Charlie Penson

[Health, October 23rd, 2002]

Mr. Speaker, the government likes to spread the myth that it is a good manager of our Canadian tax dollars, but let us look at the facts: $7 billion shovelled into foundations despite the protests of two Auditors General, subsidies to successful multi-billion dollar multinational corporations like Bombardier, Pratt & Whitney and General Electric, and of course we have the waste and patronage that continue to be the norm every day in this House.

With a record like this on waste, how can the Minister of Finance stand up and tell Canadians there is no money available for health care?

[Health, October 23rd, 2002]

Mr. Speaker, yesterday the Minister of Health and the Minister of Finance refused to rule out a tax increase for new health care spending. However the government is spending less today on health care than it did when it first came to office in 1993. It had no trouble finding $6 billion for its own departments, however, including corporate welfare schemes for large international companies.

Why would the Minister of Finance not just stand up today and tell Canadians that he will not impose any new tax on health care?

[Health, October 22nd, 2002]

Mr. Speaker, it seems to me that she did not rule out raising taxes. That was the question.

The main reason the government has shortchanged health care is because it has its priorities all wrong. It is too busy pork-barrelling. The government has a spending problem. It does not have a revenue problem, it has a spending problem. That is the problem that the government has.

Will the government commit today, when the finance minister stands in the House, and tell the House and commit to the House that any new dollars for health care will come from a reallocation of existing programs rather than levying higher taxes on Canadians?

[Health, October 22nd, 2002]

Mr. Speaker, when it comes to health care reform the only advice the government seems to be willing to listen to is to raise taxes. That is rather curious.

The Romanow commission is making noises about raising the GST. The Kirby commission wants to either raise income taxes, the GST or bring in a new dedicated health tax. However both commissions seem to be working long nights to help the Minister of Finance get down from the Peace Tower so he does not have to jump.

What is the government's prescription for health care that will rule out raising taxes?

[Canada Pension Plan, October 22nd, 2002]

Madam Speaker, that is a good question and one that deserves to have the input of Canadians.

The current Canada pension plan disability program has its shortfalls. I know of people who have taken early retirement income at age 60, as they are allowed to do, and if something happens to them during that time so that they become disabled they are not able to apply for the Canada pension plan disability section because they have taken their early retirement income. So there are shortfalls even in the current system.

However I do not believe that is a major obstacle that cannot be overcome. We need to have some kind of disability program but I think we could still have it even in spite of the fact that people would have their own individual retirement. Those are separate issues that could be designed in a separate way and I do not really see any problem with that.

[Canada Pension Plan, October 22nd, 2002]

Madam Speaker, I would like to thank the member for his question. It is an important one because he asked what we would do.

We tend to look at the model from Chile as one that has worked effectively. Instead of having a government investment board or an arm's-length government investment board individuals are allowed to put money into investment accounts of their own within investment funds, and there are about eight or nine investment funds which have been recognized as having a good record there. Essentially what individuals have is their own retirement investment fund. They are making the decision on what funds to invest in. In terms of whether it is ethical or not, at least the individual will be making that decision rather than government. Individuals will be making the decision on what is an ethical fund and what is an appropriate investment. We would like to empower individuals to do that. We think they will make wise decisions. Therefore it is a model that should be looked at.

[Canada Pension Plan, October 22nd, 2002]

Madam Speaker, there was quite a bit there. The member talked about the Canada Pension Plan Investment Board. The board is appointed by the cabinet of the Liberal government. He talks about its record. My point in talking about Canadian investment is that it cannot exceed the 30% foreign investment limits that we are all governed by.

If the hon. member was listening, my point was that the Canadian market for such a big investment fund is rather a small market. Countries, such as Chile, after about 15 years of having investment by people in their individual RRSPs or in retirement funds, decided that it was too small a country in terms of overall investment and it needed to spread it across investments outside of Chile. That way the risk was not quite so high. If it suffered a major downturn in its economy it was spreading the risk.

It seems to me that when there is $48 billion, and it will rise rapidly, dumped into the Canadian market in terms of where it will be invested, it does limit the ability to spread that risk. That is the point I was making.

