Debates of Oct. 25th, 2016

Canada Pension Plan

[Joël Godin, Conservative, Portneuf—Jacques-Cartier, QC]

Mr. Speaker, I thank my colleague for his excellent question.

I have to say that I simply do not feel secure with the government across the way. I do not believe in the current government's economic strength. I am afraid. I do not trust it. It is putting a plan in place that looks 40 years into the future, when we need to live in today's reality.

Today's seniors deserve to be properly treated. We worked very hard on that, and we will continue to do so. I encourage the Liberal government to do the same thing.

[Alupa Clarke, Conservative, Beauport—Limoilou, QC]

Mr. Speaker, my question is for the member for Portneuf—Jacques-Cartier, my colleague from the greater Quebec City area.

Over the past year, the Liberal government has broken a number of its promises. My colleague also talked about the Minister of Finance, who has contradicted himself somewhat, in terms of his current policies compared to what he has written in the past.

I wonder if the member could comment on what he thinks of the Liberals' pattern of breaking their promises and abandoning the convictions they have expressed in the past.

[Joël Godin, Conservative, Portneuf—Jacques-Cartier, QC]

Mr. Speaker, I want to commend my colleague whom I have the privilege of working with to represent the Quebec City region. My colleague is from a Quebec City riding. I do not want to cause any confusion. There is the riding of Québec, Quebec City, and the Province of Quebec. I want to thank my colleague for the question.

We are drowning in broken promises. Those members over there were elected on their promises. They fooled environmentalists, they fooled economists, and they fooled families. The only plan they have, and I dare not say it in the House, is a plan for something down the road that we will discuss when a certain bill comes before us in the spring. That is the only plan they have. That is not reassuring for the Canadian families who are working so hard every day to earn money.

I hope they will be given the chance to do what they want with the money they save. Give them the tools to do more. If they do more, there will be more and that will allow us to provide better social programs to Canadians.

[Erin Weir, NDP, Regina—Lewvan, SK]

Mr. Speaker, a strong pension system is a cornerstone of a decent society. Adequate pensions provide retirement security to those who build our country. Pensions reduce the extent to which seniors must draw upon other social welfare programs. When retirees spend pension income in their local communities, it provides an important and relatively stable source of consumer demand. Therefore, pensions are critical to our economy and to our broader society. That is why most other advanced countries have established robust universal public pension systems to cover all workers.

Even the United States set up a public social security system that is more generous than the current Canada pension plan. Here is Canada, I believe we made an historic error. We set up a public pension system only as a complement to workplace pensions. The CPP replaces only about a quarter of employment earnings, on the assumption that employees have another pension from their employers. That assumption has been severely tested in recent years, and I would suggest that the Canadian approach to pensions is actually very similar to the American approach to health care.

This reliance on the workplace for benefits has many pitfalls. Workers can lose benefits if they change jobs or if their employer goes bankrupt. The aggregate costs of administering separate plans in each workplace, or separate accounts for each employee, are far higher than administering a universal plan that covers all Canadian employees. In any case, we are at a point where only about one-tenth of private sector employees have a defined benefit pension plan in the workplace.

Of course, we can and must do more to safeguard workplace plans where they exist. One idea would be to enact a national pension benefits guarantee fund, as exists in the United States and at the provincial level in Ontario. This is something the Government of Canada could try to initiate for the whole country that would serve as a backstop to workplace pension plans.

However, the fundamental solution is to enhance the Canada pension plan to provide more defined benefit coverage for all Canadian employees, regardless of where they work. The CPP is universal, efficient, portable between employers, and indexed to inflation.

We in the NDP, and our allies in the trade union movement, have advocated doubling CPP benefits over time to replace half of employment income. The government's plan to eventually expand the CPP to replace one-third of employment income does not go far enough, but it is a significant step in the right direction. I am proud of the role New Democrats have played in the House to push the government to follow through on its promise to improve the CPP.

The federal-provincial agreement reached on the CPP is so reasonable that even Saskatchewan's right-wing premier, Brad Wall, signed on to it. To provide a bit of context, in the months before the deal, Premier Wall had been the shrillest opponent of expanding the CPP. When commodity prices were high, it was not the right time to enhance the CPP, according to Mr. Wall. When commodity prices were low, he again said that it was not the right time to expand the CPP. Indeed, in response to falling oil prices, Premier Wall's priority was to argue against improved CPP benefits rather than in favour of improved employment insurance benefits for laid-off resource workers.

