House of Commons Hansard #97 of the 42nd Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was cpp.
Sylvie Boucher Conservative Beauport—Côte-de-Beaupré—Île dOrléans—Charlevoix, QC
Mr. Speaker, I thank my hon. colleague for his question.
Unlike the NDP or the Liberals, I believe in Canadians. I believe that all Canadians are capable of making their own decisions. At some point, the government has to stop acting like a parent. You have to ask people to take charge of their lives. No one is against virtue, but promises are nothing but wind.
John Barlow Conservative Foothills, AB
Mr. Speaker, I wanted to ask my colleague a question. We have heard some comments from the other side about the impact the Conservative policies had. We had 1.3 million net new jobs. We had the best growth in the G7.
What the Liberals are not talking about is the impact the CPP tax hike will have on small businesses, which are our job creators. I would like to ask my colleague if she could talk a little more about the impact this CPP tax hike will have on small businesses.
The Assistant Deputy Speaker Liberal Anthony Rota
The hon. member for Beauport—Côte-de-Beaupré—Île d'Orléans—Charlevoix has 30 seconds to respond.
I needed 30 seconds just to say the name of the riding.
Sylvie Boucher Conservative Beauport—Côte-de-Beaupré—Île dOrléans—Charlevoix, QC
Mr. Speaker, you are lucky; sometimes it takes even longer.
Obviously this is a puzzle for small businesses too because of the aging population. As the government opposite said, our jobs have become precarious. Yes, it is a puzzle, and it is costing businesses twice as much when we do not even have the population we need to work for those businesses.
Our government balanced the budget and still gave out money. Unlike them, we were responsible.
Don Davies NDP Vancouver Kingsway, BC
Mr. Speaker, I am pleased to rise today in the House to speak on behalf of the New Democrats and express our support at second reading for this important piece of legislation. Bill C-26 amends the Canada Pension Plan act, among other acts, to incorporate the recent agreements reached with the provinces to enhance the Canada pension plan benefits for all Canadians.
While we believe that better was possible and will continue to urge the government to make a more improved plan available for workers in this country, and despite the fact the full effect of these changes will not be felt for 49 years, this CPP enhancement is in theory an important first step in improving retirement security for young Canadians. We congratulate everyone, particularly labour, which worked so hard to lay the groundwork for this agreement.
New Democrats have fought for decades for increases in the Canada pension plan, old age security, and the guaranteed income supplement benefits for all seniors. In fact, the idea of having universal retirement security programs for all Canadians has been a core New Democrat policy going back to the formation of our party. We have urged every government for decades to make meaningful improvements for Canadians, so that every Canadian can retire in security and in dignity.
Our support for the bill is qualified. That is because while the enhanced expanded CPP proposed by the bill is a plan that will benefit a new generation of workers entering the workforce, it does almost nothing to alleviate the retirement income crisis of those approaching retirement now and, quite frankly, in the decade or two ahead. We must now see immediate action by the government to help those seniors and Canadians who are on the cusp of retirement and who will not benefit from these changes. Government must build on the momentum of this agreement and take the next steps to improve long-term retirement security for today's workers, including addressing the valid concerns raised by Quebec about the impacts on low-income workers.
In the New Democrats' view, much more needs to be done to help our seniors live with the dignity they deserve. The high cost of housing and prescription medication, the clawback of the GIS, and the indexing of pensions are just a few immediate issues that we think require more work by the government. We also think that the government needs to keep its promise to introduce a new seniors price index to make sure that old age security and the guaranteed income supplement keep up with rising costs.
Retirement insecurity in this country is reaching a crisis level, as many Canadians do not have adequate savings to maintain their lifestyle upon retirement. A large part of this problem is fuelled by the erosion of workplace pension plans to the point that six in 10, or 60% of, working Canadians have no workplace pension.
In the New Democrats' view we need a clear breakdown from the government as to who will benefit the most from this plan and who will benefit the least, and how these changes will interact with other programs, and how we can strengthen the workplace pension regime in this country, as well as the public component that the bill addresses.
By way of background, it is helpful to review what is being proposed by the bill. Currently the CPP covers earnings up to a cap of $54,900. For earnings up to the cap, the CPP is designed to replace about 25% of the income. The maximum pension that a worker who fulfills all the criteria, working for 40 years and contributing the maximum amount, can look forward to is about $1,092 per month or $13,100 per year.
Contributions are 4.95% for the employer and the employee, up to the same cap. The expanded CPP proposed by the bill is a separate new tier. The new tier is added on top of the existing one. The new CPP tier does two things phased in over the next nine years to 2025. First, it takes the replacement rate up to 33 1/3% from the current 25% of earnings, and, second, it expands the upper earnings cap from today's $54,900 up to $82,700.
