Debates of Oct. 24th, 2016

Canada Pension Plan

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Mr. Speaker, we increased the guaranteed income supplement by approximately $947 in budget 2016, and that is going to help approximately one million Canadians who are the most vulnerable of the vulnerable. In addition, with the enhancement of the CPP, the working income tax benefits will be worked in such a manner that low-income Canadians will be left better off with the imposition of the enhanced CPP than they were prior, and that will assist them in moving out of poverty.

[Gord Johns, NDP, Courtenay—Alberni, BC]

Mr. Speaker, I think about seniors in my riding who are struggling to make ends meet, What comes to mind is that I met a woman during the campaign who had to make a choice between buying food or buying medicine. These are the challenges that pensioners are facing right now. I met another woman who had gone to the food bank for the first time. I also went to the Port Alberni homeless shelter recently, and they said they had seen a skyrocketing number of seniors there.

Could the member elaborate on how this enhancement is supporting those people? We look at the most recent figures available, which show that 30% of single elderly women live in poverty. That number has tripled in the last 20 years. Only 4.5% of female CPP recipients receive the maximum benefit compared to 18% of men. How will this CPP enhancement plan lift vulnerable elderly women out of poverty?

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Mr. Speaker, I am well aware of the pressures faced by seniors in my riding, as well as his, so I do note his comments with a large amount of empathy. Our government is committed to helping all Canadians. We did that with the enhanced guaranteed income supplement. That was the first step, with immediate relief provided to the most vulnerable seniors.

The enhanced CPP allows future generations and current workers to save more for their retirement so that they are not put in a position where they are unable to afford the basic necessities. I applaud our finance minister for his leadership on this file, for working together with all the provinces, of whichever political stripe, and coming to an agreement so quickly into our mandate. I think we should be applauded for that and the work he is doing.

[Gary Anandasangaree, Liberal, Scarborough—Rouge Park, ON]

Mr. Speaker, I know my friend has been involved in the investment banking sector for a long time, and he has a great deal of small businesses in his riding. I am wondering what kind of feedback he has had from small business owners with respect to the benefits of the expanded CPP to small business, as well as to all Canadians.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Mr. Speaker, I would like to thank my hon. colleague and good friend for his question. Small businesses want to have consumers who spend. We want to see aggregate demand in our economy. The Canada pension plan, through its payments to beneficiaries who are hard-working Canadians, and which was over $45 billion last year, will allow for aggregate demand to increase. People will have more funds to invest. It acts as an automatic shock stabilizer for our economy, and it allows Canadians to go to the small businesses in his community and my community to spend their dollars and support local and small businesses. The reaction has actually been quite favourable. They understand that people need a secure and dignified retirement.

[Gary Anandasangaree, Liberal, Scarborough—Rouge Park, ON]

Mr. Speaker, I am proud to speak this afternoon about Bill C-26, an act to amend the Canada Pension Plan, the Canada Pension Plan Investment Board Act and the Income Tax Act. I am proud to stand today in fulfillment of one of the key election promises that Liberals made about a year ago. These changes would make life better for a new generation of retirees.

In today's dollar terms, passage of this bill would mean that the maximum CPP benefit would go from $13,110 to nearly $20,000 per annum. This would represent the single largest change in the CPP in a generation. A change of this magnitude requires the consent of seven out of the 10 provinces, and we have that.

This proposal is a long time coming. On June 10, 2010, the former minister of finance for Ontario, Dwight Duncan, wrote to the then minister of finance seeking expansion of the CPP. I would like to quote his letter, which states, “Ontario supports a pan-Canadian approach to the reform that will provide tomorrow's seniors with better, lower-cost tools to maintain their standard of living in retirement.” Notwithstanding repeated requests for action, the previous government simply failed to advance this issue federally.

The Province of Ontario decided to go ahead on its own, with the Ontario retirement pension plan. As the program was rolled out and ready for implementation, our Minister of Finance took charge and developed a newly expanded CPP program.

This is a historical development for our country. While it is not the solution for all of our pension and retirement woes, it certainly is a great leap forward. The next generation of Canadians needs to live with independence, dignity, and pride in retirement.

I would like to take this opportunity to commend and thank our Minister of Finance and all of his provincial counterparts for reaching this historic agreement on retirement security for Canadians.

Under Bill C-26, contributions would gradually increase, starting in 2019, to a total of an additional 1% of earnings for employees and 1% of earnings for employers by 2023. For self-employed persons, contributions would also slowly rise to a total of 2% of earnings by 2023. Employee contributions would be tax deductible. For the first time since 1965, income from the CPP would increase from 25% to 33% of a person's pre-retirement income, to a maximum income threshold of $82,700.

In addition to the changes to the CPP, our government has already implemented two key changes that would help retirees. First, we increased the guaranteed income supplement for single seniors by 10%, to a maximum annual top-up benefit of $947. We know that Canadians work hard and deserve to retire in a timely manner, and, as such, we rolled back the eligibility for old age security from 67 to 65 years old. Even then, for many, the thought of retirement itself is highly stressful because many will not able to maintain their pre-retirement standard of living.

I want to take a moment to review the current options for retirement income. There are essentially two types of retirement funds available for Canadians. One is provided and administered by governments and the other by individuals and corporations. Most Canadians have an element of both. The public scheme includes the guaranteed income supplement, old age security, and the Canada pension plan.

I will focus on the second option, which comprises a range of registered employer programs, often set up by employers for the benefit of their employees and a host of private investment options, such as RRSPs, TFSAs, and other investment instruments.