There is quite a contrast with our neighbouring province in this regard. In Alberta, Premier Notley made a very strong case for extended employment insurance benefits. As a result, that benefit extension was provided to all Albertans. In Alberta, we had effective advocacy by the provincial government for better EI benefits.

In Saskatchewan, we had a right-wing premier going on a crusade against expanding the CPP. He completely ignored the issue of employment insurance. As a result, the government left half of Saskatchewan out of extended EI benefits and, even after having added the region of south Saskatchewan, it is still excluding Regina.

Workers in my city are paying the price for a lack of effective advocacy from our Premier. However, even though Premier Wall was so hell-bent on opposing an expansion of the CPP, even he came around to sign on to this important federal-provincial agreement.

It is really quite striking that premiers of all stripes, including a very right-wing premier, as I mentioned, have signed on to this reasonable compromise, and yet in this House, the federal Conservatives are opposing improvements to the Canada pension plan. I really think it speaks to just how out of touch the Conservatives are with the reality of working Canadians, that they alone are standing up and opposing any kind of enhancement of the CPP.

While I would certainly argue that this bill is an important step in the right direction, obviously it is not sufficient. Obviously, much more needs to be done to help current retirees and to help lower-income working people. We want to see the government do a lot more to improve the guaranteed income supplement for seniors.

I would note that, in the proposed bill, the enhanced portion of the CPP is actually a separate line on income tax. Might there be a way of exempting the additional benefits from the GIS clawback? That is just one idea that could perhaps help lower-income seniors.

Another idea would be to expand the working income tax benefit as a way of compensating lower-income employees for any cost of increased contributions. The government has said it is going to do this, but we absolutely need the details. We need to see something concrete for working Canadians.

On balance, I think this is a good bill. The NDP is going to support it. However, definitely the government can and should do more.

I would like to briefly respond to some of the points made in the last speech by my hon. colleague from Portneuf—Jacques-Cartier. He suggested that, instead of expanding the CPP, we should just increase the contribution limit for tax-free savings accounts. However, voluntary savings are not working. Canadians are not even filling up the TFSA contribution room they already have. That is why it is important to expand the CPP. Just further increasing the contribution limit to the TFSA would not help all the Canadians who are not meeting the current limit. It would just help the very affluent who have the extra money to put into that account.

In support of private savings, the member for Portneuf—Jacques-Cartier also made the point that those savings would be reinvested in the economy. However, the same is true of funds contributed to the Canada pension plan. Those funds would also be reinvested. While certainly savings and investment are important, that is by no means an argument against expanding the CPP.

As I pointed out in questions and comments, this money does not go into government coffers. Unlike the EI fund, the CPP truly is a separate fund with its own administration that does not appear as part of the government's budget.

In summary, this proposal is an important way of ensuring retirement security for all Canadian employees.

[Celina Caesar-Chavannes, Liberal, Parliamentary Secretary to the Prime Minister]

Mr. Speaker, I wonder if my colleague could further elaborate. He mentioned, and we know as a government, that Canadians are not saving, they do not have enough to contribute to a TFSA, and they are going to need to retire. Can the member expand a bit further as to why he thinks all the premiers have come together with our Minister of Finance to make this ground-breaking deal?

[Erin Weir, NDP, Regina—Lewvan, SK]

Mr. Speaker, it is clear that Canadians are not saving enough for retirement. I do not think that is the fault of Canadians. It is the result of stagnant wages and insufficient employment income.

We in the NDP have proposed a number of solutions in this House, but clearly there is a lack of retirement savings, and as I mentioned in my speech, there is also a lack of workplace pensions. Only about one in 10 private-sector employees even has a defined-benefit pension in the workplace. In response to this lack of private savings and this lack of workplace pensions, what we need to do is expand the public pension system to ensure a decent level of defined-benefit pension coverage for all employees.

Of course, I wish the government had gone further in this regard, but it is clearly a sensible move and that is why all provinces are on side with it.

[Marilyn Gladu, Conservative, Sarnia—Lambton, ON]

Mr. Speaker, my question for my colleague is this. Why is he ignoring the facts?

Eighty-three per cent of Canadian households are on track to maintain their current living standards in retirement, according to a study from McKinsey & Company. Statistics Canada is saying that the number of seniors living on a low income has dropped to 3.7%, among the lowest in the world. So there is not a retirement crisis. Why is the member ignoring the facts?

