Tony Valeri

[Toy Labelling, December 4th, 1997]

Mr. Speaker, privacy is certainly a major concern to Canadian consumers of financial services and rightly so. Consumers do not want confidential and personal information given to outsiders or used for the purposes other than which it was given or authorized.

The government certainly appreciates these concerns and is planning to build on actions already undertaken by financial institutions. I emphasize that the government is planning to build on these actions.

Earlier this year changes were introduced to the financial institution legislation that strengthens privacy protection for consumers of financial services. Regulations are under discussion that will require all federally regulated financial institutions to establish procedures governing the collection, retention, use and disclosure of customer information, to implement complaints handling procedures, to inform customers of these procedures and to report annually on privacy related complaints.

The banks and property casualty insurers have already adopted codes of conduct on privacy that are modelled on and consistent with the privacy code established by the Canadian Standards Association. The banks' code was audited by Price Waterhouse and the Insurance Bureau of Canada's code was examined by the Quality Management Institute to ensure that the codes were in compliance with the CSA model. The CSA financial institution codes allow organizations to obtain customer consent to use their shared personal information in a number of ways.

The banks do not provide customer information to parties outside their corporate group, with the exception of information released for legal, income tax and credit reporting purposes.

The government will continue to monitor the privacy practices of financial institutions, both to ensure their effectiveness and to assess whether more needs to be done to ensure the protection of customer information.

The task force on the future of financial services sector may also be examining privacy issues in its work. We certainly look forward to seeing what the task force has to say when it reports back to the government next fall.

[Canada Pension Plan Investment Board Act, December 4th, 1997]

Mr. Speaker, being mindful of the earlier ruling that you made of 45 seconds, I will be very brief.

I just want to make the comment, after hearing this speech, that I guess the NDP is the only party in this House that really feels there is no problem with the Canada pension plan. It ignores the fact that changes were required to the Canada pension plan. The NDP thinks that just sitting back and hoping things will get better will deal with the challenges the plan is faced with.

When the NDP members continue to talk about the disability side of the benefit, they need to understand that as a reflection of what Canadians have said, 75% of the changes to CPP are on the financing side and 25% are on the benefit side. We went easy on the benefits and that is a reflection of what Canadians said throughout the consultation period.

We had a year and a half of consultations. Members from the CFL, United Steelworkers, CUPE, CAW, Canadian Labour Congress, all made interventions with respect to the consultations. Unions had representation.

[Canada Pension Plan Investment Board Act, December 4th, 1997]

Mr. Speaker, the hon. member made reference to actually doing nothing with the plan and hoping that greater economic growth would take care of the challenges which the Canada pension plan faces. I would submit that is what past governments have done. For the first time we have a government which is responding to what Canadians have said they want through consultations. Canadians want changes to be made to the plan to ensure its sustainability.

Going further, the chief actuary has actually made the calculation that with the inclusion of 150,000 more Canadians being employed, the effect would be to reduce the steady state rate from 9.9% to 9.856%. Effectively the increase in the growth in the economy is still not sufficient to achieve the sustainability of the plan. That is why the changes were made, to ensure that the plan will be there for Canadians in the future.

The member referred to the U.S. plan and how effective it is. Is the NDP member saying that he wants to increase the age of retirement which is the case in the United States of America?

We require a made in Canada solution. We have done that by going to Canadians and ensuring that Canadians had an opportunity to be heard on the Canada pension plan. The suggestions made by Canadians in consultations are reflected in Bill C-2.

Should we mirror the U.S. plan, as the hon. member has stated in his comments?

[Canada Pension Plan Investment Board Act, December 4th, 1997]

Madam Speaker, I am pleased to speak today on third reading of Bill C-2, the legislation that will secure the Canada pension plan for Canadians now and in the future.

One of the most important social policy initiatives ever undertaken in this country, the Canada pension plan has been a key part of the retirement plans of every Canadians since 1966. It has also helped our most vulnerable citizens, the disabled, the widowed and the orphaned. That being said, the Canada pension plan is now under growing pressure and needs to be changed before it is too late.

The fact is that when the CPP was created, there were eight working age people in Canada for every retired person. Today there are five. In 30 years there will only be three.

The current 5.85% legislated CPP contribution rate was scheduled to rise to 10.1% by 2016. If nothing is done, CPP contribution rates will have to increase to over 14% to cover escalating costs. That is a 140% increase for future generations and certainly that would be an unacceptable fate for our children and our grandchildren.

