Devolin]

Is that agreed?

[Some hon. members]

Agreed.

[Judy Sgro, Liberal, York West, ON]

Mr. Speaker, a little more two years ago I asked the government of the day what it planned to do to protect and preserve pensions for all Canadians. The minister responded by saying that pensions were provincial and should be left to provincial legislatures to deal with. He said pensions were not a federal problem no matter how much the opposition cried out.

Canadians rightly found that notion to be wrong, short-sighted and unacceptable. Therefore, what is Bill C-25? It is the government's answer to our calls for pension reform. In simple terms, providing the provinces go along with this, it creates a federal notion of a pooled registered pension plan similar to a group RRSP. Clearly, that is the best thing the government could come up with.

In 1998, when the current Prime Minister was campaigning, he announced that he wanted to privatize the Canada pension plan. The Conservatives proposed the elimination of the public Canada pension plan. Backed by a bit of research, that is clearly there: it is exactly what the current Prime Minister said. He suggested that the Canada pension plan should be replaced by a super savings account that would allow Canadians to put all of their extra money, if they had any, into investments for their retirement. PRPPs are similar to that fundamentally flawed idea. It continues to be just as flawed an idea now as it was then.

What is the problem? While the Prime Minister is the sixth highest paid political leader in the world, earning an annual salary of $296,000 U.S., and telling Canadians to put their extra money into the bank for their retirement, he seems to forget that not everyone has so much extra money. What about those seniors who pay their taxes, raise their families and work hard but still do not have any extra money to invest? How are they going to survive?

The Liberals have long believed that Canadian seniors need and deserve a secure and reliable plan to help keep the “gold” in the golden years. I mean a pension plan, not an investment plan. In an effort to do this, on March 1, 1928, Liberal Prime Minister King officially created a limited old age security pension plan. That plan was expanded in 1952 by another Liberal prime minister, Louis St. Laurent.

Recent statements by the Prime Minister seem to indicate that the Conservatives do not share this view. They voted against all of those previous policies and continue to look at ways to erode the security of Canadian seniors, which seems much more like waging war on seniors and the poor than anything else.

Under old age security, the guaranteed income supplement and the CPP that were established by the Liberals over the past 90 years, Canadian seniors have gradually been lifted out of poverty. We have finally reached a level where there are a lower number of seniors living in poverty than ever before, although that level is still not acceptable.

The Conservatives have opposed each of these measures. Now it seems they want seniors to work even longer. Forcing them to work longer and harder to save for retirement, on top of asking them to pay for $6 billion in giveaways to the largest corporations, $13 billion for prisons and $30 billion for untendered stealth fighter jets, is not a plan for pensions.

The PRPPs will not work for those who need it most, but for those who have lots of money. For many of us who deal with seniors who are struggling every day, this will not be a very good tool. PRPPs are nothing but locked in RRSPs.

Canadians could face a number of problems if this plan proceeds. They will have to become market experts, as their employer will pay no administrative role in the PRPP plan. Members will bear 100% of the investment risk. A single market stumble could spell the end of any retirement home. We know how difficult the investment industry is when one goes to invest, yet that person has to rely on someone who has that expertise. The majority of Canadians do not have that expertise and will again be subjected to the volatility of the market and those making investments for them. Also, there is no ability to move out of an underperforming PRPP into a performing one or one with better services.

If the provinces make PRPPs mandatory, which we do not know yet, employers will be forced to create administrative systems to enrol members. As well, because both employers and members can opt out, costs will be incurred for no reason.

It is unclear whether homemakers can contribute to or belong to a PRPP. We clearly understand that they are not at the top of the list of concerns of the current government. Yet again the so-called Conservative plan excludes those who contribute to society outside of the work force.

Why are we not learning from some of the mistakes of others? The Australian government adopted its version of PRPPs in 1997, over a decade ago. A recent study published in the Rotman International Journal of Pension Management found that the only one who had benefited from the plan was the financial services industry. That is a shame.

PRPPs will be managed by the same people who manage Canada's mutual funds, and Canadians already pay some of the highest management fees in the world. I hear no talk about how the government will control that or put caps on any of those management fees for anyone subject to this. Clearly, those who will make the most money out of it are the banks and financial institutions.