For the generation before us, retirement was part of the life cycle. If you had a well-paying, secure job, you took retirement for granted. Workplace pensions were the norm, but with changes to the global economy, fewer and fewer Canadians now work in jobs that have registered pension plans. In fact, since 1993, the percentage of Canadians with workplace pension plans has dropped from 30% to just over 23% today. This downward trend is likely to continue.

Additionally, the trend has been away from defined benefit plans, like the CPP, which guarantees set payments, to defined contribution plans that provide pensioners with much less security. Now many Canadians are on their own for their retirement. They have to use RRSPs, TFSAs, and private investments through multiple investment vehicles, and that is if they are lucky.

The private options have several limitations. First, the current challenge in the job market is not the same as it once was. It is much more difficult for people in their twenties to find a job, let alone one with a good pension plan. In 2012, the unemployment rate for youth in Ontario was a staggering 16.9% and in some communities, including mine, it was much higher than that. If the youth in our communities have to work in low-paying jobs in which they cannot earn a good living until they are in their late twenties or even in their thirties, how can we expect them to start saving for their retirement?

Second, even if an individual has investments, they have faced a very vulnerable market in recent years. Members will recall the financial meltdown in 2008. As a lawyer at that time, I met many families who were exceptionally stressed about their future. They were worried about losing as much as 40% of their portfolios. Many, in fact, have still not recovered from that loss.

Third, there is the issue of historically low interest rates. Today, we have many retirees who saved up, were diligent, and are now facing a decade of historically low interest rates. I searched the popular portals for the best possible advertised interest rates today. The current maximum payout is 2% per annum. They are the lucky ones. For a family that worked hard and was able to save $500,000 and placed it into a bond or a GIC, the maximum payout is $10,000 per year. The chances are that historical low interest rates will be around for a while, so those with modest or even good savings will not be able to meet their needs.

I think it goes without saying that one of the major benefits of the CPP is the exceptional management provided by the CPP Investment Board. Even in these most volatile times, the CPPIB is one of the best-run investment firms in the world. They have managed Canadian retirement funds for 50 years with prudence, and yet in the last five years alone they have yielded an annualized return of 10.6%.

I know that my friends opposite feel that the changes to the CPP will be an additional burden on our employers and may limit job creation. Up until last year, I ran a law firm with about 20 employees at the peak of my practice. I prided myself on making payroll each and every pay period. For most small businesses this is often the test. I ran the firm for 10 years, and during this time my employees were the reason for my success. Without employees, I would not have been able to succeed, and I can assure hon. members that all small businesses succeed because of who they have working for them.

Most small business cannot afford to set up private defined benefit systems or extended health coverage. Most of us rely on our publicly funded and administered programs, which are the envy of the world. Between student loans, the high costs of housing and transportation, and the day-to-day expenses of running a household, there simply is not enough money to save for retirement.

That's why an expanded CPP system is good for small business. They can continue to retain good staff, be good employers, and be assured that a well-managed investment board is the custodian of their and our future retirement. I contend that the peace of mind and security of a better retirement will ensure a more productive workforce.

After a lifetime of working, we must do more to ensure that people are able to retire with dignity. We cannot leave this to the marketplace alone. Governments, especially, the federal government, must lead in filling these gaps.

Today 24% of families nearing retirement age are at risk of not having enough savings to maintain their standard of living when they retire. With Canadians living longer than ever, many Canadians also risk outliving their retirement savings. By enhancing the CPP, we will reduce the number of Canadians without sufficient retirement savings.

In closing, I would like to applaud the Minister of Finance and departmental officials for introducing a bill that is so well thought out. It is a piece of legislation that is truly good for Canada. When people look back on this Parliament, the enhancements made to the CPP will certainly be one of its legacies. By taking the steps now to improve retirement security for Canadians, we can ensure that more Canadians can retire with peace of mind.

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

Mr. Speaker, I listened to my friend's speech with interest.

I have to say this, though: there is an alternative to increasing mandatory premiums. That alternative would be either to give individuals the option of contributing more to their CPP and then receiving more in retirement, or to maintain, and indeed enhance, the existing saving vehicles that give people the incentives and opportunity to save more of their own money and receive a tax benefit for doing so.

The government has chosen the mandatory route, as opposed to offering more choice to individuals. It has chosen increasing mandatory premiums rather than giving individuals flexibility.

We all want to see people have a secure retirement, but can the member help me understand why we should be taking away choice from individuals in that process and not simply empowering them with the means to save for their own retirement and the incentive to do so?

[Gary Anandasangaree, Liberal, Scarborough—Rouge Park, ON]

Mr. Speaker, I thank my friend for the question and for always engaging on a diverse range of issues.

The CPP is a universal system, one that is available to everyone who works. We know that the management of the program itself is essential. The CPPIB, as I mentioned, has been around for 50 years. It has an enviable record of success and prudence, even in the most volatile of situations. Members will recall the 2008 financial crisis, from which the CPPIB actually came out on top. It was very stringent in its management and ensured that the funds that Canadians depended on for their retirement were secure. This is the type of investment that is required for a collective retirement future.

Of course, there are many other options available to people, and I have mentioned RRSPs, TFSAs, and other investment vehicles, which are always available to people. However, I think the studies typically show that they are not often maximized. Therefore, when it comes to a publicly run system, I think the CPP will be in the best interest of Canadians in the longer term, and will certainly be augmented by many other private options, such as RRSPs and TFSAs.