The net result is that when this plan is fully phased in by 2065, a worker who earns $54,900 annually in 2016 dollars would receive a maximum annual pension of about $18,117 in 2016 dollars by the time he or she retires. For a worker at the $82,700 maximum tier amount income level, CPP benefits would rise to a maximum of $20,352 a year in today's dollars.
The reason I am using today's dollars is that it is important to understand the very limited expansion that the current government has brought forward. If people can imagine that in 2065 they would be at the maximum CPP pension if they contributed for 40 years at the maximum earnings level, with a resulting pension of $20,352 a year, just about every Canadian planning for retirement would see that that is absolutely insufficient to retire with.
We all, though, acknowledge that the Canada pension plan was never designed to be a full retirement plan—although there is a credible argument to be made that a government pension plan could in fact achieve that if it were wanted—but was intended to be supplemented by private savings and workplace pensions. This is why I raised earlier the very alarming statistic that more than half of Canadians have no workplace pension. This is very different from the 1960s and 1970s when a much higher percentage of Canadians had a plan at work.
Canadians who are working today cannot expect to have very much pension income from their employment. Of course, given the rising costs of living in this country, particularly in Vancouver where I come from, it is very difficult for them save the amount of money they will need to supplement their Canada pension plan. So what the New Democrats would like to see and what we have advocated for a long time is a Canada pension plan designed in a way that the worker and the employer would contribute sufficient money to replace 50% of the money a person would need upon retirement. In concert with that, we also propose strengthening the programs, policies, and laws in this country to encourage employers to create pension plans in the workplace to help those workers supplement their pensions. We also believe, for instance, that laws that protect pension funds upon bankruptcy also need to be strengthened so that workers, as we saw in the case of Stelco, would not see their deferred salaries—the money they have saved over the years—distributed among creditors upon bankruptcy. That is a long-standing problem in this country that neither Conservative nor Liberal governments have ever had the political courage to touch, but it is a matter of fundamental justice.
The Canada pension plan is the best pension plan in this country for a number of reasons. It is portable. It does not matter if people quit or leave a job in New Brunswick and move to British Columbia and start working again, because their Canada pension plan will still be activated. It is the cheapest pension plan in the country. There is a associated cost for employers, who normally have to provide a pension plan, as they have to hire pension lawyers and actuaries and custodians of the money, whereas in this case, all of the costs of the plan are borne by the government. Being the largest plan in the country, it is also the safest repository of Canadians' income. In sum, it is the cheapest, most portable, safest pension plan in this country.
I think Canadians from coast to coast would love to see the current government increase Canada pension plan contributions to such a degree that we could phase these in slowly and affordably over time so that the plan would actually do what it is intended to do, which is to make sure it replaces 50% of workers' income upon retirement so that more Canadians can retire in dignity.
I just want to conclude by saying that I often hear the Conservatives use language calling this a payroll tax. Retirement investment is not a tax. It is an investment. There is no secret to pensions. People put away a bit of money for a long period of time. That is savings, and that is how they fund their retirement. When workers and employers both contribute to that pension plan, that is how we get a dignified retirement for Canadians in this country, and it is about time that the Conservatives recognized this and joined the 21st century so that Canadians can retire in dignity and with some level of security.
Marilyn Gladu Conservative Sarnia—Lambton, ON
Mr. Speaker, I would like to thank the member for his speech, but I would like to correct his misimpression. There is no retirement crisis.
Morneau Shepell, a co-author with the finance minister, said that Canadians are not facing a retirement crisis, nor is such a crisis likely to arrive. This has been backed up by studies by McKinsey & Company, which say that 83% of Canadians have enough money to keep their current standard of living in retirement. Therefore, it is really about focusing on the 17% of Canadians who do not have adequate retirement savings.
Would the member agree that it is better to target an approach to that 17%, who are typically low-income earners and senior women, to actually help those people who cannot afford to retire?
Don Davies NDP Vancouver Kingsway, BC
Mr. Speaker, I do not know that I accept the premise of that question. The proposition that there is not a retirement income crisis or a problem in this country does not jibe with the figures I have seen. I have seen figures that show that 30% of single elderly women in this country live in poverty, and that number has tripled in the last 20 years.
As I stated in my speech, it is quite uniformly accepted that six out of 10 workers in this country, particularly young workers, do not have any workplace pension whatsoever. I am not sure what cohort the member is talking to, but for the people who live in my riding, most are finding it very difficult to actually just meet their monthly expenses, never mind put away sufficient income to fund an adequate retirement.