Morningstar recently released a report grading 22 countries on the management expense ratios levied on their mutual funds, and Canada was the only country to receive an F. Shame on everyone.

Reducing government spending is a laudable goal. However, the financial players offering PRPPs will need to offer annuities so that plan members may convert their accumulated balances into a stream of pension payments. Once that occurs, insurers are required by law to price in a profit margin and to keep regulatory capital aside to underwrite the contracts. These two requirements alone are achieved at the expense of the plan members, who will see their pensions reduced as a result. This is a very inefficient way of delivering pensions.

These two requirements are the cornerstones of the PRPP plan. With that in mind, I am left to wonder how PRPPs could possibly yield results for Canadian pensioners. The simple answer is that they will not help the average Canadian prepare for retirement. The PRPP is another tool in the toolbox. It is not necessarily a particularly good tool, but clearly it is the best the government is prepared to go forward with.

Instead of copying the failed work of others, why did the Prime Minister not seek to lift seniors out of poverty? A supplemental Canada pension plan, already proposed by the Liberals, would provide the best of both worlds. It would create a new retirement savings vehicle for Canadians who needed it, while delivering the low overhead cost structure of the Canada pension plan.

A supplementary Canada pension plan would be a simple and cost-effective solution to the looming pension crisis, and is very different from the NDP proposal. This is a defined benefit pension for everyone, including homemakers and farmers. Anyone could contribute, even those who have left the work force during their lives for child rearing, illness and educational advancement. It would use proven and existing resources to give every Canadian man, woman and child a reliable and stable investment vehicle for the future.

Every Canadian has the right to live in dignity, especially during their golden years, and a SCPP would allow them to do that. The very best part of that is that a SCPP would not require the retention of assets to create a profit margin for banks and insurance companies, and it would not require them to keep regulatory capital aside to underwrite those contracts. It would be a win for the average Canadian pensioner.

However, the Conservatives, as I indicated, could not care less. By ignoring calls to improve the CPP and by floating the idea of slashing the old age pension of those aged 65 to 67, the Conservatives have shown their true colours.

Balancing the budget on the backs of seniors is nothing short of waging war on the poor. It is unacceptable and the government should be ashamed for even putting that idea forward, but clearly that is the opinion of the Conservatives. They have never supported old age security, the Canada pension plan and the guaranteed income supplement, which continues to show in their colours. As far as they are concerned, they will support a big corporation, but if a person cannot take care of themself, goodbye Charlie. That is not the Liberal way. That is not the Canadian way.

[Joy Smith, Conservative, Kildonan—St. Paul, MB]

Mr. Speaker, I listened to the member's speech, and some of the inaccuracies and the hyperbole that was used was rather worrisome.

My first question would be about why the Liberals voted against raising the GIS. When we look at what our government has done to improve the lives of seniors and their lot in life, there have been so many things done. We improved the GIS quite markedly. We removed thousands of seniors from the tax rolls and we abolished the mandatory retirement age for federally regulated workers. In addition, we introduced pension income splitting.

There are so many things we have done to support the seniors across our country. Why? Because we know our country has an aging demographic.

I would like to go back to my first question. We increased the GIS exemption and introduced the largest GIS increase in a quarter of a century. If the member is so concerned about the seniors in this country, why did she and her Liberal opposition party vote against the raising of the GIS?

[Judy Sgro, Liberal, York West, ON]

Mr. Speaker, history shows where the government's priorities are. Today all we need to do is pick up any newspaper and we can clearly tell what the choices are for the government: $6 billion in corporate tax cuts, $30 billion in purchasing fighter jets and building prisons. Those are the issues that matter to it. It has little interest in improving the lives of seniors. Using income tax for those who have lots of money is one avenue. There are those on the bottom rung living on $15,000 a year and now we are suggesting that they will need to wait until age 67 before they can even start to live on $15,000 a year. It is total hypocrisy and ridiculous.

[Charmaine Borg, NDP, Terrebonne—Blainville, QC]

Mr. Speaker, during the election campaign, the Liberals said that they would gradually enhance the pension plan; however, they have provided very few details since that time. We, in the NDP, believe that pensions should be doubled in the future in order to eliminate poverty, especially among seniors.

