Debates of May 25th, 2015

Finance—Main Estimates 2015-16

[Joe Oliver, Conservative, Eglinton—Lawrence, ON]

Mr. Chair, I am not in the business of forecasting housing prices. I can say that we have introduced a number of important measures to take the froth out of the market.

We continue to monitor the market very carefully, but the Governor of the Bank of Canada, the head of the IMF, CMHC, the OECD, and the Department of Finance all believe that while there may be a soft landing, it is not a bubble.

[Kevin Sorenson, Conservative, Minister of State (Finance)]

Mr. Chair, I am pleased to have the opportunity to speak here this evening, and highlight our government's record of supporting Canada's seniors and pensioners. It is a record that all Canadians can be very proud of. Our government understands that Canada's seniors helped to build this country, to make our country great. That is why we are proud to be putting money directly back into the pockets of our seniors and pensioners, in a number of ways but certainly by lowering taxes.

At the same time, we have strengthened Canada's retirement income system so that it is there to serve the needs of Canadians for today and for tomorrow. The result of our leadership is clear. Canada's retirement income system is acknowledged to be among the world's best by groups such as the OECD in terms of preventing poverty among seniors and ensuring appropriate income in retirement.

Under our low-tax plan, 83% of Canadians are on track for a comfortable retirement, according to McKinsey & Company. What is more, the 2014 Global AgeWatch Index ranked Canada as the fourth-best country in the world in which to grow old.

Let me also remind members that according to the latest Melbourne Mercer Global Pension Index, Canada has the best retirement income system in the G7, one of the leading retirement income systems in the world. Scott Clausen, a member at Mercer, said:

Canada’s retirement system continues to be one of the strongest retirement systems in the world by providing a combination of universal pensions, income-tested...employer pensions, individual RRSPs and individual TFSAs....

Even Canadian editorialists recognize that Canada's retirement income system is strong. Andrew Coyne at the National Post said:

By most measures, Canada's retirement income support system is an outstanding success. The poverty rate for Canadian seniors...is among the lowest in the world.

Our targeted relief effort is building on this success. Under our government, 380,000 low-income seniors have been completely removed from the tax rolls. We also introduced the largest GIS increase in over 25 years, helping more than 680,000 seniors right here across Canada. This GIS increase provided eligible low-income seniors with additional annual benefits of up to $600 for single seniors and $840 for couples.

Another way that we are helping Canadians prepare for retirement is by providing new options, voluntary vehicles to help them save. We developed and implemented the framework for pooled registered pension plans, which will provide a low-cost and large-scale retirement savings option to the roughly 60% of Canadians who do not have a workplace pension plan. Pooled registered pension plans, or PRPPs, are of particular help to employees of small- and medium-sized businesses who until now have not had access to low-cost private pension options. PRPPs help them by establishing large-scale, broad-based voluntary pension arrangements available to employees with or without a participating employer as well as even the self-employed. PRPPs are very advantageous for those people who are self-employed. This innovative new option would place a high emphasis on consent, and be available to the federally regulated private sector and crown corporations.

It would add to the other options we have created, such as the landmark tax-free savings account. Eleven million Canadians have signed up for the tax-free savings account. They have opened an account. The majority of accounts belong to low- and middle-income earners. Half of the account holders earn under $42,000 a year. The tax-free savings account has been particularly beneficial to seniors as neither income earned in a TFSA nor the withdrawals from a TFSA affect account holders' federal income-tested benefits and credits, such as GIS.

Due to popular demand, we increased the annual tax-free savings account contribution from $5,000 to $5,500, and then to $10,000 in economic action plan 2015.

This is also particularly beneficial to seniors. Some 600,000 seniors aged 65 and over with an income below $60,000 are currently maximizing their tax-free savings account and would benefit from the measure that we have brought forward. This move was praised by CARP, which said:

CARP members welcome government action in Budget 2015...to almost double the TFSA from $5,500 to $10,000...

Another staple of our low-tax plan is the introduction of pension income splitting for seniors. Pension income splitting is helping over two million seniors and pensioners every year. I hear from them at tax time. I hear from them after they have visited their accountant, and year after year, they thank us for that measure.

We know that both opposition parties are fundamentally opposed to income splitting. Just like they would take away income splitting for nearly two million families, if given the chance, we believe that they would take away pension income splitting for those two million seniors. We will not let that happen.

There are additional ways that the Liberal Party, in particular, would pick the pockets of seniors. As I have said, under our government, 600,000 seniors are currently maximizing their tax-free savings account and would benefit from the increase to the tax-free savings limit. However, again, given the chance, the Liberal leader would shut those accounts down. The Liberals' billion-dollar blunder in the last plan that they put forward was exposed when they had to airbrush their website. Now, they are proposing to fill the holes in their discredited plan by cutting TFSAs and using the revenue.

It is clear that only our government can be trusted to keep taxes low for Canadians and, certainly, for Canadian seniors.