It is easy for us in this House to stand up and pretend it is not a problem. We vest in our pension after six years in the House, with a pension of $35,000 a year after serving for six years. However, if members get out in the communities and talk to real people, most people are very concerned about their retirement, and many Canadians, I would daresay more than half, will not have enough retirement income to live the kind of secure retirement they want.
Kevin Lamoureux LiberalParliamentary Secretary to the Leader of the Government in the House of Commons
Mr. Speaker, I very much appreciate that New Democrats are supportive of this legislation. I think we share a lot in common. Workers today will benefit from this agreement that was achieved between the provinces and the leadership in this national government.
Today we have Bill C-26, but there are other aspects of the pension program. I am looking specifically at the GIS, the guaranteed income supplement, and how that program also helps supplement individuals who are in need of income.
Does the member have any thoughts on how he sees this as a bill that is one piece of what I would suggest are the three pillars of the pension issue: the CPP, the GIS, and the OAS? Can the member provide some comment in regard to the GIS and the OAS?
Don Davies NDP Vancouver Kingsway, BC
Mr. Speaker, I think those are valid comments.
The New Democrats did campaign on the promise that, were we elected government, we would also not proceed with the Conservatives' plan to increase the retirement age from 65 to 67 for old age security qualification. I congratulate the government for implementing that policy as well.
I will give the government less credit, however, for its plan on increases to the guaranteed income supplement. As was famously said of Mackenzie King, Liberals don't do in halves what they can do in quarters.
I think that is very true in the case of the GIS, because the amount of the increase to the GIS, although welcomed by seniors, is clearly insufficient to actually lift enough seniors out of poverty. The NDP is going to continue to press the government to increase those GIS payments so that there is not a single pensioner in this country, not a single senior who has given a lifetime of work to this country, living in poverty in this country. The GIS improvements do not do it yet.
This Canada pension plan gives a little bit of money but over a long period of time. We are going to continue to press the government to make even further enhancements to the CPP in the future.
Alice Wong Conservative Richmond Centre, BC
Mr. Speaker, it is my pleasure to rise today to discuss the proposed changes to the Canada pension plan in Bill C-26.
As has been mentioned by my colleagues earlier, this change would raise CPP premium rates. This plan would also increase the maximum level of earnings on which CPP premiums would need to be paid. The net result of these changes would be that both employers and employees would have to pay more. Indeed, the CRA has published a table showing that this amount could be as much as $2,200 more, each and every year, and this number would continue to go higher and higher.
Nearly all Canadians would be affected by this expansion. Everybody earning a salary in this country would be negatively affected and would see their paycheques decrease as this payroll tax takes effect. Likewise, employers would see the cost of hiring employees rise.
As a former small business owner, I have first-hand experience in seeing how a business can be affected by payroll taxes, including CPP premiums. During the past year, I have thoroughly enjoyed my role as the critic for small business, holding the government accountable for its actions and inactions. I have heard from entrepreneurs and small business owners from across the nation in round tables and one-on-one meetings. Each time the topic of the proposed CPP expansion is brought up, immediately I hear the same thing: when the cost of hiring employees rises, employers hire fewer people. Payroll taxes, which include CPP premiums, are one of the largest costs for small business owners.
These employers are leaders of our communities and care about investing in their employees. However, if they cannot afford to pay for their employees, they will be forced to either reduce their workforce or increase the workload on their current staff to avoid hiring new workers.
One entrepreneur from Toronto explained to me that she is already feeling constrained by the increasing tax burden on her business. She said that, if the CPP expansion were to move forward, she would have to expand the job duties of each of her current employees rather than hiring new workers to fill the gaps.
Small business representatives from across the country have also added their voices to this conversation, urging the government to rethink this plan. Among them, the Canadian Federation of Independent Business, the CFIB, is the most notable. It conducted a number of surveys on its members, asking for opinions and potential business decisions they would have to make, should this expansion move forward. The results are troubling.
These surveys indicate that two-thirds of small business owners believe that this expansion would compel employers to freeze salaries in order to account for the changes. The math is simple. Dollars that would otherwise go into salaries would, instead, go into extra payroll taxes. When we consider the government's track record of increasing payroll taxes, increasing small business taxes, implementing a nationwide carbon tax, and cutting tax credits, it is no wonder business owners are choosing to hold onto their wallets.
I would not be shocked to see the Liberals finally decide to raise the GST to pay for their spending spree. Who wants to invest in such a high tax environment? One of the arguments being used to support the expansion of the CPP is that it would help struggling seniors. However, the proposed plan would not be fully implemented for another 40 years, which means seniors would not be receiving the help now that the government says they need. I would challenge the government that there are many other ways they could help seniors and the aging population, but the Liberals have chosen to turn their backs on Canadian seniors.