It does not have to be that way if we act today to address the problems that we anticipate for tomorrow. As joint stewards of the Canada pension plan, the federal government and the provinces agreed last February to restore the financial sustainability of the Canada pension plan and in fact to make it fairer and more affordable for future generations.

Bill C-2 incorporates the changes proposed in that agreement and also reflects the views expressed by Canadians during last year's cross country public consultations. Some have said that these changes are being rushed but allow me to set the record straight. It is the continuing delay that threatens the CPP and in fact it is the delay in facing up to the very real challenges confronting the Canada pension plan.

In February 1995 the government tabled the fifteenth actuarial report on the Canada pension plan which showed as I just mentioned that if changes were not made to the Canada pension plan the fund would be exhausted by 2015 and the contribution rate would have to jump to over 14%.

In 1996 the federal government and the provinces released a paper on the problems facing the Canada pension plan. They held consultations with Canadians in every province and territory and released a report on those consultations.

In February 1997 we reached a landmark agreement with the provinces. There were then two draft bills released and in fact it is beyond me how anyone can say that we are rushing the Canada pension plan reforms. Clearly we have ensured that the problems that face the Canada pension plan as we move into the next millennium are being addressed and they are being addressed in consultation with all Canadians.

What I do know is that Canadians were legitimately concerned that their Canada pension plan would not be there for them when they retire. They told the federal and provincial governments to act now. They told us that they want to be able to count on their Canada pension plan now and in the future and they want it fixed, not privatized and not scrapped.

They also told us to do this in a way that does not pass on an insupportable cost burden to younger generations and they clearly told us to preserve the CPP by strengthening its financing, improving its investment practices and moderating the growing cost of benefits.

Canadians want and need the Canada pension plan but they want changes as well. We have listened and I believe that is what in fact Bill C-2 is all about.

The Canada pension plan's pay as you go financing may have been fair and appropriate back in 1966 but not in today's or in tomorrow's world. Building up a larger fund, fuller funding and earning a higher rate of return through investment in the market is now necessary to help to pay for the rapidly growing costs that will occur once baby boomers begin to retire.

Accordingly, the Canada pension plan will move from a pay as you go financing with a small contingency reserve to fuller funding to build a substantially larger reserve. Fuller funding means that the fund will grow substantially for about two years of benefits to about four or five years over the next two decades.

Until 2003, CPP contribution rates will increase in steps to 9.9% of contributory earnings and then remain steady. This steady stated rate is expected to be enough to sustain the Canada pension plan with no further increases.

During the consultations on CPP, ordinary Canadians and pension experts alike told us to improve the way CPP funds are invested and to secure the best possible return for contributors and beneficiaries.

Under the proposed new investment policy, instead of being loaned to provinces at preferential rates as they are now, Canada pension plan funds will be prudently invested in a diversified portfolio of securities in the best interests of plan members, like other pension funds.

An independent CPP investment board composed of 12 directors from a range of backgrounds will oversee investment policy for the fund. The board will in turn hire qualified investment professionals to manage the day to day investment decisions at arm's length from governments. The board will operate under broadly the same rules as other private and public sector pension funds and that means responding to market conditions, adopting investment policies and hiring qualified investment professionals.

At the same time, the board will be accountable, accountable to plan members, accountable to government and accountable to Canadians generally. I am pleased to report that the experts in pension fund management who testified before the finance committee agreed that Bill C-2's accountability provisions are in fact stringent and leading edge.

The same experts told us that the key to good investment practices and results is good management structures and that these provisions are in Bill C-2 and are extremely sound.

While this bill was before the House finance committee, a number of committee members were particularly eager to ensure that the accountability provisions of the bill were as stringent as possible. Once again, expert witnesses confirmed that the legislation was very rigorous in this area.

Moreover, two amendments for which there was support in committee were made at report stage to clarify the accountability of the board. The first one clarifies the auditor general's access to any information he considers necessary from the investment board to audit the consolidated financial statements of the Canada pension plan.

The other amendment requires that a special examination of the Canada pension plan investment board be conducted at least once every six years.

Through Bill C-2, stewardship of the Canada pension plan is also improved and its public accountability strengthened. Canadians will receive regular statements about their pensions. Federal-provincial reviews will take place every three years instead of every five years. Annual reports will be published on the fund and tabled in Parliament and regular public meetings will be held in each province.