[Erin Weir, NDP, Regina—Lewvan, SK]

Mr. Speaker, if the idea is that current seniors are not living in poverty, that might be true because current seniors often did enjoy good pensions in their workplaces. The problem is that many people who are currently in the workforce do not have workplace pensions and will not have security in retirement. That is why it is very foresighted to start phasing in increases to the Canada pension plan now, so that there will be better pension income for today's workers when they retire.

This is very much about the future. It is not about seniors living in poverty today; although, there are some seniors living in poverty today, and that is one of the reasons why it is so very important to improve the guaranteed income supplement as well.

[David Tilson, Conservative, Dufferin—Caledon, ON]

Mr. Speaker, I would like to make a couple of responses for the member from the NDP caucus.

Finance Canada people are the ones who advise the government on this type of bill, and did advise the government on this type of bill. They have made an analysis that shows that higher CPP premiums would hurt the economy. They say they would reduce employment. They say there would be fewer jobs per year for the next 10 years. They say they would reduce the GDP. They say they would reduce business investment. They say they would reduce disposable income. They say they would reduce private savings over the long run.

My question for the member is this. Having heard this advice from the people who advised the government that is putting this bill forward, with that advice should this bill proceed?

[Erin Weir, NDP, Regina—Lewvan, SK]

Mr. Speaker, I appreciate the question, but what my hon. colleague has done is present a number of quantifiable statements without actually giving any numbers.

A critical question is by how much this increase in CPP contributions would reduce private savings. If every additional dollar of CPP contributions reduces private savings by 50¢, then there is still a net increase in retirement savings as a result. Really what the Conservatives would need to show to sustain this argument is that every additional dollar contributed to the CPP would remove a full dollar from private savings, and that is not at all clear, and the member has not even tried to make that claim.

It is also important to note that CPP contributions are indeed tax deductible, so there is actually a fairly immediate return to the contributor in that sense. They are also matched by the employer. The CPP is a good deal for Canadian workers.

[Cathy McLeod, Conservative, Kamloops—Thompson—Cariboo, BC]

Mr. Speaker, I am pleased to stand 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.

What does this really mean, in layman's terms? It means that there would be a phased-in, mandatory, hike to the CPP premiums for both employer and employee. This hike would be as high as $2,200 per employee.

It is clear from this legislation that the government is not only trying to solve a problem that does not exist, in terms of our system, but does not trust Canadians to make decisions about how they best spend their own money. I think, actually, this bill should really be called the “Wynne bailout bill” or “Liberal election tit for tat” because we know that the Ontario government got itself into a really difficult position with some commitments in terms of what it was going to do with the retirement fund, and indeed, the federal Liberals had to come to its rescue.

I am going to give a few examples about the negative impact of this legislation but, first, I will talk about something that is important and that has been a bit lacking in the conversation we have had today. The tools they are going to use are our Canada pension plan and our Canada Pension Plan Investment Board.

Most Canadians are very aware of this pillar of our retirement program, but very few have much of an understanding of the underlying dynamics. Certainly when I was a young adult in the workforce, I knew there was something called CPP that was coming off my paycheque. However, the big rumour at the time when I was initially contributing was that this CPP was going to run out of money so I really had to worry about saving my own money anyway.

That clearly has not happened, but I think we are making assumptions about this plan, and I think we need to pay some attention to this plan and what it is all about.

I do want to draw members' attention to an October 17 article by Andrew Coyne. He raised some really important issues that have, again, as I noted, not been raised in this debate. I am going to spend a minute or two talking about the issues he raised, by quote or paraphrase, because I think they are absolutely critical and they represent concerns I have had over the last couple of years.

The first is that “CPP is supposed to be cheaper than private plans on account of its larger scale”.

Most Canadians have no idea, but costs at the investment board have increased, times 22, over the past decade. They have gone from $118 million to more than $2.6 billion. That is an absolutely enormous increase that has happened over just a short time frame.

At roughly 1% of assets, and that is not counting the distribution costs, the CPP is now significantly more expensive than most private exchange funds. I think the Liberals should be truly alarmed about that. This is something they need to get a handle on.

He goes on to say:

...the CPP doesn’t “help” you to save, it forces you to. If you’re already saving as much as you’d like to, it’s unclear why the government’s judgement should be substituted for yours; or if you’re already saving as much as you can afford to, forcing you to save more hardly makes you better off.

And so far as forced savings are justified, it’s never been clear why they must also be invested through the CPPIB....

The CPP II, as we will call it, is to be fully funded, and there are systemic risks that are associated with the portfolio as a whole. This fund has greatly increased these risks in the last years: 40% are now in private equity, illiquid assets like roads and bridges that are not traded on the public market.