I am going to let the House know what seniors think. The carbon tax would increase the cost of everything, including their groceries and heating their homes. That would be dramatic. That would be devastating to our seniors.
Now that I have talked about seniors, I will talk about our youth, whom the government claims the bill would benefit the most. Our youth benefit from employment, and this bill would make it more difficult for employers to hire our graduates. Young participants in my round tables are more concerned about their jobs, about their take-home money now, instead of paying into something for 40 years down the road.
Not only that, but we are forcing Canadians to invest in a pension plan that offers a low rate of return. According to a well-quoted study by the Fraser Institute published in May 2016, and externally validated by many other organizations, the projected real rate of return for CPP investees is 2.1%.
I will quote from the study:
Canadian workers retiring after 2036...can expect a real rate of return of 2.1 percent from the CPP.
This basically means the majority of our workforce today, contributing to CPP, is making a real rate of return that is barely above inflation. Remember, when people retire and draw funds from the CPP, that amount is taxed with income taxes.
Some Canadians are comfortable with the CPP and the fact that it is backed by the government, but we are given no choice in the matter. CPP legislation forces all Canadians to participate in this low-return investment. The government has made the decision for the rest of the country, regardless of the personal situation for how Canadians want to fund their retirement.
There are other ways that government could encourage Canadians to invest in their retirement. There are already many options available to individuals, including the well-known registered retirement savings plan or tax-free savings accounts. The CPP is only one method of saving, amongst others, but this is a forced method of saving for retirement.
By highlighting and encouraging other programs, Canadians are able to create a retirement financial plan that suits them best and does not solely rely on government to make this choice for them.
At a time when our economy is struggling and many people are unable to find work, such an expansion of the CPP would only magnify these problems. Our job creators would face another burden in their ability to hire new workers, and Canadians would have less money in their pockets to invest in the economy.
I am convinced the government does not want to help Canadians save. If it did, the Liberal government would not have chosen to reduce the amount of money individuals can contribute to their RRSPs or tax-free savings accounts.
Canada has excellent programs that allow Canadians to choose how they want to save their money for retirement. As I have said before, instead of making it more expensive for our small businesses to hire staff and create jobs, we should be minimizing taxes, cutting red tape, and trusting Canadians to make their own decisions regarding how to spend and save their money. I will continue to fight for our hard-working job creators.
Kevin Lamoureux LiberalParliamentary Secretary to the Leader of the Government in the House of Commons
Mr. Speaker, one of the things that has become very apparent is that the Conservatives are articulating why they believe we should not have any sort of a CPP program, from my perspective from listening to them in this debate.
The arguments the Conservatives are using today are the same types of arguments they used when there was opposition to the creation of the CPP. Maybe an appropriate question to ask members of the Conservative Party would be whether the Conservative Party supports CPP, and maybe the member could enlighten this House.
A number of Conservatives are nodding yes. If that is the case, why, then, would they oppose the good work of so many provincial jurisdictions, working with Ottawa and the many different stakeholders, who are saying that now is the time for us to give this increase? It does not take effect today. It takes effect in a couple of years from now.
Alice Wong Conservative Richmond Centre, BC
Mr. Speaker, Canadians have already said many times that they want to have a say in their own retirement plans. The government has not consulted with real people who are working and paying into the CPP.
I must agree that the CPP has its own value; however, the expansion that the government is suggesting would not really help present retirees and future retirees. It would only kill jobs, which all our people need in order to grow the economy
The member opposite has twisted the facts, saying that the Conservatives do not support the CPP. We do not support the expansion of the CPP that the government is suggesting right now, with increased premiums that would kill jobs and push our youth to unemployment.
Richard Cannings NDP South Okanagan—West Kootenay, BC
Mr. Speaker, figures show that 30% of single elderly women in Canada live in poverty. Could my colleague tell me what her party's plan is to get those women out of poverty?
Alice Wong Conservative Richmond Centre, BC
Mr. Speaker, I was the minister responsible for seniors for five years. Our government did a lot for seniors. We increased the GIS to the highest amount in a quarter century.
For single women who do not have any CPP, we really want the government to look at other ways, because increasing the CPP would not help even a single woman who is retired now. We need to make sure these women have proper housing subsidies. We want to make sure they stay healthy so that going to the doctor or pharmacy will not cost them anything.
Do members know what is going to kill them? The carbon tax is going to kill them, because they will have to pay more for everything.
Marilyn Gladu Conservative Sarnia—Lambton, ON
Mr. Speaker, we are seeing high youth unemployment in my riding, and I have heard comments about that today. If people do not have jobs, they cannot contribute to CPP and they are certainly not going to be able to take advantage of it later.