Through consultations with Canadians, some modest changes to benefits will accompany these financing and investment policy changes, but let us be clear, some benefits will not change as well.

For example, anyone currently receiving Canada pension plan retirement pensions or disability or survivor benefits will not have their benefits affected in any way. All benefits will remain fully indexed to inflation, except the one-time death benefit. The ages of retirement will remain unchanged.

The changes that are being proposed are moderate and balanced. Indeed their impact on vulnerable Canadians has been minimized and no one group has been singled out or forced to shoulder an undue burden.

During the public consultations on the CPP, Canadians told their governments to go easy on changes to benefits. Again, we have listened.

The changes to the Canada pension plan keep the contribution rate from rising to the 14.2% it would have reached had we not acted.

Seventy-five per cent of the changes that will ensure the sustainability of the CPP are on the financing side and only 25% are on the benefit side. Once again, this reflects what Canadians told their governments during the public consultations.

Let me take a few moments to refute some of the myths being spread by members of the other side of this House and by some special interest groups.

Critics claim that youth gets a raw deal from these changes. Some have actually stated that young Canadians will contribute one dollar for every fifty cents they will collect. Let us be absolutely clear. Nothing could be farther from the truth. All Canada pension plan contributors, both present and future, will receive more from the Canada pension plan than they pay in.

Young people can expect to receive $1.80 for every dollar of contributions. The return can only be higher if governments were prepared to renege on the existing commitments to seniors already receiving pensions and to working Canadians expecting pensions when they retire. We will not turn our backs on these Canadians. We will not renege on these commitments.

Some hon. members have also stated that CPP contributions will increase by 73% and charge that this is the biggest tax grab in history. CPP contributions are not taxes and Bill C-2 is not a tax grab. CPP contributions are savings toward pensions. They go into a separate fund, not into government coffers, and will be invested like other pension plans.

Let us get the facts straight. Contributions will increase over the next six years to 9.9%. However, that is also the end of the increases. What the critics never mention when they criticize the increase to 9.9% is that the CPP contribution rates are already scheduled to reach 10.1% in the year 2016 and without the changes that we are proposing, the Canada pension plan would soar to 14.2% in the year 2030.

Is that what the hon. members of the opposition parties prefer, a 140% increase? It is certainly not what the government prefers. It is certainly not what Canadians have said during the consultation period. In fact, it is certainly not what is contained in Bill C-2.

Other members argue, and the hon. member from the Conservative Party continues to argue this, that the higher CPP contributions should be offset by EI premium rate reductions. I know that it takes some time to communicate and understand these facts for some hon. members.

Let me again state quite clearly that the EI program and the Canada pension plan are totally separate programs serving different purposes. Furthermore, the government has already announced EI rate reductions for 1998 that more than offset the Canada pension plan increases. We are committed to bringing down the EI rate further just as soon as we can afford to do so.

Then there are groups that contend that not only will these changes take $157 billion out of the economy but that each 1% increase in payroll taxes will mean the loss of up to 176,000 jobs. Quite clearly the allegations are wrong and I want to take this opportunity to ensure that the record states very clearly that these allegations are wrong.

I reiterate that higher CPP contributions are not payroll taxes. Canadians have viewed and will continue to view their CPP contributions as retirement savings. They can see, as members on this side of the House can see, through the transparent rhetoric of these special interest groups. The reforms that we are proposing will generate important and lasting benefits for Canadians.

Let me continue with the myths. Some hon. members continue to talk about better returns through privatized pensions. These members owe it to Canadians to explain exactly what they would do with the CPP's outstanding obligations to Canadians. There is no question that registered retirement savings plans are important and that is why they are one of the three pillars in the retirement system of Canada. But they cannot replace public pensions.

Canadians told governments during the public consultations that they want the security provided by the CPP as a public plan. They do not want all their retirement savings dependent on their ability to second guess the fluctuations of the stock market. And I am sure that members opposite have been watching the fluctuations in the stock market lately and I am sure that the recent events have reinforced the priority that Canadians give to security even though it has not reinforced anything from members opposite.