I would like the member to explain how the Liberals intend to carry out their plan.

[Judy Sgro, Liberal, York West, ON]

Mr. Speaker, we currently have a Canada pension plan that is administered very well, has very low investment fees and so on. We could include an add-on to the current Canada pension plan and call it a supplementary Canada pension plan that everybody who has a social insurance number would have. If people have an extra $100 a month, instead of putting it into an RRSP they could put it into their supplementary plan. It would be capped as RRSPs are capped but there would not be a question about where their money will be invested. It would not matter if people were homemakers, farmers, self-employed or unemployed. No one wants to live on only $15,000 a year but many of our constituents live on that and, quite possibly, some of them live on less than that.

The supplementary plan is there. It would include low cost minimum fees and it would be a great investment. People would not need to worry about what may happen to the stock market tomorrow. History has shown a steady return on the Canada pension over many years. Thank God we have the Canada pension plan program and that the Liberals had the foresight to bring in that plan.

[Scott Brison, Liberal, Kings—Hants, NS]

Mr. Speaker, it is a pleasure today to speak to Bill C-25, the pooled registered pension plans act.

Canada's retirement system is based on four pillars. The first is the OAS-GIS, the Canadian social safety net for seniors. The second pillar is the CPP, Canada's mandatory public pension plan with defined benefits. The third is the tax-assisted private saving options, such as RRSPs, registered pension plans and the TFSAs. The fourth is private assets, such as a house or the equity people may have in their home, which they may try to downsize at some point to better fund their retirement.

I thank my colleague, the member for York West and the Liberal critic for seniors and pensions, for her exceptionally beneficial and important work and analysis on pension issues over the last several years. Through her hard work, she has developed and helped present to this Parliament and to Canadians a well thought out optional voluntary supplemental CPP that would be superior to the PRPP for a number of reasons, which she has helped explain.

First, a defined benefit plan as opposed to a simple PRPP plan with defined contributions would provide Canadian retirees with that extra degree of security despite market fluctuations. It would also make it voluntary and portable and, unlike the PRPP, it would provide lower administrative costs so that more of one's investment could end up benefiting one's retirement rather than going to ridiculously high fees, which are a real challenge in Canada, particularly with some of the mutual funds. In fact, offering a voluntary supplemental CPP option would create more competition for the PRPPs in terms of fee structures. One of the benefits in having a voluntary supplemental CPP, which I do not think has been adequately considered by this House, is that it would help keep fees low in the PRPP system and for those plans.

The reality is that the Canada pension plan itself has a very low fee and low cost structure administratively. It is diversified in terms of asset class, it is diversified geographically and it is diversified by sector of investment. It is professionally managed. As a result of decisions taken by the Chrétien government and Paul Martin as finance minister back in the 1990s, they helped ensure the fiscal and prudential strength of the Canada pension plan for decades to come. In fact, we have the strongest public pension in the world as a result of those decisions. Also, the decision to invest in public markets through a prudent, professional plan was taken at that time.

It was interesting to hear the Prime Minister last week in Davos taking credit for the prudential strength of the Canadian pension plan. In fact, I believe he, along with the National Citizens Coalition, the Canadian Taxpayers Federation and the Reform Party at the time, fought every step of the way those decisions taken by the Chrétien government which enabled Canada to have one of the strongest pension plans in the world. However, that did not stop the Prime Minister from taking credit for it. Next he will take credit for the oil and gas under the ground in Alberta and the oil under the water off Newfoundland and Labrador, although we all know that was Danny Williams, but I digress.

In terms of Canadians' financial situation right now, it is important to realize that Canadians have record levels of personal debt. On average, there is $1.53 of debt for every $1 of annual income. The Conservatives actually made the situation worse with their first budget in 2006 when the current finance minister recklessly followed the U.S. model and introduced 40-year mortgages with zero down payment. That was the same finance minister who had inherited a $13 billion surplus but raised government spending by three times the rate of inflation and put Canada into deficit even before the downturn.

Today, with an aging population, historically high debt levels and low savings rates, it is clear that the government must make Canada's retirement income system a priority so that seniors are not left out in the cold.