I wonder if the member shares that experience.
Alice Wong Conservative Richmond Centre, BC
Mr. Speaker, new graduates are finding it more and more difficult to pay back their student loans and find jobs after school. With higher payroll taxes and likely limited jobs coming from our small businesses, the CPP enhancement would only magnify these problems. New graduates need money in their pockets to pay back their school debt. We need to help our new graduates find work by creating jobs, not sticking our job creators with larger payroll taxes.
Mark Strahl Conservative Chilliwack—Hope, BC
Mr. Speaker, it is tough to follow the member for Richmond Centre after that kind of firebrand speech, but I will do my best.
It is always a pleasure to rise to speak about legislation before the House. Today, we are talking about Bill C-26, which would increase CPP premiums and increase that payroll tax for a benefit sometime in the future. The finance minister has admitted now that the benefit would be realized by workers 40 years from now. That is who will see the benefits from this.
Let us be under no illusion, Even though the government wants us to talk about increasing CPP benefits, this would do nothing for seniors today and it would do nothing for workers approaching retirement. Maybe if people are in their twenties and in jobs that are stable enough that they are making enough money to make the full contribution, this would benefit them, but for the next 40 years they would be paying more. That is our main concern today.
When the bill came forward, when this idea was floated, I sought to consult my constituents, as I do on pieces of legislation like this. I heard back from a prominent local business owner in Chilliwack who is involved in the business community. I want to share his thoughts on this. He is actually in the financial services industry and helps others plan for their retirement, so I think he has a level of expertise that the House should well consider.
I will be quoting extensively from his contribution to my consultation. He said:
If the primary intent is to take care of Canadians, I wonder what other options were explored. If mandatory contributions to retirement plans are desired, was there a “choice” option considered? Perhaps a Canadian could choose to contribute more to CPP, or, instead, open their own locked-in pension plan and make the mandatory contributions there...have restrictions on withdrawals, risks, etc.
Most 'regular Canadians' would not profess to know all the details and the considerations that were explored by the Federal Government, before proposing this solution. Most business owners would like to think that the government is working in their best interest...I sincerely hope it is. However, perhaps incentivising Canadians to save more by increasing the RRSP contribution limit, not decreasing the TFSA limit (as this government has done), providing larger tax benefits for contributing to mandatory Locked-in RRSPs, etc... options like this might warrant more exploration. Not only would Canadians need to take ownership and increase their education on the matter, but it could also increase and improve the private sector...both of these are good for Canadians.
I understand some things are necessary and hard choices need to be made. My fear is that the increased mandatory contributions are not going to solve the real issue. The issue touted by the Federal Government is that Employer Pension Plans are becoming fewer and farther between and Canadians are not saving for themselves. One might make the argument that having an employer or the government say, “we'll do this for you” is part of the problem. If Canadians are not saving enough, then they need to be educated, incentivised and learn to save for themselves. I believe in having a pension plan like CPP, however, if we don't address the real issue (too many Canadians are spending all the money they earn, in order to increase their “lifestyle” as rapidly as possible...not taking responsibility for their own future...) we will need to increase contributions to CPP again in the future, for a similar reason...
I have a family member in his early 30s. He is very aware that he has no pension and needs to create his own pension. He chooses to be content with his lifestyle and does not spend all the money he makes. He continues to educate himself, as well as increase his good habits of contributing to his RRSP, TFSA and savings....this is what Canadians need to do.
I would make the argument that having a public pension plan is a very good thing, for many reasons. However, if the public pension plan begins to try and replace or “take over” the responsibilities of Canadians, it might be considered to be creating and enabling a problem for the future of the very Canadians it wants to protect. I'm not saying that line has been crossed with the current CPP changes, but if the line hasn't been crossed yet, it appears, at least on the surface, that we are headed that way.
Those are words from a very prominent business person in Chilliwack who is concerned about this approach of the government. I share many of those concerns. I think that the proposed changes to the CPP, again, as has been said many times by Conservatives on this side of the House, could result in over $2,000 a year being taken from the incomes of Canadian workers. In a family, that is about $1,100 each.
Earlier, I heard a member from the NDP say that he was concerned about people who come into his office who are living paycheque to paycheque. My riding is not a high-income riding. The average income is under $40,000 a year. My constituents are living paycheque to paycheque. Bill C-26 and increasing mandatory CPP contributions will not help them. It will take money away from them and put it into a CPP plan that they may never be able to access.