Let us look at the costs. The cost to contributors for the Canada pension plan benefits will be 6.1%. Could mandatory RRSPs really provide equivalent or better benefits at lower costs than the CPP? The answer is no. With the new investment policy the Canada pension plan fund will earn as good returns as anyone investing privately could expect to earn. Furthermore, the CPP has the added advantage of having the government stand behind the benefits.

The administrative costs of the CPP and the cost of investing the pool of CPP funds will be considerably lower than the cost associated with administering millions of individual plans. We had expert after expert come before the committee who continued to say and reinforce the point that the administrative costs associated with mandatory RRSPs and administering millions of individual accounts was far greater than the administrative costs of the Canada pension plan.

In addition, the CPP protects families when an income earner becomes disabled or dies, and it protects the pensions of parents who take time out of the workforce to care for young children. So when we add it all up the fact is a reformed CPP will cost less than a retirement saving done exclusively through a mandatory program of RRSPs, at least one percentage point less.

Let me turn to the extra cost of paying for the burden of the $600 billion unfunded liability. Members opposite have talked about scrapping the CPP and moving to mandatory RRSPs, but they have never clearly explained how they would do that. Let those who would scrap the CPP explain to Canadians whether they are going to renege on the promises to Canadians who are now retired. Let those who are still working and counting on receiving CPP when they retire have the security that is provided in Bill C-2, ensuring that the public pension plan is there for them.

Mandatory RRSPs do not do that. Reneging on the Canada pension plan liability does not do that. That is what members opposite want.

Let those who would scrap the CPP explain how they will deal with Canada pension plan's $600 billion in outstanding obligations. Are they going to deal with this within the CPP? If not, how will they raise the revenues or make spending cuts to pay for these obligations? It is time for them to stop their fiction and fantasy. It is time for them to come clean with Canadians and give Canadians the straight goods.

The problems facing our pension system are not unique to Canada. Many countries are making changes so their pension systems will also be sustainable. Some have recommended moving toward increased funding of public plans, which is exactly what we are doing with Bill C-2.

The legislation will make Canada one of the first, if not the first, major industrialized countries to ensure sustainability of the public pension system in the next century. It is forward looking and above all it is fair. I urge hon. members to give their full support to the bill.

Generations of Canadians, our children and our grandchildren, need our leadership today to protect their interests tomorrow. Bill C-2 does that. It does that after consultations with Canadians.

The Standing Committee on Finance is continuing the consultations with experts and other groups that come before the committee. They have overwhelmingly supported Bill C-2 in its balanced approach. Bill C-2 will continue to monitor the Canada pension plan. Bill C-2 will continue to provide Canadians with the security they expect and deserve from their Canada pension plan.

I ask members not to continue with their rhetoric but to deliver the facts to Canadians and ensure the bill passes third reading and becomes legislation so that Canadians have the peace of mind they deserve.

[Canada Pension Plan Investment Board Act, December 1st, 1997]

Madam Speaker, I rise on a point of order. I think you will find that the member is now discussing Group No. 7 and if you check, you will find that we are still on Group No. 6.

[Goods And Services Tax, November 28th, 1997]

Mr. Speaker, the government is firmly committed to supporting literacy. The question has always been how can we do this without jeopardizing the hard won progress that we have made in getting the nation's finances in order.

It is quite clear that any measures taken must be effective and in fact fiscally responsible. That is why the government has introduced an initiative that rebates 100% of the GST paid on books to public libraries, schools, universities, colleges and other bodies which promote literacy.

This means that there is no GST on any books distributed freely for use in primary or secondary schools or other educational settings. This also results in tax relief on books, not only for structured learning in our schools and colleges but also for life long learning through public libraries and front line literacy groups.

The GST rebate on books recognizes the important role played by educational institutions and community groups in helping individuals get the tools they need to learn how to read. In addition, it is an efficient and responsible investment. Targeting assistance for front line literacy groups will certainly ensure a greater impact for every dollar of expenditure.

The special rebate complements government initiatives announced in the 1997 budget to support learning and education in Canada. And this year funding to the National Literacy Secretariat will rise by 30% to $30.3 million, creating more opportunities for individuals to improve their literacy and communication skills.

For students the education credit has been increased to recognize the non-tuition costs of schooling and the tuition credit has been expanded to cover not only tuition fees but also mandatory fees imposed by post-secondary institutions for educational purposes. In addition, students are now able to carry forward any unused tuition and education credits to be applied to future income.