[Gord Johns, NDP, Courtenay—Alberni, BC]

Mr. Speaker, the Port Alberni Shelter Society has been having a very difficult time getting money and support from Ottawa. We are seeing a skyrocketing number of seniors and new pensioners showing up day after day.

What proposals is the government considering for reversing the increasing poverty among seniors in Port Alberni and across Canada while Canadians wait for these enhancements to take place? If the member could address that, it would be greatly appreciated.

[Gary Anandasangaree, Liberal, Scarborough—Rouge Park, ON]

Mr. Speaker, I really do not have to go that far to find an example. My mother, a single mother who has worked for over 30 years in this country, is not that well off in retirement.

The increase in the guaranteed income supplement introduced in the budget has helped, but there is certainly a lot more that we need to do with respect to housing. It is a commitment that we as a government have. I believe that $20 billion is going forward for housing. Ideally, that will go toward senior housing as well.

The issue of income security for seniors is top of mind for us. It is one of the first things we did as part of our commitment to increase the guaranteed income supplement. Rolling back the age of eligibility for old age security from 67 to 65 will help seniors in the future. Certainly, the increased CPP from Bill C-26 will also assist.

Therefore, a combination of these programs will definitely assist, but I do share my friend's concerns.

[Gérard Deltell, Conservative, Louis-Saint-Laurent, QC]

Mr. Speaker, it is an emotional thing for me to speak to this bill in the House because it is the first time I am rising as the official opposition finance critic.

Last week, I had the pleasure of asking the government a number of questions, but I did not get any answers.

On this matter, let me pay my respects to the hon. leader of the official opposition for her confidence in giving me this crucially important role in the caucus and this democracy.

When we are talking about finance, we are talking about the heart of the country, because everything depends on our capacity or lack of it to pay for policies.

Also, I am very pleased to succeed, as well as I can, the MP for Milton who served so well as critic. We all know how well she served as a senior cabinet minister in the Harper government.

Bill C-26 does have one thing going for it: it shows just how far apart philosophically the current government and my party are.

That difference is crystal clear to us, because this proposed policy and bill show the Liberal vision for public money. For the Liberals, it is a good way to pick up money from the wallets of hard-working people. It is a good way to pick up money from entrepreneurs and those who create jobs and wealth. However, Conservatives prefer to leave the choices and give the tools to citizens to have money in their pockets, to have money to put to other purposes, and especially to put money aside for their retirement.

The good thing about Bill C-26 is that it clearly illustrates the difference between our Conservative vision and that of the Liberals. The Liberal Party thinks it is a good idea to take more money from people and from entrepreneurs, but we think it is better to give people the tools to save money and put some aside for retirement.

What is this bill about? Basically, it would increase workers' contributions from 9.9% to 11.9%, and it would be 40 years before those workers see any tangible benefit.

That is what this bill would do. I summarized it pretty briefly, but since this is about pensions, and since anyone filing a tax return knows how tricky things can get when the time comes to pin down exactly what kind of room to manoeuvre the government has and what the rules are, I will talk about the specific rules in the bill.

At the moment, Canada pension plan premiums are set at 9.9% of pensionable earnings per employee, that is, between $3,500 and $54,900 annually, up to a maximum contribution of $4,959.90 a year, to be shared equally by employee and employer. I will come back to this a little later. It does not stop there, because over the next 40 years, CPP benefits will rise from 25% to 33% of income replacement in retirement in eligible cases. In order to fund those benefits, as I mentioned earlier, the government is going to raise pension plan premium rates from 9.9% to 11.9% beginning in 2019. In addition, the maximum yearly rate for pensionable earnings will rise to $82,700 in 2015, and earnings between the current and future annual maximums will be subject to a contribution rate of 8%. As a result, premiums, which are divided between employer and employee, will rise to $2,200 per worker. Obviously, those are a lot of figures and data. Many factors are at play here, so it is important that we do this right.

Now that the table has been set and everyone has the figures, let us really get to the heart of the matter and look at why, from our point of view, this bill is a bad idea. Increasing the Canada pension plan will leave Canadians with less money in their pockets. As we have shown, it could mean as much as $1,100 for some employees. That is the employee's share, but the employer's share will double that amount, for a total of $2,200 per employee who works in a plant, office, or any business. Families with two working parents will have $2,200 less in their budgets to raise their children and will have to make certain choices.

Another thing: entrepreneurs do not exactly have an affinity for this government, which imposed the carbon tax. The Liberals promised to lower the corporate tax rate from 11% to 9%, but they broke that promise. Our entrepreneurs are paying even more.

With the Canada pension plan bill, entrepreneurs will now have to spend more than $1,000 per employee. If this amounted to anything then at least we could say that everyone is doing their part. The problem is that it will take 40 years before this truly comes into effect. This changes nothing in the immediate future and does nothing for seniors who really need help immediately.

That too is the crux of the matter. There is nothing wrong with having a long-term vision for the Canada pension plan. We all know that there will be far fewer workers in the job market five, 10, 15, or 20 years from now, or so the demographics suggest. We have to take the necessary measures.

However, the necessary measures being proposed by the current government seek to take even more money out of everyone's pockets. When we formed the government, we implemented positive and constructive initiatives that were based on individual choice. That is the big difference.

Whereas this government thinks it knows what is good for people, we think that people know what is good for them, and we give them the tools to save. The TFSA is one such tool, and I will come back to that later. These two visions are completely different. What is good about this bill is that at least the burden is appropriately shared.

Let us take the example of Mr. Smith or Ms. Smith, who is employed, or even my son-in-law, whom I saw on the weekend, and who is a nice guy by the way. Some households will pay up to $2,200 more per year.