Again, we have a pretty significant increase in the costs of managing this fund, and we have a very significant change in the risk portfolio.

There is nothing wrong with this if, one, all Canadians know what they are getting into; two, they can tolerate the extra risk; three, they have properly priced and accounted for it; and four, the returns are worth it.

The CPP, in Mr. Coyne's opinion, met none of these tests and for the 19 million contributors—perhaps they are like me when I was a young adult—it comes off our paycheques and we really do not know what is happening with the funds.

The first thing the Liberals have failed to do is look at what is happening and what they need to do about it. We should not blindly move forward in giving a greater monopoly to the CPPIB without some careful review regarding the rapidly escalating costs and risks. What we are creating is a bit of a monopoly in terms of forced government savings.

In addition to the concerns I have just raised, and I think I shared some important information, I would like to give a couple of examples of how this forced savings program would have some negative impacts. A lot of my colleagues have shared a number of examples, but I would like to talk about a few more.

Someone I know quite well has a technology firm that is doing exceptionally well, but it was a real struggle when he was getting this firm up and going. When he was first starting, there were times when he was concerned about making payroll. Like many entrepreneurs, he was putting a lot of energy in, but it took a while to see a return on his investment. It is a small company with a few employees.

We already know that the current government has chosen to raise the small business tax, so even if he was lucky enough to make a little bit of money, that was going to go up. That is money, typically, that would have been reinvested in the business.

Now he would also have, with 10 employees, an additional cost, and it could be $10,000. That $10,000 could be reinvested in the company to make it bigger and help it become successful. With that $10,000, perhaps the employees and the employer might have preferred to have some stock options. The employees could believe in the company, and in terms of their benefits packages, might think they would have more advantage with some other structure for receiving remuneration. Clearly, for that new business that is striving to make it, this is a measure that is going to create some real challenges.

I have some relatives, a young couple, who have been saving for their first home. They both graduated from university and are saving for their first home. They live just outside of Toronto. They had the down payment and were all ready to go, then all of a sudden, the mortgage rules changed. Now that the mortgage rules have changed, they do not qualify for the amount they need to purchase this home. Not only has the government changed the amount they are going to have to raise for a down payment, it is making it more difficult for them to save. They were putting a couple of thousand dollars a year away to pay off their student loans and buy their first home, but all of a sudden, they are going to have to divert some of the money they have chosen to do something else with into the CPP, the mandatory payments.

I could go on and on with examples of where this legislation is going to create a challenge.

In conclusion, I think the government is fixing a problem that does not exist. We have heard clearly that it does not exist. It is forcing Canadians to do something that perhaps is not their priority. We have entrepreneurs who could take that $1,000 a month, who are investors, who might have something else they could do with that $1,000, whether it is their own investment portfolios or investing in their businesses.

The Liberals are going to negatively affect the economy, and they have not fully assessed, in any comprehensive way in recent years, the escalating cost and the risk. I think the Liberals of today are very different from the Liberals of before. When CPP was first introduced, and we have heard this in the debate already, Judy LaMarsh, in 1964, stated:

It (CPP) is not intended to provide all the retirement income which many Canadians wish to have. This is a matter of individual choice and, in the government’s view, should properly be left to personal savings and private pension plans.

The Liberals need to really reflect on the path they are going down, and we should all have very significant concerns.

[Ken McDonald, Liberal, Avalon, NL]

Mr. Speaker, my hon. colleague mentioned the small business tax and the fact that it did not go down. As a former small business owner and an employer, I always felt that if one had customers with the money to hire a business to do the necessary work, one could grow the business from there, not by getting a very small tax break that the business would see very little of, because to enjoy that tax break, one would have to be profiting big dollars for it to take effect.

She mentioned workers being able to save for their own retirement and in another statement said that they are not able to save for the purchase of a home. I would like to know what she would say to seasonal construction workers, whether they be electricians, plumbers, or whatever, who are working without defined pensions from their employers and are moving to jobs here and there. What will they do when they decide to retire?

This is a good idea. They know they will have at least a secure Canada pension income fund to depend on.

[Cathy McLeod, Conservative, Kamloops—Thompson—Cariboo, BC]

Mr. Speaker, this is one of the arguments the Liberals have made. They talk about the increase they made to the small business tax and say that it is 1% or 2%. What they do not seem to realize is that if it goes from 9% to 10.5%, that is not 1.5%. That is closer to 10%.