Further, the annual contribution limit for registered education savings plans has been doubled and parents are now able to transfer that unused RESP into their registered retirement savings plan. Furthermore, the Canada Council provides support to Canadian authors and assistance is available to Canadian publishers through the Department of Canadian Heritage.

There are a number of ways that the government has taken on the initiative of literacy and is ensuring that the expenditures being made are targeted to front line literacy groups so that we can ensure that individuals who are most in need of literacy assistance will get it through the tax and rebate that we have provided through the GST.

Quite clearly the government does not claim that targeted tax relief will answer all the challenges that we face with respect to literacy and education. However, we are certainly convinced that these measures will go a long toward supporting efforts to improve literacy levels in communities across Canada. The Prime Minister, the Minister of Finance and all members of the House are committed to ensuring that literacy is a priority for the government. It is a priority which is reflected when we speak with Canadians.

I think the agreement in the House is perhaps how we will achieve the goal of increasing literacy in this country. We feel we have balanced that approach through our tax expenditure and will continue on that track to ensure that Canadians are well served by the expenditures the government makes.

[People's Tax Form Act, November 27th, 1997]

The member makes a statement that it is useful information. I will tell him, and I take exception to the statement, the useful information that is coming to this House right now is coming in the form of public consultations directly with Canadians through round tables, through town halls that members of Parliament conduct in their constituencies. We do not require this duplication of effort. We do not require the additional bureaucracy. Quite frankly, I am astonished that the Reform Party is putting this forward.

[People's Tax Form Act, November 27th, 1997]

Mr. Speaker, the government welcomes any efforts to open up the lines of communication with ordinary Canadians on tax and expenditure policy. Since we took office in 1993 we have greatly expanded the opportunities for individual taxpayers to make their voices heard in the policy process.

As part of the new open budget process, the Minister of Finance appears before the House of Commons Standing Committee on Finance each fall to discuss the options and priorities for the upcoming budget. The finance committee then begins a prolonged period of direct public consultations on budget priorities across Canada. This year for the first time the chair of the finance committee, the member for Vaughan—King—Aurora, asked each and every member of this House to consult Canadians in their own constituencies. That is direct democracy.

The government is apprised of the results of these consultations through a report of the committee which is tabled in the House and delivered to the Minister of Finance before the budget.

The Minister of Finance and other ministers also receive many other proposals and recommendations on tax and expenditure policy from the public each and every day. These take the form of letters, faxes, Internet, E-mail letters and other means. We take each and every response into consideration in the formulation of policy. In short, we already have a dynamic and practical system of public consultation and communications in place to help guide us in our tax and expenditure policy decisions.

While further consultations are always desirable, I am not sure this bill would significantly add to the information the government already collects in the area. As mentioned by the mover of this bill, the financial implications of this bill need to be addressed.

I do not believe it is a prudent expenditure of public funds since it would largely duplicate the results of the public consultation systems that are already in place. While I appreciate and share in the objectives of this bill, I do not think it will improve upon the existing system of public consultations on tax and expenditure policy in a very practical and efficient manner. As such I really cannot support this motion.

The member also stated that his bill will allow for extensive debate to take place throughout this country. I have to state quite clearly that at least the members on this side of the House, and I am sure some members on that side of the House, do involve themselves in extensive debate with their constituents on an ongoing basis.

Members of Parliament have ample opportunity to meet with their constituents either through town halls or round tables and certainly through householders. I ask my constituents on a regular basis through my householder for feedback on various items that the government is considering pursuing and certainly on this very important issue of fiscal dividend as we move into an era of balanced budget and a fiscal dividend. The government wants to hear from ordinary Canadians.

I find it somewhat unfortunate that members continue to point to the fact that those people who come before the finance committee are all representatives of interest groups and they do not reflect the concerns of individual Canadians.

I recall when the finance committee was in Vancouver we had a very passionate presentation put forward by an individual from Vancouver East. This individual was not there speaking on behalf of any so-called interest group, as the Reform Party is so fond of referring to. He was there to deliver a message on behalf of those constituents and individuals who live in Vancouver East. The finance committee took that information into consideration. It was a very passionate presentation indeed.

What the member is proposing in this bill is to duplicate a system that is already in place, a system which is quite dynamic and practical and does allow for public consultation and communications. This government, more than any other government in the past, has been more open, more transparent in its pre-budget consultations, allowing many Canadians the opportunity to come before the committee or provide some written submissions. Members of Parliament have gone out and consulted with their constituents through town hall meetings and round tables so that we can go directly to Canadians right across this country.

