Tony Valeri

[The Late Justice John Sopinka, November 27th, 1997]

Mr. Speaker, this week as Canadians we have been reflecting on the remarkable life and accomplishments of one of Canada's finest legal minds, Supreme Court Justice John Sopinka.

Spending many of his younger years living in Stoney Creek, John Sopinka attended Salt Fleet High School between 1946 and 1951. There he excelled both as an athlete and as an academic student, graduating a valedictorian.

His leadership abilities were evident through his work as student council president, while his capacity for excellence took shape through his membership on Salt Fleet's football team and playing the violin with the Hamilton Symphony Orchestra.

Justice Sopinka brought his considerable talents to bear in all of his pursuits, whether it was in professional sports as a CFL athlete or within Canada's legal system. His reasoned legal opinions and his many insights on Canada's legal system will remain his legacy not only to his colleagues in the legal profession but to all Canadians.

As the son of hardworking parents who showed so much promise in those early years at Salt Fleet High, John Sopinka rose to the very heights of our society and enriched us all. Truly he will missed.

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

Madam Speaker, I am sure the member does realize what I am going to say because I would expect that the member knows in fact what we are debating this morning and also understands the rules that are in effect at report stage. I would only ask the member, through you, Madam Speaker, to respect the rules of the House and continue his debate with respect to the motions that we are debating.

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

Mr. Speaker, just to pick up on the comments of my colleague who was just up speaking and addressing this House, the motion is clearly inconsistent with the public's wish to stop the practice of lending CPP funds to the provinces at below their own market rates of interest.

I refer to the report on the Canada pension plan consultation that was put out in June 1996. It says that there was widespread support across the country for achieving a higher rate of return by investing CPP funds in market securities. Participants said a higher rate of return on investment is a prerequisite for the changes to the benefits and contributions. Without it the rationale for fuller funding disappears. There was agreement that the inevitable increases in contribution rates must be kept in check through diversified investments that will earn a higher rate of return.

This is reflective of what Canadians have said throughout consultations. The NDP this morning consistently gets up and talks about how any of the changes that are put forward with respect to Bill C-2 are not progressive enough or are not reflecting what Canadians are saying.

I offer to this House the opportunity to put aside the rhetoric the member for Qu'Appelle has put forward this morning, and some of the other members of the NDP, and look at the facts.

They talk about the reasons why British Columbia and Saskatchewan did not sign on to this agreement. Let us be quite clear that during the consultations both those provinces never said that provincial access to funds was an issue. They had other issues.

British Columbia put forward toward the latter part of the consultations and the negotiations between the province and the federal government the proposal to expand coverage up the income scale to $50,000 or $55,000 from where it is with the present plan. That is fair enough, but it also needs to be stated that particular issue is on track two.

The discussion with respect to that proposal from British Columbia will be reviewed on track two when the provinces and the federal government come together once again to review the Canada pension plan.

There were no issues related to the investment board or the investment board principles. In fact, both those provinces signed on to the information paper that included the investment board principles. The investment board principles stated quite clearly that it will perform its function in the best interest of the plan members. The best interest of the plan members is an attempt to receive the best rate of return, and the best rate of return is not achieved if we have this motion go forward.

The provinces agreed that the CPP fund should be invested in the best interest of the plan member, just like other pension funds. I think it is important to emphasize like other pension funds. Another member of the NDP was up earlier this morning talking about the limited access to the funds. The regulations included in Bill C-2 quite clearly state that the bill guarantees provincial access to funds at market rates.

There is a transition period. It was part of the negotiation. The provinces wanted to ensure the amendments to the Canada pension plan provided the opportunity for the provinces to continue to receive access to those funds, and Bill C-2 does that while at the same time providing the highest possible rate of return to the plan members by ensuring the provinces are able to have access to those provincial moneys at market rates.

I also want to state that this morning we heard the NDP get up and say that the amendments are not progressive enough with respect to Bill C-2. Yet here we have a motion that continues to put forward the status quo. Let's not change it. What they are doing is mixing all kinds of different motivations for these changes. They talk about regional development. They talk about labour participating and different types of initiatives.

Regional economic development is an issue that is being dealt with outside the Canada pension plan. Canadians have said unequivocally that they want the pension plan to survive. As my colleague from the Reform Party stated quite clearly, it is Canadians' money. They are asking for the highest rate of return with prudent management and investment of the money. That is what we are doing. This motion would not speak to the concerns of Canadians or support what they want.

Let us be quite clear that nothing would put benefits at risk in the long run more than the failure to deal with the fiscal realities of the program.