What we will not suggest is raising taxes on workers while claiming that it is for their own good. Under our government, there will be no mandatory job-killing and economy-destablizing pension tax hike for employees or, certainly, for employers. Let me quote Dan Kelly, of the Canadian Federation of Independent Business, who cautioned against forcing Canadians and small businesses to pay higher payroll taxes. He said:

CFIB’s Forced Savings report shows that increasing Canada Pension Plan (CPP) and Quebec Pension Plan (QPP) benefits would result in higher premiums for businesses and employees, significant job losses and lower wages for Canadians.

What is more, finance department estimates indicate that the NDP would kill thousands of jobs by hiking mandatory CPP contributions. Meanwhile, Ontarians should be aware that the Liberals' new mandatory pension tax hike could cost a two-worker family up to $3,200 every year. That is $1,600 for each worker in the household. According to the Meridian Credit Union, the majority of Ontario small business owners believe that this “could be their greatest challenge ever faced”.

Our government does not believe in forcing Canadians into a single, compulsory, one-size-fits-all approach, nor do we believe in reaching into the pockets of hard-working, middle-class Canadians and reducing their take-home pay. On the contrary, we will continue to put money into the pockets of seniors and all Canadians. With our low-tax plan in place, we have established a rock solid foundation upon which Canadians can achieve their retirement goals with confidence.

I would be pleased today to respond to any questions about our record achievements. They are records. They are achievements. We are very proud of them.

[Joyce Bateman, Conservative, Winnipeg South Centre, MB]

Mr. Chair, I so appreciate the comments from our Minister of State for Finance. Given his discussion on the pension situation and what our government has done, and given the sustainability and solvency issues that are being faced by many defined benefit plans, I wonder if the minister would be kind enough to elaborate on priorities going forward to maintain a strong retirement income system and what new options are being considered.

[Kevin Sorenson, Conservative, Crowfoot, AB]

Mr. Chair, I want to thank that hard-working member for Winnipeg South Centre for the question.

A central focus of our efforts going forward will be continuing to ensure that Canadians have access to effective workplace pension plans. The Association of Canadian Pension Management offers a concise summary of some of the challenges that we are overcoming. It notes that:

Sponsors of DB pension plans are continuing to struggle with the significant funding challenges posed by continuing low interest and annuity rates, complex and increasingly volatile investment markets, chronic solvency funding issues....

Currently, 96% of pension plans across Canada are in defined benefit plans, as compared to 71% in the United Kingdom, 42% in the United States and 15% in Australia, but faced with such recent developments, employers are under increasing pressure to move their employees to defined contribution models, which exposes employees to market volatility and longevity risk.

Our government appreciates that Canadians want a more predictable option and employers want to attract or retain workers with a strong pension plan. That is why we launched extensive consultation on the proposed framework for target benefit plans, or TBPs in April 2014. Our consultation placed a high emphasis on the importance of consent, and proposes to require plan members and retirees to agree to converting existing benefits.

Target benefit plans would offer new, voluntary, sustainable and flexible pension options to the employees of federally regulated corporations. They would not involve changes to federal public sector pension plans that are governed by their own respective legislation.

The proposed target benefit plan framework combines features of both defined benefits and defined contribution plans. Similar to defined benefit plans, TBPs would provide highly predictable income for life for the employee, but as with defined contribution plans, target benefit plans would offer cost certainty for employers.

The plan would also be flexible, allowing for the conversion of both defined benefits and defined contribution plans into target benefit plans. All plan parties would have a say in the decision as to whether or not to adopt the target benefit plan, as well as how the plan would be designed.

Members and retirees would also benefit from the pooling of longevity risk, which is not a feature of defined contribution plans. In short, by providing a better balance of protection and costs, TBPs would offer a sustainable, innovative pension option to help support better retirement savings for Canadian workers.

Having consulted extensively with Canadians, pension experts and industry, our government continues its work in developing a framework for TBPs that meets the needs of all stakeholders.

Although the details of this framework have yet to be finalized, I can assure Canadians what TBPs will not do: TBPs will not take away benefits that retirees already have earned without their consent. We will not bring forward a framework that allows for the conversion of accrued benefits without explicit consent from pension holders.

We are still working toward finalizing an effective and responsive framework for target benefit plans that reflects this commitment. In the meantime, those who are retired or saving for retirement will benefit tremendously from targeted tax relief, new optional savings methods like the tax-free savings account, and the full range of measures that I have outlined here this evening.

[Isabelle Morin, NDP, Notre-Dame-de-Grâce—Lachine, QC]

Mr. Chair, could the minister tell me what percentage of single seniors live in poverty?

[Joe Oliver, Conservative, Eglinton—Lawrence, ON]

Mr. Chair, as a result of the measures we have taken since 2006, seniors and pensioners receive additional targeted tax relief of about $3 million a year, and these measures include a $2,000 increase in the age credit amount and the introduction of pension income splitting. Furthermore, the government created a guaranteed income supplement top-up benefit for Canada's most vulnerable seniors and strengthened the retirement income system.

[The Assistant Deputy Chair, Conservative, Bruce Stanton]

Order, please.