Let me tell the member, who says he is a small business owner, that if all of a sudden his taxes were going up by 10% and payroll taxes were increasing significantly with an increase in Canada pension plan deductions, it could make all the difference in terms of whether the business was a success or could expand.

Do not just take my word for it. The Canadian Federation of Independent Business has clearly articulated that this is a concern for small business.

[Marilyn Gladu, Conservative, Sarnia—Lambton, ON]

Mr. Speaker, in addition to the very negative impacts this CPP increase would have on small business and the economy, which my colleague talked about, a point I have not heard made today is the fact that to have a payroll deduction, one has to be on the payroll. I do not know what it is like in her riding, but in my riding there is 16.7% unemployment among youth, and the government is doing nothing to create jobs. I wonder if she could comment on that.

[Cathy McLeod, Conservative, Kamloops—Thompson—Cariboo, BC]

Mr. Speaker, that is an excellent point. I was recently in Calgary. I understand that there are 100,000 workers in Alberta who are unemployed right now, and we do not seem to be focused on that as an issue. We have a softwood lumber agreement that has not been signed, and we are looking perhaps toward some punishing trade wars. I could give example after example about creating the jobs we need.

The government said it was going to spend $10 billion to create jobs. It is now at $30-plus billion, and to be frank, we have not seen the job creation it promised with that approach.

[Jim Eglinski, Conservative, Yellowhead, AB]

Mr. Speaker, I am pleased to rise in the House today to speak to Bill C-26 and the Liberals' plan to expand the Canada pension plan.

This expansion would take more money from Canadians' paycheques, place more hardship on small businesses, and do very little for vulnerable citizens. Vulnerable seniors would gain little or nothing from the expanded CPP, as many have not contributed to the CPP and therefore are not eligible to receive CPP entitlements.

I quote from the Fraser Institute, through their colleagues, Charles Lammam and Hugh MacIntyre, who stated:

Instead of expending political energy on debating CPP expansion in the misguided belief that many middle- and upper-income Canadians are not saving enough for retirement, the focus of public debate should be on how best to help financially vulnerable seniors.

For low-income seniors who have contributed, an increase in CPP income could trigger a reduction in other government transfers, meaning little or no net increase in retirement income. If this plan goes ahead, the CPP premium rate will start rising in 2019, and the maximum level of pensionable earnings will go up from $54,900 this year to $82,720 in 2025.

According to a study by the Fraser Institute, this expansion will take money from Canadians, with little benefit in return.

Simon Gaudreault, chief economist at the Canadian Federation of Independent Business, stated that the agreement will have serious negative impacts on workers and the Canadian economy and that the announced changes, including increased contributions, may put Canadian wages, hours, and jobs in jeopardy.

Forcing Canadians to make higher contributions to the CPP will take more money from their paycheques. This means that they will have fewer dollars to invest outside the formal pension system and in private voluntary savings, such as RRSPs and TFSAs. This would result in little to no increase in total savings.

In addition to making it more difficult for Canadians to contribute to their TFSAs, the Liberal government has slashed contribution limits back to $5,500. Our government raised them, because it was such a popular program, from youth to seniors.

Our Conservative Party was proud to introduce the tax-free savings account that encouraged Canadians to be responsible in saving, and many Canadians have come to rely on these savings accounts when planning for their future. Tax-free savings accounts have provided Canadian families and seniors with a secure and flexible savings option that protects their money from being eroded by taxes.

The Liberals cut the limits for these savings accounts, and now they are taking even more money from the pockets of Canadians, making it difficult for them to use these accounts. The changes being made by the Liberals, in my view, will make life less affordable for Canadians who are trying to save for their vulnerable years.

Canadians should be able to manage their own money. With the out-of-control spending we have seen from the Liberals over this past year, they cannot trust the Liberal government with their pensions.

Vulnerable seniors will gain little or nothing from an expanded CPP. For low-income seniors who have made contributions, an increase in CPP income could trigger a reduction in other government transfers, such as the guaranteed income supplement. This would mean little or no net increase in their retirement income.

Our Conservative Party believes in reasonable, evidence-based policies that help Canadians retire with dignity, which is why the previous government expanded the guaranteed income supplement. The Liberals clearly agreed with this approach, since they increased the GIS by 10% in the first budget.

The Canada pension plan expansion may not effectively target those middle-income earners who are at the greatest risk of pension problems.

Employers and employees may decide to shrink their workplace pensions over their earning range when the CPP is newly expanded so the workers are not over covered.

An increase in payroll contributions after 2019 may result in a downward pressure on wages or employment. This would force Canadians to contribute more to the Canada pension plan, and would reduce their private voluntary savings. Canadians should choose how much they save and spend based on their income and preferred lifestyle.