The first pillar I want to speak to is old age security. Old age security was introduced in 1952 by a Liberal government. It was then followed by the GIS, the guaranteed income supplement, introduced by a Liberal government in 1967. The OAS and the GIS have formed a key part of Canada's social safety net. This has been a defining element in terms of Canadians' social values and reflects the dignity that we believe seniors ought to retire to. Ensuring that the government sets aside enough money to pay for the social safety net has always been a priority.

The amount we spend on OAS does fluctuate with our demographics. Last year the federal government spent 2.37% of Canada's GDP on OAS payments. Twenty years ago, in 1992, spending on the OAS reached 2.72% of Canada's GDP. In 2030, spending on the OAS is expected to reach 3.16% of GDP. Ensuring that we have enough money to pay for these increases is a matter of priorities, of planning and of making decisions based on evidence as opposed to making decisions based on ideology.

Back in the nineties, the Conservative government of the day tried to cut the OAS by scrapping the guarantee that OAS payments would keep up with inflation. This was done after they had promised not to touch or reduce Canadian pension benefits. A 63-year-old, Solange Denis, told Prime Minister Brian Mulroney at the time:

You made promises that you wouldn't touch anything... you lied to us. I was made to vote for you and then it's goodbye, Charlie Brown.

We will all remember that pivotal moment. The Conservatives, ultimately, reversed their decision on that and listened to seniors across Canada, like the Canadian Association of Retired Persons and other organizations representing seniors and grassroots across Canada. Canadians stood up and defended themselves against that cut at the time.

Last week, the Prime Minister signalled that his government was considering increasing the qualification age from 65 to 67 for OAS benefits in Canada. We need to think about who would be impacted by this and whether it is fair. According to tax returns filed in 2009, the latest information available from the CRA website, more than 40% of seniors receiving old age security had an income of less than $20,000 per year. Furthermore, over half of the OAS money went to seniors earning less than $25,000 per year. Therefore, increasing the qualification age for OAS disproportionately hurts those Canadians who are most vulnerable, seniors living at or below the poverty line.

By increasing the qualification age for OAS from 65 to 67, the Conservatives would be taking away up to $30,000 from each of our most vulnerable senior citizens. These cuts to OAS would disproportionately hurt the poor, especially older single women. OAS cuts would force these seniors onto provincial welfare rolls and put seniors' drug coverage at risk as provinces only provide certain drug coverage to seniors receiving the GIS supplement. If people do not qualify for GIS, they do not qualify for drug coverage. We can only think of the unintended consequences of these changes on poor seniors.

The Conservatives are trying to download all these costs on to the provinces, with provincial treasuries having to pick up the tab or just do without. It is the same with the Conservative's jail agenda, billions of dollars of federal money but also billions in costs imposed on provincial governments, without any consultation, negotiation or discussion with provincial governments.

It is also important to look back a couple of years when the Conservatives cut the OAS to prisoners in Canadian penitentiaries. At that time, the human resources minister spoke of cutting off OAS for prisoners serving a sentence of at least two years. She said, “Canadians who work hard, who contribute to the system, who play by the rules deserve government benefits such as Old Age Security”.

It is interesting now to take those words forward and see that the Conservatives are now treating senior citizens like prisoners. They are treating senior citizens today, people who have worked hard and played by the rules, like they would treat prisoners.

It is bad enough that the Conservatives follow an ideologically rigid and ineffectual tough on crime agenda that will not work, but where will this tough on seniors agenda get Canada? I look forward to questions.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

Mr. Speaker, I know the member is a former cabinet minister under the Liberal government and most of us have heard about the demographic issue coming forward for some period of time. For some of us, it has been over 30 years and certainly as baby boomers we saw this issue coming forward and what was going to take place.

What steps did the member, as a former cabinet minister, take to deal with these issues when he was in government? What substantive things did his government do at that time concerning these issues?

[Scott Brison, Liberal, Kings—Hants, NS]

Mr. Speaker, that is a terrific question because it was the government of Mr. Chrétien, and Paul Martin as finance minister, that made the fundamental changes to the Canada pension plan, which prepared the CPP for decades of prudential strength looking forward to the future. It was also the government, with Paul Martin as finance minister, that eliminated a $43 billion deficit, balanced the books and ensured that $100 billion was paid down on the national debt. Of course, we know we have now lost all that because of the Conservatives' ideological profligacy in the last few years.