Those just getting started in life—as we refer to those who have just finished school—all have a bit of student debt, and that is not unusual. However, when they enter the job market, they want some help. They do not want to have less money in their pockets. They definitely do not want a government that imposes new rules and that will take $1,100 out of workers' pockets. That is what the government will do.

This bill is not good for young people entering the job market who have to pay back student loans. It will also be harder for young families to save enough money to go on vacation and enjoy life with new babies and so on. It will definitely be harder for businesses to create jobs and give their workers raises because they will have to shell out an extra $1,000 for each employee.

That is $1,000 less that could have gone to pay raises, $1,000 less per employee that could have been spent on training; and $1,000 less per employee that could have been spent on productivity-boosting equipment. It is also $1,000 less toward hiring people, creating jobs and wealth, making businesses even more productive, and enabling them to share all that talent and potential with the world given that our country basically relies on export. Companies will have $1,000 less to invest in their future and the future of their employees.

Our vision, which I clearly described earlier, is to trust people. We are aware of that issue and so was our government. Our predecessors, former finance ministers Jim Flaherty and Joe Oliver, considered the situation and took steps to implement measures to allow people to save and make the choices they felt were necessary, rather than having the government impose a system on them. That is the big difference between our vision and that of the current government.

Obviously, that is why we decided to increase the guaranteed income supplement. This year, the government implemented that measure. That is a good thing. Well done. It does not happen every day, but I am pleased to say that the government followed the path that we laid out when it comes to the guaranteed income supplement for seniors. That was the right thing to do and the government implemented that measure in the budget.

I remember that we were doing a lot of interviews after the budget was tabled and a reporter told me point-blank that there must be something good in this budget. In that sort of situation, it is not always easy to come up with an answer and one has to think quickly. My thoughts immediately went to our seniors, because we knew that it would be a good thing to help them by increasing the guaranteed income supplement. That is what we did and the current government implemented that measure. Well done.

Another difference between our vision and that of the current government is that we invented what is called the tax-free savings account or TFSA. We are very proud of that. I remember quite clearly the moment that this measure was announced. I can still see my colleague from Bellechasse—Les Etchemins—Lévis, who by the way announced yesterday that he would be running for leadership of the Conservative Party. I wish him every success in that endeavour.

When he was minister, he said that people would really want that, especially people in Quebec. He was quite right, given that the tax-free savings account was one of our government's finest achievements to encourage people to save. This helped make progress on old age pension amounts. That is why we support incentives aimed at helping people save for their retirement.

The proposed measure means that the government will have to manage between $2,000 and $2,200 from the employer and employee. Can we really trust the Liberal government to manage our money? Need I remind everyone that this government was elected on a promise of small $10-billion deficits, but then presented a budget that will create a $30-billion deficit? TD Bank estimates that it could even reach $34 billion. Last week the Prime Minister said he was not really sure how this was all going to turn out in the end. Business owners are being asked to shell out $1,100 more per employee. I am not convinced that the Liberals are in the best position to properly manage public funds.

That is why we think that it is much better to trust people and allow them to make their own choices, critical choices for the future, than to take $1,100 per worker per year directly out of the employers' pockets.

If the government ever moves forward with this bill, the increase in CPP contributions will hurt the economy. There will be an estimated 0.4% to 0.7% reduction in employment, or 1,000 fewer jobs per year for 10 years. These estimates come from the Department of Finance Canada, not from a right-wing think tank.

The gross domestic product will drop by 0.3% to 0.5%, business investment and disposable income will drop by 0.3% to 0.6%, and long-term private savings will go down 7%.

That is not what we would call an economic stimulus for creating employment and wealth. It is hard to do worse than a reduction in employment, GDP, investments, disposable income, and private savings. All these economic development factors appear together in the same sentence and it is all bad news. It is hard to do worse when it comes to creating wealth and employment.

The Fraser Institute found that a 1% point increase in the CPP contribution rate reduces private savings by nearly 1%.

When Canadians workers who get up in the morning, work hard, and want value for their money realize on Thursday that they will now have $1,000 less a year in their pockets because of the government and its changes to the CPP, they will certainly not be inclined to save. We are not the ones saying it. It is the Fraser Institute.

The less people save, the more at risk they become. That is the difference between our vision and the Liberal government's. The Liberal government is telling people what is good for them. We trust people because we believe that they know what is best for themselves.

Let us talk about entrepreneurs. According to the Canadian Federation of Independent Business, 70% of small business owners do not agree with the proposed CPP hike, which could have a direct impact on their business. The Canadian Federation of Independent Business, meaning the entrepreneurs who create jobs and wealth and know how to manage a company, are telling us that this is not a good idea.

Furthermore, 90% of small businesses believe it is important that public consultations be held before finalizing any agreement. Where, how, with whom, and how many times were public consultations held? We did not really get much of an answer.

A C.D. Howe Institute report indicates that the Liberals' plan will not benefit low-income earners. This independent economic institute says that their contributions will increase, but the net increase in retirement benefits will be low because the higher CPP benefits will be offset by a clawback of GIS benefits.

In other words, what the government takes with one hand, it may not necessarily give back with the other. That is the problem. That is why we established the guaranteed income supplement, and it has been a big help to those in a difficult situation. That was a positive move.

The Liberals are so much in agreement that they adopted our approach. Well done. However, Bill C-26 will take more out of people's pockets, which will put them at greater risk.

