Mr. Speaker, I am very pleased to speak to the NDP motion.
As I said before, the Liberal Party will be supporting this motion. We feel that the issue of whether pensions are adequate for Canadians now and whether they will be in the future is a huge challenge for Canadians and for the middle class in particular.
Everyone knows that our leader, the member for Papineau, is focusing on issues facing the middle class. Given that this is a huge challenge for the middle class, we are very supportive of the principle of this motion. We will vote in favour of it, although we do not completely agree with the NDP about the details.
I would like to begin my speech by explaining why this is a major challenge and what economic factors suggest that to be the case. Then, I want to talk about the policies of the NDP, the Conservatives and the Liberal Party. I would say that we take a centrist position, which falls in between the other two parties' extremes.
First, let us ask why the pension issue is such a huge challenge for Canadians in general and middle-class Canadians in particular. There are a number of reasons, and many of us have heard them before, so I can be relatively brief.
There was a recent CIBC study saying that the average 35-year-old today saves only half as much as that same 35-year-old would have saved a generation ago. That is fairly dramatic evidence of inadequate savings.
We know as well that only some 25% of Canadians who work in the private sector have access to workplace retirement savings plans. We know as well that the Canadian Institute of Actuaries did a study, and they reported that among middle-class Canadians earning $30,000 to $100,000 who planned to retire within 10 years, only one-third of all of those millions of people will have retirement income sufficient to meet basic needs.
Finally, I will mention a report by CARP, the Canadian Association of Retired Persons. CARP surveyed its members to ask whether they felt that they would be comfortable in their retirement. In 2009, 30% of the respondents said they would feel comfortable. That is not a huge number, but 30% said yes.
Over the four years following, from 2009 to 2013, that number fell from 30% to 14%. Only 14% of CARP members today feel that they will be comfortable in their retirement years. Notice that the drop from 30% to 14% occurred during the period when the Conservatives were promoting their pooled retirement pension plan. It also came at a time of economic crisis in this country.
The pension challenge is compounded by record low interest rates, which we have had for many years and which some think will continue into the future. It is compounded by the aging population, by the fact that Canadians are living longer, and for other reasons. The pension issue is more important and more challenging today than it has been in the past, and it is evident from what I am saying that I do not think the Conservatives are providing any answers to this pressing problem.
The Liberal position is that we regard this as a major challenge. Our position is to take what I would call strong but sensible action to address the pension issue. I want to address very briefly what we would do, but I want to have a little bit of a caveat. That is because we have our party policy convention in a couple of months, so what I am about to say is not necessarily the final word. Going forward we will have consultations with Canadians at our convention, but what I am outlining now has been the Liberal position for some time, and as of today it remains so.
First, we will certainly not agree to increase the age for old age security from 65 to 67, and there is no doubt in my mind that position will not change. Second, traditionally we have supported a moderate increase in the regular Canada pension plan, not unlike what is being discussed now by premiers and what has just been rejected by the federal government. Third, we have been on record as supporting a supplementary voluntary Canada pension plan, but subject to what is called “auto-enrolment”, which would supplement the existing Canada pension plan.
I will come back to those positions in more detail, but in broad strokes that is the Liberal position. Let me begin by comparing it with the positions of the NDP and the Conservatives.
The contrast between the New Democrats and the Liberals reminds me a bit of a topic familiar to those in the House. That is the situation involving Senator Gerstein and Senator Mike Duffy. Those two senators turned out to be in agreement with each other on principle, but they differed on the quantum. By that I mean that they both agreed that it was okay to use Conservative Party funds, part of which were paid for by taxpayers, to make Senator Duffy whole. That was okay in principle, but they disagreed on the quantum. For Senator Gerstein, $30,000 was his upper limit, whereas Senator Duffy wanted $90,000 and that is where they disagreed.
The issue we are talking about today is certainly legal and it is perhaps even noble; that is to say it has nothing to do with the Senate but everything to do with the adequacy of Canadians' future pensions. It is fair to say that Liberals and New Democrats agree on the principle, but not necessarily the quantum. We agree that strong action must be taken, that we are facing a huge challenge, but we do not necessarily agree with the NDP proposition that we have to double the Canada pension plan.
We know that originally comes from the Canadian Labour Congress. We are respectful of that idea and we have had discussions with them. However, we think that doubling may be excessive in terms of quantum from the point of view that we know ordinary Canadians are hard-pressed. If they are so hard-pressed with record debt, can they really afford to double their CPP premiums? Second, for companies we know that the job situation is pressing. Can we really afford to ask those companies to pay radically higher premiums?
That is a question of quantum not a question of principle, but we have differences with the NDP on that issue of quantity, if not on issues of principle.
However, where we really differ is with the Conservatives because essentially their policy is to be missing in action on pensions, or if one wants to be charitable, it is a policy of benign neglect. The reason I say I am being charitable is that I am not sure if the word “benign” is appropriate, but certainly “neglect” is appropriate. The position of the Conservatives is well summarized in an editorial in The Globe and Mail that appeared yesterday evening, of which I will read part:
Ottawa’s move last week to flatly reject a provincial pitch to expand the Canada Pension Plan is an unfortunate decision. The federal government is still choosing to back a far less effective retirement savings program.
The Globe and Mail goes on to say:
...PEI Finance Minister Wes Sheridan said last week that the...government could have at the very least countered with a more modest reform as a compromise. Ottawa’s blanket rejection suggests that it never had any serious intention to back the idea.
That is 100% right. I believe that the Minister of Finance is on record as being willing to countenance a moderate increase in CPP pensions, but he was overruled by his boss, the Prime Minister, who as of today, I believe, is still the boss. The Prime Minister is on record over many years as not only opposing CPP moderate hikes today, but opposing the CPP in general.