We do not require another bill that speaks to the duplication of what is already taking place. I find it ironic. The Reform Party has always been out there talking about government needs to eliminate duplication. We now have a bill here that promotes the duplications.

The Reform Party continues to talk about the prudent expenditure of money. Passing this bill would allow for some phenomenal bureaucracy to take place. We would have to go out and hire more public servants at a time when we have been talking about reducing the public service in order to deal with the financial implications we were left with because of the past administration, the Tory government, that did such a terrible job over the last period it was in office in dealing with the finances of this country.

In closing, while I certainly appreciate and certainly would say quite clearly that not only on this side of the House but on both sides of the House further consultations are always desirable, I am not sure this bill would provide anything significant and would add to the information the government is already collecting.

[Canada Pension Plan Investment Board Act, November 27th, 1997]

Mr. Speaker, I want to make a few comments on each of the motions that form part of this group.

With respect to Motion No. 11, I think it is important to point out that essentially this motion puts the financial sustainability of the CPP at risk, the very thing that the bill addresses. The motion in fact would mean that instead of rising to 9.9% by 2003 and then levelling off, contribution rates would in fact rise to 10.1% and then to 14.2%, a 140% increase over current contribution levels. That is in fact the motion put forward by the NDP. This motion would impose an unfair burden on our children and grandchildren and never in fact make the CPP sustainable.

I ask the question, does the NDP want to kill the CPP by neglect? Let us do nothing. We have heard a lot of rhetoric from the NDP today which is in full flight. We did not hear anything of substance unfortunately.

With respect to Motions Nos. 13 and 14, the federal-provincial governments have put the plan on a sustainable track through their negotiations after consulting with Canadians. Freezing the YBE was part of the changes required to balance the cost of the program. Despite the freeze, the low income workers will still pay contributions on a smaller portion of their earnings than higher income earners.

In fact the amendment put forward by the NDP and the Conservatives would remove an essential element of the federal-provincial package and would require a significantly higher long term contribution rate than the 9.9% provided for in this legislation.

It also may be of interest to hon. members of the House to know that further examination of the basic exemption will occur in the next phase of the Canada pension plan reform studies. More specifically, the federal and provincial governments have agreed to study Quebec's proposal for graduated removal of the exemption as income rises. In fact there is a commitment on the part of the federal government and the provincial governments to the changes to the YBE in the next review.

Motion No. 16, essentially the measure that is the five year average of earnings, is similar in concept to how most private pension plans adjust for wage growth over a pensioner's working life. The reduction again helps the costs over time and strengthens the sustainability of the CPP. Again, I think it is very important to ensure that Canadians know that current pensioners and persons age 65 or older in 1997 will not be affected by any of the changes.

Changes to the benefits that had to be made were in fact balanced. This particular change is the only measure in Bill C-2 which affects retirement pensions and it is therefore not only essential to the overall goal of sustainability but also to achieving an overall balance in the impact to the benefit changes.

The effect of the motion as worded is somewhat flawed and in fact would make the legislation unworkable. It would not be acceptable to take away this critical element to ensuring the long term security of the program.

Motion No. 17 essentially talks about the labour force attachment rule. The current provisions require very little participation in the workforce, in fact as little as a few months over the course of two years. I think this is important because members of the NDP have been getting up all day and making comments that in fact what the government is intending to do does not reflect what Canadians have been saying. During the consultations many Canadians have said that the current requirements of labour force attachment were not strong enough.

Now, with the changes put forward in Bill C-2, workers do have to demonstrate a slightly stronger attachment to the workforce to be eligible for the disability benefits. The measure will not affect current recipients of the CPP disability benefits. Under the proposed changes, workers must have made contributions in four of the last six years compared to the current requirement to work in two of the past three or in five of the past ten.

Again, it is also very important to make note of this. The new coverage rules are still more generous than the original rules of the plan.

Prior to 1987, workers had to contribute in five of the past ten years and also in at least one-third of the years from their 18th birthday in order to be eligible for disability benefits. We have seen the progressivity of the plan. The new coverage rules are still more generous than the original rules of the plan.