That is why Canadians do not like this bill. According to Angus Reid, only 9% of Canadians have been following this debate. That is worth noting. We are not talking about something that might happen at some point. This will affect all Canadians and all workers, yet a mere 9% of them are aware of what is going on in the House right now.

According to a poll conducted for the Canadian Federation of Independent Business, the majority of Canadians know nothing about the funding structure of the Canada Pension Plan. It turns out that 70% of working Canadians oppose an expanded CPP. More than one-third of employed Canadians say they cannot afford the proposed hikes. More than 80% of Canadians want the government to hold more consultations before making a decision.

That is the reality we are dealing with today because this measure will affect all Canadian workers. We have to do something to ensure that people at least know what this is about. We need to take our time and debate this important issue thoroughly.

Let us look at the situation facing seniors. According to the McKinsey firm, 83% of Canadian households should maintain their current standard of living in retirement. According to Statistics Canada, the number of low-income seniors has dropped from 29% in 1970 to 3.7% today. That is the lowest poverty rate in the world. This very interesting fact deserves to be recognized.

According to the C.D. Howe Institute, Canada's savings rate has climbed from 7.7% of one's salary in the 1990s to 14.1% today. Poverty among seniors is therefore declining, twice as many Canadians are saving, and the savings rate is double what it was 20 years ago. Those are all good things.

Poverty rates among seniors have dropped and Canadians are saving more. We believe in reasonable, positive incentives to encourage saving, rather than coercive measures that take money out of taxpayers' pockets.

That is why Dan Kelly, president and CEO of the Canadian Federation of Independent Business, said that it was extremely disappointing that the Minister of Finance is putting workers' wages, hours and jobs in jeopardy.

The chief economist at the Canadian Federation of Independent Business said that the agreement would have a serious adverse effect on workers and the Canadian economy. According to him, the announced changes, including higher contributions, could put salaries, working hours, and Canadian jobs in jeopardy. This is not good for the economy.

Yves-Thomas Dorval, from the Conseil du patronat du Québec, says he is concerned about the new direction of the Canada pension plan and its impact on the Canadian economy. He says that there is no universal solution for encouraging retirement savings. On the contrary, this could have an adverse effect on economic activity, employment, and salaries.

As far as seniors are concerned, Charles Lammam from the Fraser Institute wrote that instead of spending political energy debating CPP expansion by falsely believing that many middle- or upper-income Canadians are not saving enough for their retirement, the focus of public debate needs to shift to finding better ways to help financially vulnerable seniors.

That is why our party opposes this bill. We do not think it is a good idea to take even more money out of workers' pockets and to force businesses to give even more money to the government.

We think that the best way to encourage people to save for a decent retirement is to give them the tools they need to make the choices that affect them. They are the ones who are in the best position to know what is good for their retirement, not the government.

That is why our government implemented positive measures, such as the guaranteed income supplement and the TFSA, which allow people to make their own informed choices. Rather than imposing a new tax on Canadians, we helped them to save for their retirement.

All this government wants to do is meddle in people's lives even more and take money out of taxpayers' pockets. We trust Canadians' good judgment. That is why we oppose this bill.

[Ken Hardie, Liberal, Fleetwood—Port Kells, BC]

Mr. Speaker, I congratulate the member for Louis-Saint-Laurent on his new position. From my vantage point, it is always entertaining to see him present. I may not agree very much with what he says, but his presentation is very good to hear.

In the big picture there seems to be a contradiction on the Conservative side. On the one hand, the Conservatives say that putting a price on carbon will take money out of the pockets of people, people who cannot afford it and that improving the CPP will take money out of the pockets of those same people. On the other hand, we should leave the tax-free savings account at $10,000. That does not connect very well unfortunately. It would have been interesting to see how many people would have taken advantage of that huge lift in the tax-free savings account.

On top of that, household debt is high and 60% of Canadians in the private sector have no pension plan.

What does the member see the government facing in the future when all of the people who have not had the means, much less the choice, but certainly not the means to save as maybe the elite has for retirement, and simply cannot afford to live?

[Gérard Deltell, Conservative, Louis-Saint-Laurent, QC]

Mr. Speaker, first, we created the guaranteed income supplement, which helped those very people. It was such a good idea that we increased the amount of that benefit and the current government followed our lead and did likewise. I encourage the member to use caution when talking about the elite, since a person does not need to be a millionaire to save money. Anyone who is able to manage their money properly is able to save.

I would also like to remind the member that, if the government encourages people to save, like we did with the TFSA, they will have choices. The government wants to force people to pay over $1,000 a person per year into a program that they will not be able to access for another 40 years. We do not think that the Liberal approach is the right one, and we think that the government should instead continue with the incentives that we put in place.

[Alistair MacGregor, NDP, Cowichan—Malahat—Langford, BC]

Mr. Speaker, I listened with interest to my hon. colleague's speech about the Canada pension plan and his views on it, particularly his comment about giving people more choice and the fact that the Conservatives stood for putting more money in the pockets of people. I would argue that when we look at the poverty situation among seniors, many of them do not have a choice. The level of poverty that I have witnessed in my community among seniors shows that they really have no choice. It is a day-to-day fight for them.

Studies that came out earlier this year showed that only 15% to 20% of middle-income Canadians without a workplace pension plan had saved enough money for retirement.

I also want to take issue with the Conservatives calling this a tax. This is not a tax. This would be a deferred wage for retirement years. I do not know of any tax that I pay where I would get money back later on. This is not a tax. People would be contributing to their retirement security to provide them with a meaningful income.