In one statement, he said that the CPP is a “fictitious obligation that the government can change down the road”. In a second comment, he talked about Mr. Martin's exercise to reform the CPP as “bogus”, to the extent that the investment board fails to function like a private-sector fund manager, it will be inefficient, increasing the likelihood of further CPP premium increases.
Then the Prime Minister stated, “But if [the CPP] succeeds in operating 'just like the private sector'...then there's no real reason for government to run it at all.” In other words, he does not like the Canada pension plan, so I believe that as long as he is the Prime Minister of this country, no time will be the right time for any infinitesimal increase in CPP premiums and benefits. That is precisely the point, which The Globe and Mail attacked yesterday.
The Globe and Mail and others have also attacked the pooled registered pension plans as being entirely inadequate to the job. Let me again quote from The Globe and Mail:
Canada’s experience with RRSPs illustrates why another voluntary savings program is not as appealing an option as an expanded CPP. RRSPs have long provided a tax-effective way to save for retirement, yet three out of four eligible tax filers did not contribute one cent into their RRSPs in 2010. Canadians are already sitting on $633-billion of unused RRSP contribution room, and that figure keeps climbing.
That was in The Globe and Mail. The PRPP is essentially a glorified group RRSP. With only one in four Canadians availing themselves of RRSPs, why do the Conservatives think the take-up will be significant for their new plan?
A second problem is that it is costly. The CPP cost is far lower than the private sector cost and one of Canada's leading pension experts, Keith Ambachtsheer, has done an analysis in which he shows that relatively small differences in the management costs can have enormous differences in the long-run value of the pension, differences on the order of 20% to 40% of the pension. Therefore, one other advantage of the CPP or the supplementary CPP over the government's proposal is cost and that difference in cost can have a major impact on the long-run values of the pensions of middle-class Canadians. I have said in the past, let a thousand flowers bloom, let the private sector offer what it wants, let the supplementary CPP be offered, let Canadians choose, and out of that choice will come the best solution for Canadians.
Another piece of evidence that the government's plan is not working is that there has been very little take up by the provinces. I believe that three provinces have passed the legislation. Only one, Quebec, has so far implemented it, and provinces such as P.E.I. and Ontario would not be proceeding with planned reforms to the CPP if they truly believed that the Conservative government's solutions were adequate.
As I said, if we put all that together, Liberals believe that the government is totally missing in action on the pension issue, or if one wants to be more charitable, this has been a policy of benign neglect by the Conservatives. We believe that the Liberal plan, based on the three points I have mentioned, is the centrist position. These are active but sensible measures to address the pension issue, not the benign neglect of the Conservatives and not the more radical proposals of the NDP.
In my remaining time, I would like to outline very briefly the essence of the Liberal plan. There are three parts. One, as I have mentioned already, we would not—I repeat, not—raise the OAS age from 65 to 70. Actuaries have assured us that the plan is perfectly sustainable the way it is and the way in which the Conservatives are proposing to act would really hit the most vulnerable Canadians, particularly those who have been subject to hard physical work and are unable to work beyond 65. They would lose their OAS and GIS and be thrown onto provincial welfare. This is a totally unacceptable solution for this country.
Second, we want a combination of a moderate increase in the Canada pension plan, the regular plan, and a supplementary plan. We in the Liberal Party have long been proud of the Canada pension plan. It was brought into existence by Lester Pearson. It was radically strengthened by Paul Martin in the 1990s, to the point where it is now recognized as being solvent for 50 years, 75 years. It is one of the few national pension plans in the western world or even the whole world, that is solvent to such a degree. We can be proud of that, but needs have changed so we have to move on.
The needs of 2013 are not the same as they were in the mid-1960s. We have to expand some combination of the regular CPP and the supplementary CPP. We believe that for reasons of cost. CPP is very low cost. As I said earlier, that has a major impact on the value of Canadians' pensions because of the power of compound interest over time, and the supplementary CPP.
I want to talk about the supplementary CPP because it came under attack before the last election by the Conservatives who kind of made stuff up. Recently, a new plan that is being implemented in the United Kingdom called NEST provides further evidence and support to Liberal proposals.
First of all, Conservatives made up numbers saying that the cost of our supplementary plan would be high for various specious reasons, which we said were wrong. We now know, based on the actual implementation of a very similar plan in Britain, that the actual cost of the plan is 50 basis points per year, or half a percentage point, which is a small fraction of the typical private sector costs and which would result in a substantially higher pension than the Conservatives would be providing under their plan. That is now a fact. It is not subject to argument; it is a fact.
The second point that is really important is that I said negative things about voluntary plans and that evidence from RRSPs suggested only a relatively small fraction of people would participate. However, the British have what they call “automatic enrolment” so that employees are automatically enrolled in the British plan called NEST, but they have the option of opting out if they so desire. I suppose there is a certain inertia in human affairs. It turns out that this automatic enrolment has a major impact on participation to the point where so far in the U.K., over 90% of employees remain in the plan and choose to participate. Yes, it is voluntary, but with this auto enrolment, the participation rate is very high.
To conclude, we will support the NDP motion. However, as far as the details are concerned, we feel that pensions are a huge challenge. The government is basically doing nothing, while the NDP is perhaps doing too much by wanting to double the pension plan. We are taking the middle road. Our plan consists of a number of elements. First, the age of eligibility for old age security benefits will remain at 65, not 67. Second, we will expand the Canada pension plan, both the regular plan and the supplementary one.
We think that this strong but sensible approach to addressing the pension challenge is the right way to go. Since the NDP is in principle on the same page, we in the Liberal Party are happy to support the motion.