The CPP tax hike will take money from the paycheques of hard-working Canadians, put hundreds of thousands of jobs at risk, and do nothing to help the seniors who need it today.

In 2013, the total household net worth of Canadians was $7.7 billion, split almost equally between pension assets, namely CPP/QPP, RRSPs, employer pensions, real estate equity, and other financial and non-financial assets.

A similar CPP hike scenario studied by the Canadian Federation of Independent Business in 2015 said that it would eliminate 110,000 jobs and permanently lower wages by nearly 1%.

Dan Kelly, the president and CEO of the Canadian Federation of Independent Business stated, “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”.

For the above reasons, I will not be supporting this bill.

Throughout my riding of Yellowhead in Alberta there are many unemployed people and many who are still working. Those who are working are the younger generation, many of whom who would look at the Canada pension plan and not trust that there would be funds there when they retired.

When we talk to financial planners throughout my area, we find that many young people, those who are just starting in the workforce and those who are already there, are putting money away for their retirement. They understand what it means to preplan their own destiny. Our government brought in the tax-free savings account specifically for those people who wanted to plan for their own future and use the money they could invest today, knowing that when they took that money out or when they retired, they would not be paying tax.

The difference between the Canada pension plan and the tax-free savings account is that people can put as much money as they wish forward. At the same time, our government gave them the option to make voluntary contributions to the Canada pension plan, which is what I believe should be in place today, rather than having to make greater mandatory contributions.

[Adam Vaughan, Liberal, Parliamentary Secretary to the Prime Minister (Intergovernmental Affairs)]

Mr. Speaker, I have listened to several of the speeches and it seems members have settled on some statistics, even if we accept them as being accurate. We keep hearing about the 83% who are doing okay, that they are saving privately for their retirement, and that is good. Some of the programs the previous government put in place have helped that. We acknowledge that and have not changed them. In particular, the TFSA for seniors is a responsible and appropriate way to go forward.

However, what about the other 17% who do not have the capacity to save, do not have the income to save, do not have the good luck not to have to dip into their savings before they get to retirement?

Why can we not focus on what needs to be done for them beyond saying just get a job? Why can we not have a safety net in place for the poorest of the poor who are seniors, enhance the CPP, ensure the capacity is there to support these people if bad luck comes their way, even if they do all the other things the rest of us are doing to protect our security in our old age? Why can members not focus on that 17%?

[Jim Eglinski, Conservative, Yellowhead, AB]

Mr. Speaker, I believe the Conservative government gave the opportunity to make voluntary contributions to the Canada pension plan. Yes, it may not affect those who are having a hard times, but I do not believe that taking money from the paycheques of hard-working Canadians having difficulty is going to help them any more than the old plan with the option to add extra funding if they so wish. There is a responsibility for individuals to look at their long-term prospects and their future.

[Alex Nuttall, Conservative, Barrie—Springwater—Oro-Medonte, ON]

Mr. Speaker, to follow up on the member's question a minute ago, it is interesting to hear talk about the 17% that happened to come from the lowest 5% in terms of income in society. Does the member agree with the member across the floor that taking more money out of the paycheques of the lowest 17% somehow makes them more successful?

[Jim Eglinski, Conservative, Yellowhead, AB]

Mr. Speaker, the simple answer is, no. It is just going to make it more difficult. We have many people coming out of university. Forcing them to pay more money into the Canada pension plan will make it harder for them to pay off their student loans. It will make it harder for young and middle-income families to plan for holidays or for their kids' post-secondary education. It will be difficult for many small businesses to keep people working or create new jobs.

[Harold Albrecht, Conservative, Kitchener—Conestoga, ON]

Mr. Speaker, I want to underline a point my colleague made toward the end of his response, and that is the impact on small business. This summer I had the privilege of talking to an accountant who does payroll for a number of small businesses. When she heard about this proposed increase from 9% to 11%, she was astonished. She said that this was going to hurt the small businesses she worked for. Some of them will not be able to hire and some of them will have to lay someone off.

At the very least, this is a huge blow to small and medium-size business. We all agree, and the Minister of Small Business repeats it often, that small business is the backbone of our Canadian economy. How will a punitive payroll tax on small business improve the lives of Canadians who are looking for a job? It is fine to get a 33% CPP benefit when people retire, but they need to have had a job to do that. If there are no jobs available, this is not a productive way to go.