Furthermore, putting more money in the pockets of seniors is a good thing for small communities because seniors spend money in their communities. They often own their own homes and many of their housing assets. Putting more income in their pockets is be good for local communities.

In the previous Parliament, the Conservative members supported the pooled registered pension plans, but most of those benefits would overwhelmingly go to upper middle-class Canadians. Would the member now admit that those plans failed to improve the lives of middle and lower-income Canadians and that it is smart policy to educate Canadians about saving more? Current statistics show that this is not the case.

[Gérard Deltell, Conservative, Louis-Saint-Laurent, QC]

Mr. Speaker, I do not want to start a fight on words. Is it a tax or is it not a tax? What I do know is that the government will take money out of the pockets of people. Maybe it is not clearly a tax, but the government will put its hand in the pockets of the people and that is not good for the wealth of the people.

That is why our government established the tax-free savings account, in which people have the chance to put money aside for their retirement. That is great. It is so great that the Liberal government should keep this program. This is not so bad.

I want to give some numbers to my colleague who said that older citizens had some difficulties. We all know some people who have difficulties.

According to Statistics Canada, the percentage of low-income seniors was 29% in 1970 and today it is 3.7%. It is Statistics Canada, not the Conservatives, who are saying this. Clearly, this is a significant improvement. The best way to prevent poverty in old age is to give people the tools they need to save money and to let them make their own choices based on their means. They know how to manage their money, not the government, and especially not this government, which wants to take money out of their pockets. That is also why our government created the TFSA, which is an excellent tool, and why we want the government to keep it.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Mr. Speaker, I would like to thank my colleague for his presentation, and I congratulate him on being named the finance critic.

I am a business owner. I have 25 employees. I have an associate who, with my daughter, is involved in running the business. This kind of measure will definitely impact my business and thousands of others across Canada.

Can my colleague tell us about the implications of such a measure for a company that has an average of 20 to 25 employees? Potentially, what would this mean in terms of staff reductions caused by the new costs of this measure?

[Gérard Deltell, Conservative, Louis-Saint-Laurent, QC]

Mr. Speaker, that is the problem. With this bill, the government is picking the pockets of not only workers, but also employers. I would actually like to salute all business owners, who are the real job creators and wealth creators.

A 25-person company like the one my colleague owns and operates would be taking a hit of at least $1,000 to $1,100 per employee. In other words, in the case of a 25-person company, that is $27,000 less.

For a small business with 25 employees, $27,000 would be enough to hire someone part time, provide training to the workers, or purchase equipment to increase productivity so the company can sell more product outside Canada. It could then generate even more wealth, for that is what our businesses do. I do not want to keep repeating the same argument, but when business owners are forced to shell out another $1,000 for each employee, that is $1,000 less for development, hiring, and pay raises. It is therefore anything but positive, constructive, and good for our economy.

[Kevin Lamoureux, Liberal, Parliamentary Secretary to the Leader of the Government in the House of Commons]

Mr. Speaker, why does the member believe the Conservative Party is right on this issue? Provincial governments came together in Vancouver and reached what I would call a historical agreement. This bill is in the best interests of the workers and Canadians, as a whole, are very supportive of it.

We have governments from all regions of the country, we have the national government demonstrating strong leadership on the pension front, and then we have the Conservatives who seem to be out of touch, once again, with Canadians.

Could the member explain why are all the other governments wrong, but the Conservative Party, which is out of touch, seems somehow to be correct in its mind?

[Gérard Deltell, Conservative, Louis-Saint-Laurent, QC]

Mr. Speaker, I appreciate the fact that my hon. colleague asked me a question. I really appreciate that he is always there and that he always has something to say, even if all we say is not good.

I cannot believe my hon. colleague from Winnipeg talked about the Vancouver meeting, the Vancouver accord. May I remind him that the Vancouver accord was based on the principle of the Paris accord. Does he not remember that the Vancouver accord was based on the fact that every province should support the decision all together, working together, and have the consultation in every province on the environmental issue?

What happened three weeks ago? The Prime Minister, in the House of Commons, dictated a new way for the carbon tax. This is why he scratched down the Vancouver accord, this famous meeting about which he talked. We have seen three ministers slam the door because his government cannot recognize, cannot appreciate, and cannot work with all the provinces.

[Terry Duguid, Liberal, Parliamentary Secretary to the Minister of Families]

Mr. Speaker, I will be splitting my time with the member for Brampton East.

Let me start by saying I am so honoured to rise in the House today to speak to Bill C-26, an act to amend the Canada Pension Plan, the Canada Pension Plan Investment Board Act, and the Income Tax Act.

To begin, here are a few basic facts about this program that has served so well for decades. It is a mandatory, contributory, social insurance program that provides partial income replacement for workers in Canada and their families in the event of retirement, disability, or death.

It began operation in 1966, and is overseen by federal and provincial finance ministers. Half a century ago, it took vision, diplomacy, and negotiation to reach this historic agreement. The then minister of national health and welfare, the hon. Judy LaMarsh, was the champion of this program, a senior member of the Lester B. Pearson government that brought us so many of our modern-day social programs.

The CPP covers employed and self-employed Canadians. Quebec has the separate but comparable Quebec pension plan. Contributions are collected on earnings above the year's basic exemption, $3,500, and up to the year's maximum pensionable earnings or $54,900 in 2016.

This is not the first time the CPP needed modernization. In the 1990s, as life expectancies began to lengthen and unfunded liabilities increased, the need to make important adjustments became clear. This change also required significant co-operation. Then federal finance minister, the Right Hon. Paul Martin, helped by his Winnipeg parliamentary secretary, David Walker, worked with provincial counterparts to do what was in the best interests of Canadians, and the CPP was significantly improved.