As a minister specifically, I was part of the expenditure review committee of cabinet which was led by the hon. member for Markham—Unionville. During that time we saved billions of dollars. We did not do it based on ideology; we did it based on evidence. We looked at every department and every agency and we worked with departments and agencies. My department of public works saved over $3 billion, working with public servants, and $1 billion every year since by reforming procurement, by privatizing in some cases and by out sourcing in other cases, but also by getting better value for tax dollars. I am certain the hon. member would support all of those initiatives.

[Wayne Easter, Liberal, Malpeque, PE]

Mr. Speaker, I enjoyed the remarks by the member for Kings—Hants.

There seems to be some confusion around the announcement of the Prime Minister in Davos. It is not unusual for the Prime Minister to show contempt for this place by making fairly major policy announcements outside the country. However, there seems to be a lot of discussion on the OAS and the fact that it seems to be the government's objective to increase the time people can qualify, to move it ahead two years to age 67.

I ask the member for Kings—Hants this. Is it true that OAS and GIS are linked, that if we raise one, we will be raising them both? Is this not really just an attack on the most vulnerable in Canadian society?

[Scott Brison, Liberal, Kings—Hants, NS]

Mr. Speaker, we understand that to be the case, that if we change the qualification age for OAS, we do the same for GIS. Of course, GIS is there for those seniors who are significantly below the poverty line.

However, beyond that, just the OAS numbers alone, over half the seniors receiving OAS in Canada make less than $25,000. Just think of that. These seniors are one of Canada's most vulnerable populations. It was bad and cruel enough that the Conservatives made the caregiver tax credit non-refundable, denying that benefit to low-income seniors, but it is heartless to attack seniors further.

I found it interesting that at Davos last week, at the World Economic Forum, there were world leaders almost without exception saying that income inequality and the gap between rich and poor was an issue that needed to be addressed in countries around the world. The only leader who did not talk about income inequality was the Canadian Prime Minister. Not only did he not speak to income inequality and the challenge it represents to societies, but he actually floated an idea that would make it worse in Canada.

This is another example of how we have a bit of a challenge with the occupiers in the NDP and the Tea Partiers in the Conservatives. We need a good, moderate, centrist, practical Liberal government focused on the future of Canadians and helping all Canadians achieve a dignified retirement.

[Shelly Glover, Conservative, Parliamentary Secretary to the Minister of Finance]

Mr. Speaker, I am pleased to have this opportunity to participate in today's debate about the importance of passing Bill C-25 in good time.

I would like to use my time to take a closer look at this new retirement savings option for Canadian workers within the broader context of growing income inequality and, more importantly, what our government has done to fix that.

This troubling trend is affecting countries around the world, and Canada is no exception.

The global economy is more integrated than ever in terms of trade, the job market and even monetary systems, so it should come as no surprise that Canada is feeling the effects of this phenomenon that originated elsewhere. Other countries with advanced economies and social safety nets have experienced similar repercussions. For example, the growing gap between rich and poor in Germany is virtually identical to that in Canada in the most recent decade studied by the Organization for Economic Co-operation and Development, the OECD.

That being said, we must keep in mind that the effects of increased immigration and heightened global interaction and integration have been, for the most part, extremely positive.

In absolute terms, fewer families are living in poverty, and their median after-tax incomes are higher, according to a Vancouver Sun report in October, and this despite the increasing income inequality that has been observed.

These observations are seconded by Statistics Canada research showing that, from the mid-1990s to the mid-2000s, after-tax incomes and transfers increased in all income brackets and that, in fact, low-income families are not nearly as common in Canada as they once were. Of course, this does not mean that we should not consider income inequality.

The Minister of Finance recently spoke about his concerns in this regard. As reported in the Toronto Star, the minister said that income distribution is important and that the issue is that while a very small number of people have very high incomes, others do not have the same opportunities. This is not in keeping with the equal opportunity economy that our government is endeavouring to build, an economy that provides everyone with the opportunity to succeed no matter what their background.

We must not forget that this trend began well before the current government of Canada was brought to power by Canadians.