That is another part of this discussion that I think we need to be honest about. When we are talking about increasing a mandatory payroll deduction, we are taking $1,000 away from a Canadian worker and putting it into a government-run CPP pension plan. If that person dies before reaching the age of retirement or does not live to the age of 85, this increased amount of money that is taken from each and every paycheque, the reduction in disposable income for the families in my riding, is not saved in an RRSP, a TFSA, or something that is designated to the individual. It is not an asset that can be passed on to the heirs of the contributor, to their family, or to their children like a TFSA or an RRSP.
Therefore, to say that it is for their own good that the government will take more money off of their paycheque and put it into an account that they can draw from in retirement might sound great to people because they might think that they could stand to save a little more. However, what they do not realize and what they are shocked to learn when they learn more about CPP, which most people do not look into until they approach retirement, is that this is not an asset that is transferrable to their heirs. Rather, if they die young it goes into the general revenue of the account. It disappears. Therefore, they have spent their entire working life paying more under this plan and they do not have the ability to pass that on to their heirs.
This is bad for the people who say they want a choice in how they save. It is bad for low- and middle-income Canadians who will not benefit but will see a reduction in take-home pay, a reduction that they simply cannot afford. Certainly, as the member for Richmond Centre said, as the government seeks to increase costs on all Canadians through a carbon tax, they can ill-afford yet another payroll tax that reduces their take-home pay. It is bad for families because they cannot pass along this investment. It is not like other registered investments that can be passed on. It does not help seniors now.
We know that during the campaign the Prime Minister famously accused small business owners of simply being people who were looking for ways to avoid paying their fair share of taxes. Therefore, we should not expect the Liberals to take the concerns of groups such as the CFIB seriously. However, on this side of the House we do. Last year, for the first time in 30-plus years, the CFIB was not invited to make a pre-budget consultation, so perhaps it should not surprise us that the Liberals are not taking its advice as well.
However, Dan Kelly, the president and CEO of the CFIB, stated:
It is tremendously disappointing to see that finance ministers are putting Canadian wages, hours and jobs in jeopardy and willfully moving to make an already shaky economy even worse.... Despite all the talk, it appears that jobs and the economy are not particularly high priorities for the governments that have signed off on this deal.
He went on to say:
Two thirds of small firms say they will have to freeze or cut salaries and over a third say they will have to reduce hours or jobs in their business in response to a CPP/QPP hike....
This is going to affect real, hard-working, taxpaying Canadians. This is not going to help those workers for 40 years. It will not help seniors in retirement who may hear about this and think that they will get a raise. They will get nothing out of this. Rather, this is simply taking away choice from Canadians in planning for their own retirements, and taking away money from their paycheques now, which as far as we are concerned is the wrong direction. We will be voting against it.
Kevin Lamoureux LiberalParliamentary Secretary to the Leader of the Government in the House of Commons
Mr. Speaker, I can better understand, because of the debate, why the former prime minister, Stephen Harper, backed away from the Canada pension plan. We heard member after member talk about how the CPP is not of benefit to Canadians and any sort of increase would be to the detriment of those retiring in the future.
I recall over the last number of years that I have had many petitions that Winnipeg residents, Winnipeg North residents in particular, signed saying that they believed in the CPP and they believed in the GIS and the OAS. The Harper government made a bad decision when it increased the age of retirement from 65 to 67. The Harper government made a bad decision by not engaging the provinces and demonstrating leadership on the CPP file.
Canadians have a right to know exactly where the Conservatives are on the CPP. I listened to the speeches. The arguments Conservative members are presenting today are the same sorts of arguments that were presented when CPP was introduced. Does today's Conservative Party support CPP, yes or no?
Mark Strahl Conservative Chilliwack—Hope, BC
Mr. Speaker, that is a ridiculous red herring. The Conservative Party supports public pensions. We supported them when we were in government. We believe in the CPP, but we also believe in Canadians. We believe in the ability of Canadians to make choices for themselves. That is why we introduced the tax-free savings account and expanded it to allow people to make their own choice, to save their own money after taxes.
What did the government do as soon as it took office? It immediately rolled that back. It clawed back the ability of Canadians to save for themselves. We believe that Canadians can and want to save for themselves. That is what we saw with the record number of Canadians who opened and used the maximum amount of their TFSAs. These were middle- and low-income Canadians who made savings a priority. Now the government says we do not believe in Canadians. We believe in government. Where there is a problem, the government must try to solve it.
This is not a solution. This is taking money from Canadian workers and putting it into an account that they will never be able to access for 40 years. This does nothing for Canadian seniors now. It does nothing for workers approaching retirement. It is the wrong direction and we will not support it.
Alistair MacGregor NDP Cowichan—Malahat—Langford, BC
Mr. Speaker, I appreciated the member's speech and I especially relate to the fact that his riding, like mine, has a lot of low-income people.