The NDP has continued to focus on the disability aspect of the plan. Persons with disabilities are not being singled out. The CPP changes are only one aspect of the government's broad agenda focusing on persons with disabilities. It is also important to note that the federal and provincial governments are moving forward on a number of other strategies that will enable persons with disabilities to participate more fully in the economy and society.

With respect to the CPP disability, the chief actuary analysis also points out that 75% of the proposed changes to keep the contributions to 9.9% are on the financing side and only 25% are on the benefits side. It reflects the message from Canadians during consultations to go easy on the benefits side when fixing the CPP.

With respect to Motion No. 18 put forward by the NDP, as worded the provision would be temporary in nature and would only be helping contributors who receive a benefit beginning in the period from 1999 to 2003. This would be entirely unfair to other contributors, especially the future generations who will be paying for these pensions through their contributions.

We hear contradictions in the House where the NDP continues to put forward the intergenerational argument and how it is unfair to future generations. Here we have an amendment put forward by the NDP which would in fact do the exact opposite and put a greater burden on future generations.

If it was made a permanent feature of the program, the doubling of benefits as the NDP is asking for would also require an approximate doubling of contributions. This would be unacceptable to the governments that are the stewards of the program, both federal and provincial governments, and also to Canadians who have asked us to ensure that the plan remains financially sustainable.

The point has been made over and over again by various members of the opposition parties other than the NDP that if we want more benefits, premiums have to go up. The NDP have not formed any sort of argument that would deal with the premium side of the program. Canadians have said to deal with the plan, ensure that it is sustainable, ensure that we go easy on the benefits side and ensure that it is balanced off with the premiums.

With respect to Motion No. 19, I must stress that the proposed changes will not affect those who currently receive combined disability-survivor or retirement-survivor benefits. The CPP has always had limits to restrict the stacking of benefits. The proposed changes bring the limits on combined benefits more in line with their original intent.

It is also important to understand that the combined benefit provisions will have no effect on survivor recipients who are not also receiving another CPP benefit, that being a retirement or a disability pension in their own right.

It also may be of interest for hon. members of this House to know that there will be further examination of the role of the CPP survivor benefits in the next round of the federal-provincial review of the plan. The object is to ensure as far as possible that all CPP premiums remain relevant to the needs of Canadians.

I have one final motion to comment on in the time remaining. Motion No. 22 put forward by the NDP asks that we delete the requirement for increased contribution rates to cover the costs of new or increased benefits. It is an important statement of principle and something that Canadians have continued. It has certainly been very effectively communicated during the consultation process that the federal and provincial governments agree that any future benefit enrichments must be paid for, that we should never again put the security of the Canada pension plan at risk by enriching benefits without being willing to pay for them.

On the intergenerational issue, we must ensure the sustainability of the plan. We must do so not only for the seniors who are receiving the benefit now, the near seniors, the middle age Canadians, but for young Canadians. The changes we have made to the CPP will ensure that young people are not saddled with an unbearable burden.

[Canada Pension Plan Investment Board Act, November 27th, 1997]

Mr. Speaker, I would like to spend a few moments speaking on Motions Nos. 10 and 12.

Motion 10, proposed by the member for Calgary—Nose Hill, intends to delete the requirement for workers and their employers to make extra contributions for 1997, which are the maximum of $24 each for employers and employees.

The contribution rate for employers and employees in 1997 is 2.925% and employers have been submitting their employer-employee contributions based on that rate.

Section 59 of Bill C-2 amends the existing schedule of the contribution rates to require employers and employees to pay the 3% in 1997.

Again I state that the motion deletes the mechanism for collecting the extra contributions resulting from the amended contribution rate for 1997.

The motion would require that the extra contributions be collected starting at the beginning of 1997. Since it is impossible to undo the past, the motion is in fact eternally flawed. I am sure that is not the intent of the member who has put forward this amendment.

Let me spend a few moments talking about what the departments have done to deal with the anticipated increase in the CPP premium.

Departmental officials did meet with several staffing groups concerned about the 1997 rate collections. Revenue Canada did reflect the new higher rate in the 1997 withholding tables, which it puts out each December.

Putting new tables in mid-year is quite expensive for the government and administratively cumbersome for employers. The government did try to make employers aware of the possibility that the 1997 rate could be changed during 1997 so that employers had as much notice as possible to deal with this situation and they could take appropriate action.

As I stated, Revenue Canada alerted employers in December 1996 and contained this information in the 1997 withholding tables.