The higher rate of return the actuary has indicated the plan will receive speaks to the contribution level. If we take away provisions from the bill that do not allow the board to achieve the highest possible rate of return in a prudent fashion, which reflects what Canadians have said then, as my hon. colleague from the Reform Party said, the money has to come from somewhere, either from higher contributions or reduced benefits.

On the one hand the NDP continually says that the benefits are being slashed in the program. At the same time it is saying that we should not allow Canadians to receive the highest rate of return on their money. The NDP cannot have it both ways. Bill C-2 strikes a very good balance in achieving the sustainability of the plan financially while still providing crucially important benefits to Canadians.

I close by saying that we should oppose this amendment for the reasons stated by me and by members of the Reform Party, the Conservative Party and the Bloc who all stated quite eloquently reasons why we should not support the motion.

The provisions in Bill C-2 reflect what Canadians have been saying throughout the consultations. It allows for a higher rate of return than is presently there. It also continues to allow provincial access to funds, which is part of the federal-provincial agreement.

[Questions On The Order Paper, November 27th, 1997]

I ask, Madam Speaker, that the remaining questions be allowed to stand.

[Questions On The Order Paper, November 27th, 1997]

Madam Speaker, Question No. 24 will be answered today. .[Text]

[Canada Pension Plan Investment Board Act, November 26th, 1997]

Mr. Speaker, Bill C-2 reflects what Canadians have said throughout the consultation process. In fact the motion would eliminate the restrictions that apply to other pension plans in Canada, essentially specific restrictions that are part of the fed-prov agreement.

The regulations which are part of Bill C-2 require applying the appropriate provisions and regulations of the Pension Benefits Standards Act to the new CPP investment board, regulations that in fact state things like the fund could not hold more than 30% of voting shares of a company or that it could not invest more than 10% in the security of a single company.

As joint stewards of the plan and as a result of the fed-prov negotiations and agreements, Bill C-2 will specify the arrangements under which provinces will have access to portions of the new CPP funds the board allocates to bonds.

Essentially the investment the fund makes requires that domestic equity be passive and that it be reviewed after three years. Provinces will have a guarantee of access to a portion of the new funds and thereafter, after three years, their access will reflect a percentage of provincial and municipal bonds held by pension funds in Canada.

That being said and despite the restrictions, the chief actuary still says the fund will receive a 3.8 per cent real rate of return, which is a good rate of return and one that reflects the priorities and the best interest of Canadians.

[Canada Pension Plan Investment Board Act, November 26th, 1997]

Mr. Speaker, I just want to make a couple of points on this motion and get some facts on the record.

Canadian pension funds and individuals saving through RRSPs can invest up to 20% of their assets abroad. It is a statement and a fact that I think most Canadians are aware of.

It should also be said that this 20% is a significant amount of international diversification and additional international exposure can also be gained by investing in Canadian companies with international operations. However, the 20% foreign property rule also ensures that a significant portion of tax assisted savings is invested in Canada.

We should also point out the fact that in recent days international markets have not performed well. Present rules are intended to provide a sort of balance for Canadian investors.

It is also important to mention studies by experts like Mr. Slater who stated that Canada's capital markets could absorb the increase in the CPP fund. The fact is that our capital market is quite healthy. It does provide substantial rates of return. Let us also remember that the changes to C-2 are increasing the rates of return to the Canada pension plan. So we are all moving in the same direction.

I also want to point out a statement that was made by the hon. member from the Reform Party who said that it was important to listen to the people because they are connected to the grassroots. I am sure every member of this House takes the opportunity of listening to constituents and trying to reflect their concerns here in this House of Commons.

It is also important to note that Canadians have indicated through public consultations that they want the CPP fund to be invested like other pension funds. Today in Canada pension funds are allowed to invest up to 20% of their assets in foreign securities. The CPP will follow the same limitation. It does allow for diversification to enhance returns but it also ensures that CPP funds are invested predominantly in Canada.

As was stated earlier, the intent of the government is to ensure the financial stability of this plan. It is crucial that the changes that we have been making to the CPP provide for that financial sustainability. With this particular motion we would be treating the Canada pension plan in isolation. Making changes to the Canada pension plan or if we did make changes to other tax assisted programs, it would not be fair.

What we are saying is that the CPP fund will follow the same limitations. If the foreign property rule were to change at some point in the future then we would see the Canada pension plan reflect that change. Therefore, if in the future the 20% foreign property rule were eliminated, although no one is saying it will be eliminated and we are not advocating its elimination, then the Canada pension plan fund, as requested by Canadians through prior consultations, would be treated like other pension plans in Canada.

What C-2 does is treat the Canada pension plan like other pension plans throughout this country.

I believe it is important to make those points. Other members have made similar points. I would certainly encourage members of this House not to support Motion No. 2 for the reasons stated.