Before we continue, could the hon. member tell us how she will share her 15 minutes?

[Isabelle Morin, NDP, Notre-Dame-de-Grâce—Lachine, QC]

Mr. Chair, I will share my time with the member for Thunder Bay—Rainy River.

I would like to give the minister another chance to answer my question. I asked him how many single Canadian seniors live below the poverty line.

[Joe Oliver, Conservative, Eglinton—Lawrence, ON]

Mr. Chair, I am proud to say that we have the lowest poverty rate among seniors in the world.

[Isabelle Morin, NDP, Notre-Dame-de-Grâce—Lachine, QC]

Mr. Chair, for the minister's information, Statistics Canada says it is 28.5%.

The OECD has shown that although poverty rates among seniors in other countries dropped between 2007 and 2010, poverty rates are rising in Canada.

Why did the Conservatives choose to make things worse by raising the age of eligibility for old age security?

[Joe Oliver, Conservative, Eglinton—Lawrence, ON]

Mr. Chair, as I said, we are proud of the fact that poverty rates in Canada are lower than elsewhere in the world. That is due to many of our initiatives. We have a very progressive tax system. A million people who used to have to pay tax no longer have to.

[Isabelle Morin, NDP, Notre-Dame-de-Grâce—Lachine, QC]

Mr. Chair, once the changes to old age security eligibility are fully rolled out, how much will those changes cost seniors?

[Joe Oliver, Conservative, Eglinton—Lawrence, ON]

Mr. Chair, economic action plan 2015 includes several measures to help seniors, such as reducing the minimum withdrawal factors for registered retirement income funds so that seniors can preserve more of their savings to better meet their financial needs in retirement.

[Isabelle Morin, NDP, Notre-Dame-de-Grâce—Lachine, QC]

Mr. Chair, it will cost the average senior much more than $13,500.

What is the cost of this cut to the pensioners who also receive the guaranteed income supplement?

[Joe Oliver, Conservative, Eglinton—Lawrence, ON]

Mr. Chair, Canada has one of the strongest retirement income systems in the world. One of the pillars of that system is the old age security program.

Since taking power, our government has introduced numerous measures to give Canadians more savings options and to ensure that seniors enjoy financial security in retirement.

[Isabelle Morin, NDP, Notre-Dame-de-Grâce—Lachine, QC]

Mr. Chair, in fact, it is about $32,000 less for each senior citizen under the Conservative plan.

I would like to know what impact the cuts to old age security will have on people aged 65 and 66, according to a study conducted by the Université Laval.

[Joe Oliver, Conservative, Eglinton—Lawrence, ON]

Mr. Chair, as I was saying, we recognize the importance of supporting seniors, who, after all, have helped build our country.

We are providing extra support across the country with lower taxes, solid pensions, and strong health care. Our government's low-tax plan has resulted in over 380,000 seniors being taken off the tax rolls.

We want to ensure that seniors have a choice and flexibility in how they save, and that is why we have modified the RRIF program.

[Isabelle Morin, NDP, Notre-Dame-de-Grâce—Lachine, QC]

Mr. Chair, according to that study, the number of seniors living in poverty will double as a result.

Does the minister know how much the GIS would need to be increased to eliminate seniors' poverty?

[Joe Oliver, Conservative, Eglinton—Lawrence, ON]

Mr. Chair, we have done more, certainly, than the previous government. We are in a position to have a better system for retired persons than other countries.

We have done so many things: introducing pension income-splitting, which the other party voted against; increasing the age credit amount by $2,000; doubling the pension income credit to $2,000; enhancing the new horizons for seniors program by increasing funding—

[The Assistant Deputy Chair, Conservative, Bruce Stanton]

Order. The hon. member for Notre-Dame-de-Grâce—Lachine.

[Isabelle Morin, NDP, Notre-Dame-de-Grâce—Lachine, QC]

Mr. Chair, I am asking the minister how much the GIS would need to be increased by to eliminate seniors' poverty.

[Joe Oliver, Conservative, Eglinton—Lawrence, ON]

Mr. Chair, in 2011 we introduced the GIS top-up of $600 for single seniors and $840 for couples, which grows with inflation. This represented the largest increase for the lowest-income seniors in a quarter-century.

[The Assistant Deputy Chair, Conservative, Bruce Stanton]

Resuming debate, the hon. member for Thunder Bay—Rainy River.

[John Rafferty, NDP, Thunder Bay—Rainy River, ON]

Mr. Chair, the minister is free to answer questions with yes, no, or I don't know for any of them.

Can the minister tell us how many Canadians will face a drop of more 20% in their standard of living at retirement?

[Joe Oliver, Conservative, Eglinton—Lawrence, ON]

Mr. Chair, we have lowered taxes for seniors and pensioners. We have created the tax-free savings account and have almost doubled the amount Canadians can save, but the NDP would roll back that increase. We introduced income splitting for seniors in the same financial circumstances so they can pay closer to the same tax. The opposition would take this away. We lowered taxes 180 times--