[Jim Eglinski, Conservative, Yellowhead, AB]

Mr. Speaker, the hon. member is absolutely correct. I look at my own situation and my family. My son-in-law and daughter own a company. They work in the oil patch. They employ anywhere from 65 to 100 people a year. This is going to be a great hardship. It means they probably will not be able to hire two additional people. That is two additional people in my riding who may not work. However, if this were not in place, those people may be hired and may be working.

I think we will see that in many small companies that employ 50 to 100 people. That is $50,000 to $100,000 a year more that they have to look at. They could take that money and invest it in new equipment that may spur more work and may require more people to be hired. It is definitely impacting small businesses.

[Karen Vecchio, Conservative, Elgin—Middlesex—London, ON]

Mr. Speaker, this week the Minister of Finance tabled Bill C-26, An Act to amend the Canada Pension Plan, the Canada Pension Plan Investment Board Act and the Income Tax Act.

I had the opportunity to listen to the minister's speech, and the question and answer portion. I listened to him try to explain to us in the House, as well as to the viewers, how this bill was good for Canadians. I had the chance to ask the first question to the minister during that period, and although he is a great speaker, I did not get the answer I requested.

To start, I am going to pose this question once again, but in a different way and hope that through the following hours of debate that there is finally an answer. I shared with the minister two quotes from the Canadian Federation of Independent Business CEO, Dan Kelly:

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.

Another quote from Dan Kelly stated:

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.

These two statements are very troubling, especially with the statistics from 2013 indicating that there are 1,116,423 small businesses in Canada. That makes up 98% of all employer businesses in Canada. This same information shows that 86% of Canadian exporters were small businesses in 2009, that accounted for $68 billion in exports or approximately 25% of Canada's total export value.

Locally, I have received data from my riding of Elgin—Middlesex—London, done by CFIB. When polled on the support for CPP increases, 12% of all Canadians in Elgin—Middlesex—London supported this increase. That is 12%. That means 88% of the people polled did not agree with the CPP tax increases.

With these important figures, I will continue to discuss the concerns with increases to CPP and the impact on small businesses. Rather than continuing with all the stats and figures, I want to share with the House my own personal experience as a small business owner.

Many of us come to the House with different skill sets and different assets, which is very important. One of the assets that I have was being a small business owner. I had the opportunity to run a small business with seven employees. That was run by my former husband and I. When we took this business over in 1998, we purchased it as a franchise. The gentleman was moving out of the franchise business.

At that time, we had received the books showing how well the business was doing, so we were very excited about the first day on the job. However, our first day accomplished $81 in sales. My former spouse and I had paid two staff throughout the entire day. We were open from 7:00 a.m. to 11:00 p.m., and we paid two staffers throughout the day for their shifts.

At the end of the day, our cash received for the items we sold was $81. Obviously the issue here was we needed to look at how to run a proper business. How could we do this? We had many obstacles in front of us, but one of the first things we needed to do was reduce our costs. By doing so, we had to look at what were some of the costs that a business could reduce without impacting what is being sold.

I was in a small coffee shop. We were a coffee house where there was entertainment five nights a week. We served an area where there was a TD Bank and many other local businesses. We were a very common stopping ground for people on their way to work and leaving work.

One of the first things we did was business promotions. That was able to bring in some sales, but at the same time we had extraordinary expenses. I was in a location where our actual cost for rent was $3,800 per month in the downtown core of London. I was dealing not only with an extravagant expense when it came to the rent, but we also had high hydro costs. For anyone who lives in Ontario, believe it or not, it is actually even worse than it was in 1998. We were spending at least $400 and $500 per month on those costs.

We also had other costs that we had to look at, whether it was municipal taxes or different things that we had to go and propose to council, so we could put seating outside. There were many things we had to deal with that had red tape.

The number one thing I did was to reduce costs. It was a really horrible choice to reduce the number of staff. To make that business work, I needed to make sure we had inventory. I needed to make sure there were coffee beans and milk, that the lights were on, and that we paid the rent. That was what was important to me, because without those things, I could not run a business. The first expense I could change was to decrease my staff by two employees. It was a very difficult decision for us to make because it involved the lives of two students going to Western University. We had to take away 15 hours of work per person just to make ends meet.

Over time, we did do better. Nonetheless, anyone who is a small business owner will recognize that we are not just there counting the receipts at the end of the day, but are paying the bills. In my case, I recognized that I could buy a pound of pre-cooked bacon for $7.50, or I could pre-cook that bacon myself in my own kitchen for $3.50. Every single thing mattered, especially when the first day of business brought in $81.