[Canada Pension Plan Investment Board Act, November 26th, 1997]

Mr. Speaker, I think it is important that we restate again today at report stage of Bill C-2, which is amendments to the Canada pension plan, that Canadians from all walks of life want assurances that the CPP will really be there when they need it and when they retire. They want assurances that it will never be taken away from them.

I think these are legitimate aspirations that everyone from all sides of the House shares. What we are doing is of course making sure that the financial sustainability will never again be at risk, that in fact the CPP funds will be invested in the same way as the private pension plans and that Canadians start to receive regular statements of their pension and earnings.

Specifically on the motions in Group No. 1, Motion No. 1 in particular talks about the conflict of interest procedures. I think it is important to note that the board's conflict of interest procedures will be made public and that will be subject to scrutiny not only of experts, but also the public at large. The conflict of interest provisions contained in the legislation are widely regarded by experts to be quite stringent.

I want to make a point of clarification. The first speaker as we kicked off the debate today at report stage made a point that the investment board was not independent. I want to state again that that is not true. It is an arm's length board.

The board will be working for the best interests of the plan members. In fact the whole basis of establishing this board is to ensure that it is an arm's length board and that there is accountability built into that board.

There was the comment about how women were being treated unfairly. It is important that we make reference to the gender analysis that was put forward that showed that in fact women would receive $2.56 of benefits for every dollar of contribution.

Motion No. 3 talks about appointing the auditor for a five-year term. I think it is also important that we make the point that it is standard corporate practice to appoint an auditor for one year, but nothing is preventing the board from reappointing that auditor for subsequent terms.

In the case of resignation or removal of the board's auditor, the act already requires that a statement explaining the reasons for the resignation or removal be sent to the finance minister and the finance ministers of participating provinces.

There has to be a reason for the resignation or removal by the board and that provides the accountability and the transparency. Again, I want to reiterate that the board is an arm's length corporation.

I want to make reference now to the two proposed amendments that the government has put forward, the first of which will in fact clarify that the auditor general will have access to all the information that he considers necessary to conduct his overall audits of the CPP. On the basis of this change, the auditor general has indicated that he is satisfied with the audit provisions of Bill C-2 and has written to the finance committee chair to this effect.

The second amendment will require that the CPP investment board be subject to special examination at least once every six years. Bill C-2 currently provides for special examinations but it does not specify the fact of minimum frequency.

I want to restate that these amendments are a result of the committee work and the contributions that the various members of the committee have made in the discussion on Bill C-2. The fact that we are moving to put a timeframe on the special examination once every six years is a slight change from the original motion that was put forward in committee.

That change is there to coincide with the review that is to take place every three years. The auditor general would have to perform a special examination on the second triennial review so if there were any challenges to the plan, the Minister of Finance would be able to address them at that time.

I have some additional information about the board and its accountability since there has been a fair amount of discussion in this first part of the debate on Group No. 1 on the accountability to Parliament and to Canadians.

The legislation makes the investment board fully accountable to Parliament and to the Canadian public. Experts in pension fund governance have praised the accountability provisions of Bill C-2 for being extremely rigorous. The Ministers of Finance and Human Resources Development will be required to prepare an annual report on the CPP which will be tabled in Parliament and also sent to the provincial finance ministers. The report will include the audited financial statements of the CPP investment board as well as the report of the auditor general in those statements in his overall audit of the CPP.

The amendment we have made clarifies a provision that was included in the bill already. It merely clarifies for the House that the auditor general would have had access to any and all information that would be required to complete his audit of the consolidated financial statements of the Canada pension plan.

We have responded to the issues that a number of members of this House have made with respect to the auditor general's access to information by bringing forward these two amendments. These amendments also address the request for the auditor general to conduct these special examinations over a period of time. We have indicated that every six years would be suitable since at the second review of the plan the finance minister would be able to address any issues of concern.

The board will keep Canadians well informed of its investment activities. It is important for us to tell Canadians that the board will be managing this large pool of money in a very transparent fashion. Canadians will be fully aware of this. The board will make Canadians well aware of its investment activities by making its investment policy standards and procedures public, releasing quarterly financial statements, publishing annual reports and the board's members will be holding regular meetings in each province to allow for public discussion and input with respect to their work as members of the investment board.

I will comment briefly on the last motion which is related to Motion No. 23. It requires that any changes to contribution rates resulting from the three yearly reviews by the federal and provincial governments be subject to public consultation by the finance committee. The finance minister has stated over and over again that any major changes to the Canada pension plan in the future will be subject to consultation with Canadians and that all changes to contributions require the consent of two-thirds of the provinces and two-thirds of the population.