I am just hoping he could clear up a few things for me, because I know the Conservatives were in favour of having the $10,000 limit for TFSAs, but by his own admission, many of the members of his constituency would not be able to take full advantage of that $10,000 per year. I want the Conservatives to understand that we did not get rid of the TFSA. We brought it back to a simple level, and that is to look after future government revenues so that we can look after the services that many of his constituents and mine might depend on.
I understand that looking after seniors is a multi-faceted issue. The bill looks at the future, long term. It is one part of a parcel. Of course, GIS and OAS, and immediate and near-term futures are other parts. I am hoping he could explain some of the contradictions that seem to be coming from the Conservative side in that respect.
Mark Strahl Conservative Chilliwack—Hope, BC
Mr. Speaker, I find it interesting that the member referred to “we” did not roll back the TFSAs. The carbon tax coalition lives on. They are in it together.
The NDP and the Liberals tried to paint the TFSA as a tool for the rich. The facts simply did not bear that out. The vast majority of TFSAs were utilized and maxed out by people earning a middle or low income because they made savings a priority. They used the tools that were available to them. It is the most important tool introduced to protect the income and retirement savings of Canadians since the RRSP. It is a shame that the government did not think Canadians could be trusted to manage their own money and rolled that back so that it could perhaps find the fiscal room to raise payroll taxes as it is proposing to do today.
We trust Canadian businesses. We trust Canadian families to make choices for themselves. That is why we will not support the bill, which does not help seniors, does not help workers, and will not address the problem it is seeking to address.
The Assistant Deputy Speaker Liberal Anthony Rota
It is my duty, pursuant to Standing Order 38, to inform the House that the questions to be raised tonight at the time of adjournment are as follows: the hon. member for Vancouver Kingsway, Housing; the hon. member for Cowichan—Malahat—Langford, Democratic Reform; the hon. member for Sherbrooke, Canada Revenue Agency.
Alistair MacGregor NDP Cowichan—Malahat—Langford, BC
Mr. Speaker, I am very pleased to have this opportunity to speak to Bill C-26, which is the government's effort to expand and enhance the Canada pension plan. As many in the House know, the expansion of the CPP has long been a policy objective of the NDP. From the campaigns of both the Liberals and the NDP, I do not think Canadians are under any sort of surprise that this policy eventually would be brought up in the 42nd Parliament.
As we all know, Canada's retirement system is based on three pillars: a combined Canada pension plan and the old age security from the government side; workplace pensions that used to be provided by many workplaces but are increasingly uncommon; and the RRSP and private savings of Canadians.
Unfortunately, two of these pillars are now in not very good shape and it is a moral imperative that we act to do now what we can, looking into the future, to prop up the third one, namely the Canada pension plan and the combined old age security and GIS.
I listened both yesterday and today to arguments from the Conservatives about giving Canadians more choice and putting money back into the pockets of people. I could not agree more with those two. With this measure, we are giving seniors a choice. I believe that in the future, with more money in their pockets, they will have more choice.
I also understand the arguments the Conservatives have made about the cost of living increases going on in Canada. I do not believe that this is a cost of living increase. It is not a payroll tax. It is a very simplistic argument and it misleads the conversations that we ought to be having about our retirement future. This is an investment in our future. I know of no other tax that Canadians pay where they will actually get dividends at a later point. These are deferred wages that they will be drawing from in their retirement years.
I have also heard of the absolute calamity that Canada has experienced now that the tax-free savings account has been dropped from $10,000 to $5,000 a year. The costs to the treasury would have been enormous in later years if the $10,000 limit had been allowed. I wonder how this connects with the increased reliance on the guaranteed income supplement that the Conservatives are always proposing as a measure to help Canada's seniors. I agree that the GIS plays a very important role, but the goal of this place is to get to a point where the guaranteed income supplement is not as necessary. Despite what the Conservatives say, the measure of the TFSA only helps a small segment of the population.
I have also heard the arguments about increasing personal responsibility. That is a terrible argument to put forward to someone who is living paycheque to paycheque and giving up on their own retirement future to help put their kids through college, to make a housing payment, to put food on the table. To tell someone that they are not personally responsible because they are not saving enough is just a terrible argument to make to people in these tough economic times. We are all hard-wired to help our kids. It is something I would do in a heartbeat and without a second thought.
When times are tough, especially when we have minimum wages that do not even come close to what the living wage is, it becomes near impossible to save for retirement. The facts from Statistics Canada back this up.
We also know that defined benefit pension plans, like the Canada pension plan, are one of the most effective tools in combatting income inequality and retirement insecurity.