Therefore, it is one of many challenges that will be handled better by our government than by the opposition parties, as Canadians clearly realize. That is why they gave our government a majority. Canadians can rest assured that we have implemented a number of effective measures to address this challenge, including the pooled registered pension plan, or PRPP.

Some of the comments made by opposition members in this debate would have us believe that the solution to the problem of income disparity is for Canadian governments to simply take money from some people and give it to others, thus magically solving the problem.

The reality is that this approach would impoverish everyone. Our government knows that this is not how a country creates and distributes wealth in the real world.

Scuttling the entire ship will not encourage retirement savings, increase the standard of living or bridge the income gap. The real way to achieve these objectives is to take advantage of the power of our job creators, so that they can invest in higher wages, training, equipment and technology that allows them to do more, be more competitive globally and share their success with the country, which will benefit all Canadians.

With the next phase of Canada's economic action plan—a low-tax plan for jobs and growth—we are taking significant actions to create these conditions. These actions include reducing the tax burden for Canadians, thereby providing support to families and individuals, and encouraging businesses to make the types of productivity-enhancing investments that result in sustained economic growth.

As a result of broad-based federal and provincial business tax changes, Canada now has an overall tax rate on new business investment that is substantially lower than any other G7 country and is below the average of the member countries of the OECD. This tax advantage is aggressively positioning Canada for long-term success.

Forbes magazine recently ranked Canada number one in its annual look at the best countries for business. Globally, more and more people are putting their money to work on this understanding and investing in Canada as the place to be in the future. With the strong mandate we received from Canadians in the last election and with the next phase of Canada's economic action plan becoming a reality, these investments are going to pay off not just for investors, but for all Canadians. When Canada's entrepreneurs and job creators succeed, all Canadians succeed.

With the implementation of the PRPP framework, Canadians saving for retirement will be in the best possible position to invest in this dynamic approach to creating wealth and to support and benefit from it. As we have heard, PRPPs represent an innovative, low-cost, privately administered and accessible pension vehicle to help Canadians meet their retirement savings objectives. These plans are especially important to small and medium-sized businesses because they will allow such business owners and their employees to access a comprehensive, low cost, privately administered pension plan for the very first time.

Professional administrators will be subject to a fiduciary standard of care to ensure that funds are invested in the best interests of plan members. By pooling pension savings, Canadians will have greater purchasing power. The lower costs resulting from pooled purchasing will allow members to devote more of their income to retirement savings. These plans will be straightforward in order to simplify membership and management.

PRPPs will have to be harmonized across the provinces, which will further reduce administrative costs. These design features will eliminate many of the barriers that used to prevent some employers from offering retirement plans to their employees. Our government believes that this will encourage many small businesses to offer PRPPs. This is quite significant when we consider—and this is rather astonishing—that just over 60% of Canadians do not have a retirement plan provided by their employer. What is more, some Canadians might not be capitalizing on the all the saving possibilities currently available to them through individual products such as RRSPs and they might not be saving for retirement on a regular basis.

In cases where employers offer PRPPs, we encourage automatic enrollment for employees. Automatic enrollment will encourage regular savings in PRPPs. Employees who do not opt out will be automatically enrolled.

On another note, in December 2011, Parliament passed the Keeping Canada’s Economy and Jobs Growing Act, which implemented other important aspects of the next phase of Canada's economic action plan to help our economy flourish.

One of the most important measures in the act reflects the idea that jobs are the best income support program.

To protect jobs and support growth, the act grants small businesses a hiring tax credit of up to $1,000 to offset the increase in their employment insurance premiums in 2011 relative to their 2010 premiums. Some 525,000 businesses, and even more Canadian workers, will be able to benefit from this temporary measure.

I want to emphasize that this credit is in addition to our recent initiatives to limit employment insurance premium increases and to protect jobs.

Because we believe that employment is the best social security program, we introduced the working income tax benefit in 2007 and enhanced in it 2009 to encourage low-income Canadians to find and keep jobs.

As my government colleagues have pointed out, the WITB has provided over $1.1 billion per year to working low-income Canadians. Together with other tax cuts introduced by the government, the WITB has had an extremely positive impact in terms of encouraging people to find work and on the financial situation of many low-income Canadians.