Any changes large enough to require legislation would always be referred to an appropriate committee of the House for review as a matter of course.

Therefore there really is no need for this proposed motion. The process is already in place. It is a standard process and one that the Minister of Finance is on record as stating he asked for.

With respect to the motions which were put forward in the first grouping, I want to say that certainly every member of this House is committed to ensuring there is financial sustainability in the Canada pension plan. The changes to Bill C-2 are responding to the public consultations which took place over a period of time. Canadians had an opportunity for input and to talk about what they would like to do and would like to see happen with respect to the Canada pension plan. The message was overwhelmingly that they wanted to have the Canada pension plan sustainable, safe and in place for them in retirement. The changes in the amendments being put forward in Bill C-2 speak to those concerns of Canadians.

I look forward to the speedy passage of this bill so we can continue to do our work in ensuring that we reflect the priorities of Canadians as we move forward.

[Child Benefit, November 19th, 1997]

Mr. Speaker, I appreciate the opportunity to speak to this private member's motion which recommends that the government review the level at which the Child Tax Benefit is indexed.

I am unable to support the motion and in the few minutes available to me I would like to explain my reasons. Before I begin I want to emphasize that the government continues to place a very high priority on making assistance available to families with children, particularly those at the low and modest income levels.

Let me take a moment to explain how the indexing provisions work with respect to the child tax benefit. Under the Income Tax Act the child tax benefit is partially indexed on an annual basis. It goes up each year by the amount the consumer index exceeds 3%. Many of my colleagues will recall that this policy of partial indexation was introduced to help address the severe fiscal problems facing the federal government.

Partial indexation of the child tax benefit is consistent with how other elements of the personal tax system are treated. For example, the basic personal credit, the spousal credit and the tax brackets are all partially indexed. This is a policy which applies broadly across the tax system.

The Income Tax Act has been amended a number of times to allow for the child tax benefit discretionary increases. In actual fact the motion before us today should be considered as a proposal to amend the Income Tax Act and move to full indexation of the child tax benefit base and threshold.

As hon. members know the only realistic alternative to discretionary increases is the full indexation of the child tax benefit. While the government fully supports the broader goal of increasing assistance to families with children, let us not forget that with an inflation rate of 1.6% per year, restoring full indexation of the child tax benefit would cost the federal government about $160 million per year. In addition, it would be difficult to restore full indexation to some tax parameters and not others.

The federal revenue implications of moving to full indexation of all tax parameters are quite substantial, with a cost of $850 million a year. The cost is cumulative, so it means that it will be $850 million in year one, $1.7 billion in year two, and so on. Such revenue losses could threaten the government's program to restore fiscal balance. Because of these potential fiscal costs the government is unable to support the motion.

However, I assure the House that the government will review the policy of partial indexation once our fiscal position makes it possible to do so. In the meantime the government is committed to targeting additional assistance to priority areas like families.

In the last two budgets, for example, the government increased by $850 million the assistance provided to low income families through the child tax benefit. Since July 1997 over 720,000 low income working families have received increased benefits as a result of restructuring and enriching the working income supplement.

Maximum benefits increased from $500 per family to $605 for the first child, $405 for the second child and $330 for each additional child. Next July these benefits will be extended to all low income families as part of the joint federal-provincial initiative known as the national child benefit system.

The national child benefit system has three key objectives: to prevent and reduce child poverty, to improve work incentives and to simplify administration.

Under the national child benefit system the federal government will assume a larger role in providing basic income support to families with children. The provinces and territories will make corresponding reductions to the child component of their social assistance payments and reinvest all the savings in complementary programs and other benefits and services for low income families. For the lowest income families the proposed increases in the child tax benefit represent a 50% increase in federal benefits.

Before closing I remind hon. members the government has promised a further enrichment of child benefits of the same magnitude during its mandate. As I stated earlier, these actions demonstrate that assistance to families with children, particularly low and modest income families, is and will continue to be a priority of the government.

Let me repeat that the government will review the policy of partial indexation once it is fiscally appropriate to do so. For these reasons I am unable to support the motion before the House. I encourage all my colleagues to do the same and not support the motion.

[Customs Tariff, November 18th, 1997]

Mr. Speaker, I thank the hon. member for his intervention, but I want to clarify that Bill C-11 does not make any changes to the current automotive tariff policy; rather it continues to ensure that all auto manufacturers in Canada, auto pact and non-auto pact companies, import parts duty free. No changes are made to vehicle tariffs. Auto pact companies continue to import vehicles free of duty while non-auto pact companies pay duty on all vehicles which they import.

I wonder whether the hon. member is now indicating that he wants to change that policy.