Mr. Speaker, I rise today to speak to Bill C-25 at third reading. I am very happy to do so. I know that all members in the House share the common goal of making sure that all Canadians have security in their retirement. However, I am rising to speak against the pooled registered pension plan scheme for many reasons.
One of the reasons is that it would not actually guarantee a pension. As many on my side have pointed out, we should not be calling this a pension plan. Instead, it is a savings scheme. The second reason is that it would put the burden solely on employees and would not require any contribution from employers. It would allow employers to say they are doing something for employees' retirement, but they will pay for it. In that sense, the style of the plan is a bit deceptive.
It would not be indexed to inflation. When we combine that with no cap on administrative fees or costs, it means that the risks would be entirely borne by the employees. Therefore, when it came time for employees to retire, there would be no guarantee that they would even get back payments equally valued to the contributions they made.
How do we know that? We have seen the evidence from the Australian plan, which was put in place more than a decade ago, similar to this, called the Australian super fund. In the study of that plan by the Australian government recently, it showed exactly what I said, that the benefits were only equal to the rate of inflation. In fact, the employees who contributed were simply treading water and not really planning for secure retirement.
I have heard members on the other side ask why on earth I would oppose what is another tool in the tool box for retirement savings. I would first say that I am worried it would become another tool in the tool box of investment planners and banks to make more money for their long-term security instead of making more money for the people who actually contribute to those plans. Their tool box is already full, from my point of view, and there is no need to give them another profit source as I think this plan would obviously do.
Is it a real tool for employees to save for their retirement? It would certainly take money out of their cheques. Most families are struggling as it is just to make ends meet by providing housing, putting food on the table and providing for their kids. The vast majority of employees do not have any spare money to risk in a plan like this. Their money would be much better invested in an expanded Canada pension plan. The Canada pension plan is not a theory or ideology but a proven plan that has shown it has lower costs. Why does it have lower costs? Because it spreads out the administrative costs over the entire population. It is a plan that has lower risk. Why does it have lower risk? Because it spreads the risk across the entire population and provides a defined benefit indexed to inflation.
The CPP has a couple of other benefits that we do not often talk about. One of them is that increasing benefits in the CPP would ultimately reduce costs for government because it would reduce the demand for GIS payments. In other words, if people had been allowed to put money into a plan that would provide them a secure retirement and pay for it themselves, they would not be dependent on welfare at the end of their lives in terms of the GIS. That is no criticism of those who collect GIS. Most Canadians have not had the opportunity of having secure jobs with workplace pension plans that pay enough to provide secure income. The easy way to do that is to expand the Canada pension plan.
This has been on the public agenda since 1996 when the NDP government of British Columbia first put an expanded CPP on the table and tried to convince governments at that time. If it had begun with a slow increase in the contributions made by both workers and employers back in 1996, we would be in a place where the CPP would be providing double the benefits it provides now. We would have made a great dent in the problem of seniors poverty. It is still not too late. The NDP campaigned in the last election to do just that: begin with modest increases in the contributions by workers and employers and, over time, double the benefits that are being paid out by the CPP. Again, workers would be paying for their own secure retirement. It is not a welfare program. There would be no cost to government.
The Canada pension plan along with its parallel, the Quebec pension plan, have been major contributors to helping end poverty among seniors. As I said, it is an earned pension with all the dignity and self-esteem that comes with having provided for one's own retirement.
I would point out they are also very good for small business. We are talking about small businesses that are too small, really, to run their own workplace pension plan, that could not bear those administrative costs, that cannot recruit, as the hon. Parliamentary Secretary to the Minister of the Environment talked about, that cannot recruit employees because they cannot offer the same kind of benefits.
Yet, if the benefits under the Canada pension plan were increased, it would level that recruitment playing field for small businesses, because people would be earning an adequate pension in all jobs across the country.
Originally the CPP was designed, along with the QPP, to be supplemented by private pension plans, so the original plan was never meant to provide the full retirement income. It was thought at the time that workplace pension plans and other schemes would fill the gap to bring Canadians up to an adequate retirement income.
What we have learned is that that has not happened for several reasons. One of those, of course, is that more than 12 million Canadians lack any workplace pension plan of any kind. Even those who do have plans are quite often enrolled in plans which are not portable. We all know the days when people go to work for one company and stay there for 30 years are becoming more and more rare. Even if they had a private pension plan, when they are forced to change jobs, people often have to start over in a new private plan or cash out their benefits at that time.
The second problem with workplace pension plans that we have seen in the last years of economic crisis is that they are not secure. When a company goes bankrupt, unfortunately, those with disability pensions and those with workplace pensions are almost last in that line of creditors.
For that reason, the NDP has proposed, as another way of securing retirement incomes, the bankruptcy laws in this country need to be amended to place disability pensions and retirement pensions at the front of the line of creditors in the case of bankruptcy, so that those who have made contributions themselves would have their pension secured before the other creditors of those bankrupt companies. Unfortunately, we are still waiting for action on that very important point.
The Canadian government, under the Liberals, did recognize that retirement savings were inadequate. The government came up with the registered retirement savings plan to allow people to voluntarily put money into a plan to help supplement the CPP in their retirement. A good idea in theory, but the problem with that plan is that because of the high cost of living, the high cost of housing and other difficulties in making ends meet, only 31% of those who are eligible to contribute to RRSPs are actually able to do so. That means that this great solution to fill that gap has not been successful.
More recently the federal government came up with the idea of tax-free savings accounts. Once again, there is an implicit recognition that there is a gap in retirement income for Canadians. So the tax-free savings accounts were set up. Only about 41% of Canadians have established a tax-free savings account. Most of those say that they are not using it to save for retirement.
Most interesting to me, over half of those who have tax-free savings accounts earn more than $100,000 a year in income. They are obviously already able to take care of themselves when it comes to retirement. Most Canadians, obviously, do not earn anywhere near this figure and do not have extra money at the end of every month to put into a tax-free savings account.
The vast majority of Canadians are dependent on the CPP for their own retirement income. When we look at the benefit levels of $12,000 per year, it is clearly not enough. As I mentioned, it was not designed to be enough. It was designed to be supplemented by these other programs which have failed over time to do so.
Now it is time to revamp the CPP and QPP to make sure they provide an adequate retirement income, that we share the risk, that we spread this out over everyone in society, and make sure that everyone is secure in their income.
Clearly there are some other measures that are needed to attack the problem of inadequate retirement income. I mentioned amending the bankruptcy legislation in this country, and I think that is very important.
The NDP also promised that when we are government we will increase the GIS to immediately lift every senior out of poverty at a relatively modest cost.
Why not proceed with the CPP? The government says the provinces are not onside. It requires co-operation to change the CPP and the QPP. As far as I can tell, only one province was really opposed. I have seen no real effort from the federal government to bring the provinces onside to expand the CPP.
In conclusion, I would just like to remind members of the House that all Canadians would benefit from an expansion of the CPP, not just the fortunate few.
It would benefit small business. It would benefit workers changing jobs. In particular, it would benefit those who work hard all their lives in low-wage jobs and are not able to save for their retirement.
I urge the House, rather than create this new plan, which would do nothing to solve the problem, to turn instead to an expansion of the CPP-QPP program.