The first thing I had to do was to reduce my staff. Seven days a week, for a year and a half years, I would go in and work. Take into consideration that at the time I had a child who was three months old, as well as a 19-month old, and a child who had just reached the age of 4 and had just started junior kindergarten. This is about a family run business. It is not about rich small business owners. This is about a family that was running a business: a mom, a dad, and three children. I would go in there and scrub the toilets and do all of those things so that we had the business.

By the end of this, we did end up doing very well, and after about 18 months, it was either a matter of our mental wellness and selling the business, or continuing to work every day. We decided to sell that business.

However, one of the biggest things we had to do to keep our costs low was to reduce wages. With wages, we have to look at what payroll means. It is not just the CPP contributions that the government is talking about. Those premiums are matched not only by employers but also by the employees themselves. We have employment insurance premiums. We have WSIB, and I am sure there are very similar programs across the country. Therefore, as a small business owner we are not just dealing with paying the taxes that are removed from someone's pay. We are also doing matching contributions.

There are many things to consider, but I think that is the one thing on which we have to sit back and get into the shoes of a small business owner.

Making business decisions can be very difficult. I fear with this change to the CPP that the government is asking small businesses to make that same decision I had to make in order to have a successful business. To reduce costs, we had to reduce expenses. An easy way of reducing expenses is the hardest job, and that is by cutting staff. It is cutting human resources, and we need to talk about that.

On Friday, I asked the member for Foothills about the challenges in his region, where over 200,000 jobs have been lost in Alberta. In my region I saw a similar thing happen between 2008 and 2010, when we went through the global economic downturn. I asked him in particular if the CPP tax hikes would hurt new businesses. Obviously, the answer is yes.

Changing direction, we also have to make sure that Canadians are aware of what this program is. In the CFIB's Ipsos poll, it was noted that 40% of Canadians think the government contributes to the CPP. We have to make sure that people realize that is not the case. It is the employees and the employers who contribute. It is not about the government here.

We cannot confuse Canadians when we are talking about CPP and are throwing in the point that the GIS has been increased. All we are doing is taking the three pillars of retirement and confusing the average Canadian who has not had an opportunity to sit down and study it.

Retirement is about three pillars. It is about the CPP contributions of the employee and the employer. It is about the social programs, such as old age security and the guaranteed income supplement, and it is about personal savings. This government has reduced personal savings with its changes to the tax-free savings accounts. However, the bottom line is that more money cannot be taken out of Canadians' pockets.

I want to finish with a quote that I am sure the government has heard many times:

Whatever the reason might be to expand the CPP, it is not to eliminate poverty. The poverty rate among seniors is now as close to zero as we can get. Yes, a little over five per cent of seniors today still have income below the poverty line...

That was Fred Vettese, chief actuary of Morneau Shepell and co-author of the finance minister's book, The Real Retirement. This segment was taken from The Financial Post, June 5, 2016.

I would really ask that we look at these things and recognize that CPP is not about poverty reduction. These proposed CPP increases would hurt, especially when we are going to be seeing things like a precarious carbon tax and the cancellation of the small business tax reduction by the current government.

[Mark Gerretsen, Liberal, Kingston and the Islands, ON]

Mr. Speaker, there is no doubt that my colleague has a valid point when she talks about making sure that employers are able to afford the CPP contribution increases. As a small business owner myself, I am fully aware of the fact that the employer has to match the CPP contributions. But it really comes down to balance. It is about where the healthy balance is.

I can appreciate that my hon. colleague might feel differently about this particular piece of legislation, but what does she propose we do 20 or 30 years from now when there are people who have not properly prepared for retirement? The burden would ultimately fall on the taxpayer one way or the other. We can either try to assist now and help them plan for the long term, or we can deal with the consequences in the future of not doing so now. Perhaps it is a fundamental difference of political philosophy at work here, but I am curious if the member could comment on that.

[Karen Vecchio, Conservative, Elgin—Middlesex—London, ON]

Mr. Speaker, I thank the member for that great question. Truly, we are talking about saving for the future in 40 years. If people do not have jobs, they cannot save money in the first place. What we are going to be doing is taking a big slash at small-business opportunities. People cannot save something if they do not have something, and that is what we have to remind ourselves.

If we want to see great job creators in Canada, then give them the opportunity to succeed. Make sure that things like the 9% small business tax is implemented, instead of saying that we are going to do it in the future.

Make sure things like carbon pricing—or carbon tax or whatever we are going to call it—are taken into—