Madam Speaker, we are discussing retirement security. Our people are getting older and living longer. What does this mean to our retirement system and what should we do about it?
I will start with some incredible facts.
In 1951, when the old age security system was put in place, life expectancy was age 69 and the age of eligibility was 70, meaning that the average person would not live long enough to collect old age security at all.
Today, the average life expectancy is 82 and eligibility starts at 65, meaning that people, on average, will collect OAS for 17 years.
Back in 1975, there were seven taxpayers for every one senior. Right now, there are four taxpayers for every senior. In two decades, there will only be two taxpayers for every senior.
As we move forward, life expectancy is growing by 47 days per year. That means that in two decades the average person will live until he or she turns 84, which means that under the existing rules of old age security he or she will collect for almost two decades.
Put together, these facts mean that in two decades the number of people collecting OAS will double, the cost of the program will triple and the number of taxpayers supporting each retiree will fall by half. By consequence, OAS will rise from 15¢ on every dollar the federal government spends to 25¢ on every dollar the federal government spends.
According to the Macdonald-Laurier Institute, on the current trajectory of demographics and program spending, the government will have a shortfall of $67 billion annually in today's dollars by the year 2040.
We should think of OAS as a glass of water. Retirees can only drink out of the glass in benefits what workers pay in taxes. If retirees are drinking out faster than taxpayers are paying in somebody goes thirsty. We have seen the costs of drinking from the glass of profligacy in places like Greece and Portugal. In order to avoid that kind of financial drought, we have put in a plan to make the system affordable and sustainable by gradually raising the age of eligibility from 65 to 67 starting in the year 2023. People over the age of 54 will not be affected in any way, shape or form by these changes. Those under the age of 54 have a lot of time to plan for these changes.
That addresses some of the cost problems with old age security but there is another problem with our retirement system, that being that 60% of Canadians do not have a workplace pension. That is because many of their employers are too small to afford the cost of assembling their own defined benefit or defined contribution system.
I will use the example of a couple named Joe and Martha. One is a manager at a restaurant and the other works at a corner store. Both of them would love to have the ability to save for the future in an employer-based pension plan but neither of their employers are large enough to manage such a plan on their behalf. As a result, they only have RRSPs to supplement the government income programs that exist. However, because they find investing on their own to be too intimidating and the markets too mercurial for their risk profile, they do not save for the future.
Imagine if thousands of workers like Joe and Martha could pool their risks and share the management costs of an employer-based pension plan through a pooled system. That is exactly what we are proposing.
The design of these plans would be straightforward with simple enrolment and management. A third-party administrator, normally a bank, insurance company or pension plan, would be responsible for the administrative and legal duties. What a relief for the small business owners. These plans would also be subject to the standard pension rules that exist for plans across the sector right now, unlike RRSPs which have no similar standard regulatory practice.
The opposition opposes giving small businesses the ability to join together and pool their resources to provide their employees with a pension for their retirement. Instead, it proposes massive new government entitlements. Not only do opposition members fail to deal with the existing $67 billion shortfall that will result based on existing demographics and policies, they propose to stack billions of dollars in new promises.
For example, the deputy leader of the NDP and the leader of the Liberal Party have both moved and seconded bills that would make people who have lived in this country for only three years eligible for OAS when the rest of Canadians have to pay their whole lives in taxes in order to afford that benefit. That would raise the cost of OAS and exacerbate the shortfall that exists in the current system.
How would they pay for it all? Well, they say they will tax big business. What businesses are they referring to? Maybe they mean Canadian Natural Resources Limited, the country's largest independent oil and gas producer with over 100,000 barrels out of the oil sands each day; a perfect target for the NDP and Liberals.
The NDP proposes to raise taxes on that company's profits, but where do those profits go right now? Right now, they go to the shareholders, one of the largest being the Quebec pension plan, which is Quebec's equivalent of the CPP. The dividends that Canadian Natural Resources Limited pays to the Quebec pension plan today are enough to cover the full pension requirements of 1,100 Quebeckers every single year. If we raised taxes on Canadian Natural Resources Limited, we would reduce the dividends it pays out to its shareholders, one of the largest being Quebec pensioners. Here we have the NDP proposing to raise taxes on a public pension plan. One wonders where its priorities lie.
CPP is the same way. Over half of its assets are invested in companies like the Canadian Oil Sands, Suncor Energy, Imperial Oil and Athabasca Oil Sands. The Canada Post pension plan's top five holdings are the Toronto-Dominion Bank, the Royal Bank of Canada, the Bank of Nova Scotia, Suncor and Canadian Natural Resources Limited. Banks and oil companies, the twin villains in every left-wing storyline, are the ones that are paying the dividends into the Canada Post pension plan. To increase taxes on those companies, dividends would be reduced to the postal workers' pension fund.
What happened to solidarity forever? The truth is, there can be no solidarity when one's entire narrative is based on dividing us and them and believe that the only way for one person to prosper is for another person to fail.
In this country, the mail man relies on the profitability of the energy companies in order to have his pension cheque. We are all in this together. Through a symbiotic system of free market economics, the success of one is the success of all. We have a shared destiny, a common future, a united Canada. That is how we succeed, by sticking together and standing for what is right. That is the formula for this government.