Today, again, we face the need for change. The proposed enhancement makes a couple of important changes. We will increase the amount of retirement pension from one-quarter to one-third of pensionable earnings, as well as the survivors' and disability pensions, and the post-retirement benefit, subject to the amount of additional contributions made and the number of years over which those contributions are made. We will increase the maximum level of pensionable earnings by 14% as of 2025. We will provide for the making of additional contributions beginning in 2019 and phased in gradually over seven years.

What is the reason for this change? Why have we brought forward the need to modernize and enhance the CPP?

First, a significant minority of Canadians approaching retirement age are not saving enough. Many middle-class families without workplace pensions are at risk of facing financial insecurity in retirement. Only 15% to 20% of middle-income Canadians are retiring with enough savings, according to a study from the Broadbent Institute. These individuals, now aged 55 to 64, will face a dramatic drop in their standard of living, and many will fall into poverty.

Furthermore, most working Canadians today do not have a workplace pension. This suggests that in the not-so-distant future, more retiring Canadians will be at risk of falling into poverty as well. The bottom line is that the average CPP benefit is simply not enough to ensure Canadians the secure and dignified retirement they deserve. The previous government did not act, even though the writing on the wall was clear.

Second, the economy of today continues to undergo significant transformation, rendering a far different landscape than the one for which the original CPP was designed, most notably, the decline of workplace pension plans, as I have already mentioned, low interest rates on savings plans, and the changing nature of work. The latter refers to increasingly contract-based job markets.

We must recognize these changes and ensure that our social insurance programs address the ever-changing needs of Canadians. On June 20, 2016, Canada's finance ministers reached a historic agreement to make meaningful changes to the CPP. These will allow Canadians to retire with more money in their pockets. The bill would make the necessary legislative changes to implement this historic agreement.

The enhancement would be fully funded, which is a requirement of the existing CPP legislation. As a result, the enhanced portion of the retirement pension would accumulate gradually as additional contributions are made. The full replacement rate of one-third of lifetime pensionable earnings would be reached after 40 years of additional CPP contributions. It is important to note that the proposed enhancement represents a separate addition to the CPP. Benefits under the current or base CPP would continue to be paid as before, based on a contribution rate of 9.9% on earnings. The new or additional CPP benefit amounts, based on two new contribution rates of 2% and 8%, effectively serve as a top-up to base CPP benefit amounts.

Importantly, the bill would be phased in slowly over seven years with the fully adjusted contribution requirements not coming into force until 2025. This would allow businesses the flexibility and long-term planning required. Total benefit amounts would be calculated using the same formula as under the base CPP.

These changes are long overdue and were promised in our election platform, thus representing the fulfillment of the needs of Canadians to secure their retirements and to provide greater financial security to vulnerable members of our society.

It is important to note that Canadians back this change. According to a recent Forum Research poll, over 65% of Canadians support making changes to the CPP.

I look forward to continued debate on the proposed legislation and to working with members on all sides of the House to ensure its passage. Given the buy-in from provincial ministers across the country, nine out of 10 provinces, this truly represents a non-partisan, national consensus, one which I hope all my hon. colleagues can get behind and support.

[Ted Falk, Conservative, Provencher, MB]

Mr. Speaker, I too am a small business owner, like my colleague from Quebec stated he was earlier. I have a partner who is running my business in my absence. I wonder if the member across the way could explain to Canadians how taking money out of the pockets of employees is going to help them to have a better standard of living today to better meet the needs of their children and their families.

Also, for every dollar that employees would be required to commit, the employer is going to have to contribute an equal amount. The Liberals already did not reduce the small business tax like they promised they would do. How would taking money out of the employers' pockets with additional CPP contributions help a business to grow and continue to create jobs and create wealth?

[Terry Duguid, Liberal, Winnipeg South, MB]

Mr. Speaker, I heard the answer from my colleague from the NDP across the way. It was very persuasive to me, and we are very persuaded on this side of the House. We are going to have a seven-year phase-in to allow for adjustments by businesses. As my hon. colleague from the NDP said, this is not a tax. This is an investment in our communities. It is an investment in the future of individuals.

It is interesting that the Liberal Party has always been at the forefront of investing in people and in our communities. The Canada pension plan was resisted by the Conservative Party back in 1966. I was just reading the records of the 1990 debate. Mr. Harper, in his previous incarnation as a Reform Party member, along with Preston Manning, opposed changes to modernize the Canada pension plan back then, and indeed, the Conservatives are opposing it today.

The hon. finance critic was talking about the GIS. The Conservative Party raised the age for OAS and the GIS to 67, and we have returned it to 65. That would have left many seniors in poverty.

[Rachel Blaney, NDP, North Island—Powell River, BC]

Mr. Speaker, I rise to say that I am going to support the bill today, but I have a lot of serious concerns.

The people of North Island—Powell River have a lot of seniors living in extreme poverty. I have talked to constituents who face challenges, asking themselves whether they should pay for their medication or eat this month, or pay for their medication or have heat this winter. Those are real concerns, so this is a good solution, potentially, for the future for someone like my 16-year-old son. However, is this the best solution for today?

Also, can we hear a little more about how we are going to invest in seniors today, and are we going to make sure that we do not see a clawback of the GIS in the future?