Our government recognizes that it is important not only to create and protect good jobs to shrink the income gap, but also to enable people with jobs to keep more of their hard-earned money.

This is especially important for low-income Canadians who spend a greater proportion of their income to meet their families' basic needs: food, housing and clothing.

That is why our government reduced the tax burden for individuals, families and businesses by an estimated $220 billion in 2008-09 and for the following five years.

Individuals and families in all tax brackets are benefiting from tax cuts, with those in lower income brackets benefiting from proportionally bigger tax cuts.

For the 2011 tax year, one-third of the individual income tax cuts introduced by our government has benefited Canadians whose income was lower than $41,544, even though they pay only about 13% tax.

Cutting the GST from 7% to 5% gave all Canadians a break, including those who do not earn enough to pay income tax.

The GST credit, which was not reduced even though the GST was cut by 2%, returns more than $1.1 billion per year to low- and modest-income Canadians.

In addition, all taxpayers benefit from personal income tax reductions, such as the reduction from 16% to 15% for the lowest tax bracket, and the increase in the basic personal amount that Canadians can earn, which is not subject to federal income tax.

The Canada employment credit is another important measure that truly helps workers make ends meet. A credit of up to $1,065 is available for the 2011 taxation year to help cover work-related expenses, such as buying a personal computer, uniforms and supplies.

Measures implemented by our government since coming to power ensure that low-income Canadians now pay considerably less tax and receive greater benefits. A single parent with only one child who earns $37,000 will pay $1,125 less in personal income tax in 2011. In addition, as a result of changes made to the national child benefit supplement in budget 2009, this parent will also receive additional benefits of up to $241.

As a result of initiatives taken by our government since 2006, more than one million low-income Canadians no longer have to pay taxes.

But that is not all. Our government knows that employment is the best social safety net, and we have implemented measures to create jobs and to allow the incumbents to keep more of their hard-earned income.

Nevertheless, we realize that, for various reasons, some people are unable to take advantage of these measures. We therefore took action in order to remedy this situation.

The Canada social transfer and the Canada health transfer allow the Government of Canada to provide significant financial assistance to the provinces and territories in order to help them provide important programs and services to low-income Canadians.

These transfers support health care services, post-secondary education, social assistance and social services, as well as programs for our children.

In 2011-12, the provinces and territories will receive $11.5 billion in cash under the Canada social transfer and $27 billion under the Canada health transfer. These amounts will increase by 3% and 6% respectively over the next few years.

In budget 2009, the government invested $2.1 billion in the construction and renovation of social housing across Canada, including housing units for low-income seniors, people with disabilities and first nations people living on reserve.

In the latest budget, the government also announced a new guaranteed income supplement top-up benefit for Canada's most vulnerable seniors.

Since July 2011, seniors with little or no income other than the old age security pension and the guaranteed income supplement have been able to receive additional benefits of up to $600 for single seniors and up to $840 for couples per year. This measure will improve the financial security and well-being of more than 680,000 Canadian seniors.

Together, old age security and the guaranteed income supplement constitute Canada's largest federal social program, through which over $36 billion in benefits are paid to about 5 million Canadian seniors.

Low-income seniors who receive the guaranteed income supplement and who have a job will now be able to keep more of their earnings.

In budget 2008, the government increased to $3,500 the amount that can be earned before the guaranteed income supplement is reduced, so that GIS recipients will be able to keep more of their hard-earned money.

Thanks to our government's efforts to create jobs, to allow workers to keep more of their earnings and to help those who need it most, Canada has one of the lowest poverty rates among seniors out of the 33 OECD member countries. Our rate is lower than that of Australia at 27%, the United States at 24% and the United Kingdom at 10%.

Once fully implemented, PRPPs will play an important role in closing the income gap by promoting saving, while supporting a global investment process that will create wealth and move our economy forward.

Fortunately, when Bill C-25 passes, the provinces will have a model that is easy to apply to their respective frameworks, so that the system can be put to work for Canadians.

For all of these reasons, I encourage my colleagues to support the timely passing of Bill C-25 and our government's efforts to create a stronger, more prosperous and inclusive country for all Canadians.