I want to contrast that with the defined contribution plans of which some in the House are in favour. There has been a push from the right to consider that Canada engage in more defined contribution plans, but we can see examples from around the world of the problems with these plans.
I refer hon. members to the case of Australia. Australia has had its superannuation plans. They are defined contributions. They were instituted in the mid-1990s. Around that time, nearly 80% of workers were covered by these plans. We look 20 years later and nearly 50% of Australian seniors now live in poverty. The country is the fourth highest spender on government assistance. Sixty-five per cent of seniors have no money left in their defined contribution funds by the time they reach age 75. That is completely inadequate.
Another recent study compared the pension income of British citizens with defined contribution plans to Dutch citizens with defined benefit plans. It found that the cost was 1.5% more in fees per year to run the defined contribution plan. Over time, these fees add up. In fact, a British citizen who made the same contributions and earned the same investment returns ended up receiving a pension payment that was 50% lower than his Dutch counterpart. This makes it more crucial for the government to push for defined benefit plans that do not suffer from those same problems. The CPP is the best retirement vehicle we have to ensure that happens.
The proposed changes in the bill are welcome, but they are unfortunately inadequate for what is needed now. I want to give that caveat to the government side. It is a good plan for those who are very young now and would have the full benefits in many years, again looking to our future. However, the plan needs to go hand in hand with solutions for those retirees or soon-to-be retirees right now.
Seniors have been struggling and this plan would do nothing for them currently. There has been unacceptable erosion in workplace pensions over the last decades. Six in ten Canadians have no workplace pension. We have even sold the idea that RRSPs and TFSAs are great options to replace workplace pensions. I think everyone here can see from the evidence that has not worked. These voluntary options have shown their inability to address the issue of lacking real pensions and a weak Canada pension plan.
Among those aged 55 to 64 without access to a company pension, about half have less than half of what they would need to pay their bills. A staggering 32% have less than $1,000 in retirement savings. That is one-third of the population.
This is a crisis that needs concrete solutions. When we have seniors living in poverty and food insecurity, with very little to no retirement savings, it is a moral imperative for the government to act. Not only is it the right thing to do, but this kind of thing if left unchecked becomes catastrophic for the economy.
If we are talking about 10 to 15 years in the future and we have millions of Canadians with little to no disposable income, then the economy tanks because they cannot afford to buy anything.
Poverty deniers on the right like to point to home ownership of seniors as proof that there is no crisis. However, we know that even with accounting for the total net worth of seniors, only 28% of seniors without employer pensions have even five years' worth of replaced income saved. Five years of savings is nowhere near the target needed for a happy and healthy retirement.
Enhancing the CPP is something that we have always fought for in the NDP, and we welcome the government's initiative for this. However, more needs to be done.
This plan would raise the CPP up to 33%. We in the NDP will continue fighting for what was passed at the Canadian Labour Congress, which is the voice of working people. We need to go to 50% benefits of the pre-retirement income if we to be serious about tackling the issues of retirement, security, and income inequality.
We also need to continue tackling the GIS and raising it. While the increase that came in budget 2016 was welcome, it has still left a lot of seniors without the adequate income they will need.
Also, if we are talking about seniors and their state today, what happened to the conversation about universal pharmacare, so we never again have a senior who has to choose between healthy food and taking their proper dosage of medication?
We need to enhance home care and palliative care, which is at crisis levels. I hope to see that in the health care accord.
There are a lot of things we could do.
The bill is a good idea, but it only tackles one small part of what needs to be done. We will support its passage, but it is too important not to lose sight of the larger problem of seniors today. Rather than taking a piecemeal approach to pensions and retirement, we need to develop a national strategy for seniors that completely looks at all facets, a strategy that will respect aging. For seniors who have lived their lives building our country, and who continue to make great contributions, the least we can allow them is to live in dignity and with respect.
Marilyn Gladu Conservative Sarnia—Lambton, ON
Mr. Speaker, I share my colleague's concern about seniors. I am especially concerned that the current fix proposed in Bill C-26 will do nothing to address the problem that elderly widows are having, which is that they may not have worked, their husbands have died, and they do not get any of their husbands' pensions. This bill would do absolutely nothing for them. Could he expound on some of his ideas for a solution?
Alistair MacGregor NDP Cowichan—Malahat—Langford, BC
Mr. Speaker, when we go back to budget 2016, the increase in the guaranteed income supplement was the specific target. Before that increase came, the number of seniors living in poverty in Canada was about 719,000 and that 10% increase was only going to address 149,000. Of course, the majority is women, so there certainly are more steps that can be taken.
The ball is going to be in the government's court. I hope to see some concrete action in budget 2017. Hope springs eternal with me and we shall see.