[Terry Duguid, Liberal, Winnipeg South, MB]

Mr. Speaker, I thank my hon. colleague for the question. It gives me the opportunity to talk about what this government has done for seniors.

As I was saying at the end of my last response to my Manitoba colleague's question, we've returned the age for the collection of the OAS and GIS back to 65 from 67. That is going to put an average of $13,000 in the pockets of each and every senior, many of whom would have been finding themselves in poverty or on social services rolls. We have increased the GIS top-up for almost a million seniors.

Also, we will be investing $200 million in seniors' housing over the next two years. We are working very hard on a national poverty reduction strategy, and I can say that seniors will be very much at the heart of that strategy.

[Raj Grewal, Liberal, Brampton East, ON]

Mr. Speaker, it is good to be back in Ottawa after a week of travelling with the finance committee. Today's debate is a very pressing one. The changes that our government is proposing to enhance the Canada pension plan are important to every working Canadian. Not only are they important, but they are much needed.

We know that today, one in four families nearing retirement, which is 1.1 million families, risk not saving enough for retirement. In particular, middle-class families without workplace pension plans are at greater risk of under-saving for retirement. A third of these families are at severe risk. To address this, a historic agreement was reached with the provinces in June to make meaningful changes to the CPP that would allow Canadians to retire with more money in their pockets. These enhancements would be phased in over a seven-year period, starting in 2019. Once fully in place, the CPP enhancements would increase the maximum retirement benefit by about 50%.

Enhanced benefits would accumulate gradually as individuals pay into the enhanced CPP. To fund these enhanced benefits, annual CPP contributions would increase modestly over seven years, starting in 2019. I want to remind my colleagues in the House that contribution rates in Canada are much lower than those in other countries with public pension plans. In fact, the CPP contribution rate is about half of the average rate among 25 countries in the OECD that have public pension plans. This remains true even with the CPP enhancement.

What would this mean to Canadians? What would it mean to young workers in their twenties? Recently, I spoke to 20-year-old Canadians and they asked what they would get out of this CPP enhancement. Workers nearing retirement asked me if this would change their pension benefits. Low-income workers worry that any extra contributions will come straight off their paycheques. These are very good questions.

For young workers in their early twenties just starting out their careers, this will be a great benefit for when they retire. By paying into the enhanced CPP, they will have more to retire on. The modest increase in contributions would be phased in over seven years, so people working with constant earnings of $50,000 would contribute an additional $70 per year, or $6 per month, in 2019. By the end of the phase-in period, those same people would be contributing $475 per year, or $40 extra per month.

By strengthening the Canada pension plan, workers will receive more money from their pensions, one-quarter of their eligible earnings to one-third of their eligible earnings. If people make $50,000 a year during their working lives, they will receive about $16,000 each year in retirement instead of $12,000 today. That is $4,000 more right into their pockets. In addition, the enhancement will increase the point at which a person stops making contributions by about 14% in 2025.

I know that some are concerned about the increased contributions and what they will mean to their bottom lines and, most importantly, their paycheques. We thought about this and designed a gradual phase-in, so that contributions would increase modestly over seven years.

We also thought about employers in designing the enhanced CPP. We specifically designed a slow phase-in of the annual CPP contributions, with the express purpose of minimizing the impact and giving employees and employers time to adjust to these new changes.

The great news is that young workers will see the largest increase in their retirements benefits. In fact, we know that young people in general find it difficult to save. Many are working in jobs that do not have company pension plans, which means they have to save for their retirement on their own. The fact is that a tax deduction, instead of a tax credit, would be provided to the employee contribution portion of the enhanced CPP. This would avoid new CPP contributions increasing the cost of savings.

Workers in the middle of their careers or nearing retirement will still benefit from our enhanced CPP, as the increased contributions that are made in 2019 will later go toward an enhanced retirement pension plan.

What about low-income workers who are worried about the effect of increased CPP contributions on their paycheques? How will the enhanced CPP help them? I want to assure my colleagues and low-income workers all across this country that an enhanced CPP would benefit all workers, including those with low incomes.

In order to make sure that low-income workers are not burdened financially as a result of these extra contributions, the government will also enhance the working income tax benefit. The proposed enhancement to the working income tax benefit is designed to provide additional benefits that roughly offset the incremental CPP contributions for eligible low-income workers. Therefore, with this enhancement, there will be no impact on disposable income, and when they retire they will also get a larger retirement benefit payment. The bottom line is that people who are working in Canada, paying into the CPP and planning to retire after 2019, will have more money in their pockets from the CPP retirement pension benefit.

Day in and day out, in my riding of Brampton East, I speak to constituents who call me personally about the issues they and their families face. I often hear that young Canadians are having a hard time finding permanent employment and are worried about their financial future, their financial outlook, and saving for retirement. I hear from young families and established families alike, who are thinking of retirement and realizing they do not have adequate savings. This concerns me, and many of us in this House.

The Canadian Association of Retired Persons estimates that roughly 600,000 seniors are living in poverty in Canada. That is more than the population of all of the city of Brampton. Frankly, it is unacceptable. Our government is doing its part to ensure that no seniors will be living in poverty in the future. We started by reversing the eligibility age of old age security to 65 and boosting the guaranteed income supplement, the GIS, by 10%, to provide almost $1,000 per year more per GIS recipient. That is aimed especially at helping low-income seniors who live alone. However, that is not enough. Associations like CARP have been calling for a CPP expansion for years, and it is about time that we delivered.

We feel that this is a win-win. I urge my honourable colleagues to support an enhanced CPP, which will further help Canadians contribute to a safe and secure retirement.