The Minister of Finance indicated in his February 14 statement that the extra money for 1997 would be collected at tax filing time. Revenue Canada again informed employers in May of the procedures for collecting the 1997 premiums. Again, finance officials talked to a number of employers and their associations over the spring and summer.

There have been ample attempts by the departments and the governments to inform employers that in fact this anticipated increase is coming and tried to work with them to deal with the administrative concerns they may have had.

I just want to talk for a second on the mechanism to collect. Employers file, every February, a T-4 reconciliation statement that is used as a final year end reconciliation for EI, for Canada pension plan premiums as well as other taxes that are collected and withheld from employees.

This T-4 reconciliation form is the form that would be used to collect the 1997 premiums. There is no additional administrative burden put in place as a result of having to collect these 1997 premiums in 1998.

The changes that were made do eliminate that administrative burden and if we had made those changes mid-stream we would have caused much greater hardship on the business community.

With respect to Motion No. 12, it attempts to prevent the new CPP contribution rates from coming into effect for 1997 through 2000 unless the increases are offset by decreases in employment insurance contributions from employers and employees.

It is clear that there is no link between CPP and EI. They are separate programs that serve purposes and rates are established independently. EI premiums nevertheless have been reduced since 1994 and they will fall again from $2.90 to $2.70 which is a $1.4 billion expenditure on behalf of the government. This completely offsets the 1998 CPP rates for workers and more than offsets the increase in CPP rates for employers.

The government has committed over and over again that it will continue to lower EI premium rates as soon as it can. However, the overwhelming message from Canadians throughout the entire consultation period was that the government needs to take action now to fix the CPP so that the contribution rate does not rise above 9.9%.

The second part of the motion deals with the steady state contribution rate. The motion intends to prevent the steady state contribution rate from exceeding 10.25% regardless of the chief actuary's calculations. Establishing a cap of 10.25% is clearly inconsistent with the CPP financing principles set out in the act. The principles require a constant contribution rate that can be sustained. The 9.9% steady state contribution rate is based on prudent assumptions and we are therefore confident that the rates will not exceed this level.

There was also some discussion earlier from the Conservative Party about the so-called tax grab. Let me be very clear that it is not a tax grab. This is a contribution of savings toward pension. When these contributions are made and collected by the government, they go into a separate fund. They do not go into consolidated revenues; taxes go into consolidated revenues. They will go into a separate fund and will be invested like other pension plans. That is what Canadians have asked us to do and that is what Bill C-2 will do.

Under the existing legislation, CPP contribution rates are already set to climb above the 9.9% rate. In fact, the rates are scheduled to reach 10.1% in 2016, so we are reducing the amount that the existing contribution rates would end up being if we did not bring forward Bill C-2.

The chief actuary has shown that if we do not move fast, the Canada pension plan will be bankrupt by 2015 and the rates will have to soar to 14.2% in 2030, which is a 140% increase. No one on this side of the House is saying that the CPP premiums are not going up. Clearly they are going up but they are going up so that we can sustain the plan. They are not going up as high as they would have if we had done nothing. For the first time in a long time the administration of this government has taken action to save the CPP plan.

The same cannot be said about the prior administration which sat there and watched the CPP go into disarray. It sat back and said it would do nothing, that it should be left to become someone else's problem. We do not want that to happen. We are reflecting what Canadians have said. We had the consultation period. Bill C-2 reflects what Canadians have told us.

The responsible thing to do to avoid bankruptcy and truly intolerable rates is to put forward Bill C-2 to ensure the Canada pension plan stays solvent and provides the security Canadians are asking for.

The hon. member from the Conservative Party continued to talk about the increases in the CPP premium. He referred to an $11 billion tax grab. Let us be very clear. He fails to mention that because of the changes that have been made in this bill, premiums would ultimately be $11.5 billion if we compared it to the existing schedule.

When we talk about doing something for future generations, when we talk about ensuring the pension plan is solid, when we talk about doing it in a very balanced manner, and when we look at the premium increase versus the changes on the benefits side, we will find on review of Bill C-2 that we have met those criteria. We have ensured that the concerns of Canadians have been reflected.

The provinces have played a very large part as joint stewards of this plan in the federal-provincial negotiations. We have an agreement that is clearly a balanced approach that will ensure the Canada pension plan will be there for Canadians well into the future.