In terms of the provinces buying into this, the provinces have benefited quite a bit in the past. There have been low interest loans from the Canada Pension Plan Investment Board that the provinces can still maintain. In fact, the provinces get to roll this whole thing over one more time if they wish in order to buy. That is the rule of the Bill C-3 legislation. Some of the interest rates the provinces are paying, unlike what the member talked about of a 6% return, is more in the range of 1.5% to 2%. The provinces have had a pretty good deal out of the Canada pension plan in the past. Maybe it is not in their interest to change that with these low interest rates.

I would think that the member would want to look at the dynamics of what is happening to our aging population and how we will address the issue of how we will have retirement income for young people in the future. This is the major concern I have and it should also be the concern of the members.

The former chief actuary of the Canada pension plan recognized the problem of having retirement income for our young people in the future. He recognized that the 6% or the 5.8% that was going into the Canada pension plan fund in terms of deductions was not enough and that it had to be raised. In fact, it was raised to 9.9%. The former chief actuary suggested that it still would not be enough and most people agree that it will fall short.

I know the Liberal government is pinning its hopes on the Canada Pension Plan Investment Board to make good investment decisions to make up some of that shortfall.

The member says that the board is at an arm's length from government. Crown corporations are at an arm's length from government and the Export Development Corporation is one of those. In fact, members cannot get information from the EDC because we are told we must go through the minister. Some of their investments are falling pretty flat these days. They are subject to too much political interference or the possibility of political interference on who to invest in.

We all know that the Liberals have some favoured corporations in Canada that have funded some of the campaigns of the major politicians in the House today. The Liberals continue to fund those corporations.

Our concern is that these investments will not necessarily be made with the best interests of Canadians in mind. It might be in the interests of those corporations and the Liberal government. That is our concern.

[Canada Pension Plan, October 22nd, 2002]

Madam Speaker, it seems we have hit a nerve on the other side. I guess I know why. These are the architects of a failed plan. Not only do they not recognize it is a failed plan, they continue to make the same mistakes over and over again. This is really not anything new.

It does not just deal with the Canada pension plan and Bill C-3. It applies to a whole bunch of sectors. The government is more concerned about looking good with window dressing legislation than it is about addressing serious problems of Canadian society. I would put this in the same class as a number of those other problems that it is not really serious about. It wants to look good but it is not concerned about the young people of the country having a retirement income. Otherwise it would do something about changing this plan to respect young people when they are coming up and ensuring they have the same kind of retirement income that the rest of us have.

It does us all a big disservice not to recognize the changing demographics of the country, the aging population as it is coming forward, and to understand how we will deal with a shrinking workforce paying for the retirement incomes of a lot more people. We must address this issue. It must be taken seriously. We all want to have retirement income when it is our turn, but this current plan will not help in that regard.

My prediction is that in the next few years under this scenario we will have to increase Canada pension plan deductions again, probably up to 15%. That is what the last chief actuary said before he was fired. It may be even more than that. If we are not going to have replacement people coming into our country to replace our population, where will the money come from to provide for this plan?

Other countries are looking at this. It is not just Canada. The United States is looking at the issue. Great Britain has the same problem, maybe even worse in terms of birth rate than we do. Chile has undertaken a major program on pension reform that goes back some 10 to 15 years. It has worked out a system that seems to be working there. It is giving young people an opportunity to invest their income into some pension plans from a diverse group.

Canadians are not well served by this legislation. We will oppose it and hope that something better comes forward to serve young Canadians and their need for retirement income.

[Canada Pension Plan, October 22nd, 2002]

Madam Speaker, I am happy to rise today to speak to Bill C-3, an act to amend the Canada Pension Plan Act that has been brought back in this Parliament after Parliament prorogued last spring.

The main thrust of Bill C-3 is to propose a transfer of all amounts held in the Department of Finance within the Canada pension plan account, including the bond portfolio which is worth about $40 billion. It is the transfer to the Canada Pension Plan Investment Board. This transfer would take place over a three year period.

Bill C-3 would establish a means for the transfer of assets between the Department of Finance and the CPP Investment Board so that immediate payout obligations of the plan can be met. The legislation also spells out how the provincial securities currently held in the account may be redeemed or replaced. Lastly, the bill would apply to the Canadian pension plan fund the 30% foreign content limit that applies to registered retirement savings plans and employer and union sponsored pension plans in Canada.

While Bill C-3 is a step in the government's planned development of the public pension plan, managed at arm's length by a crown corporation, the bill is more than a housekeeping bill. The Canadian Alliance is opposed to the Liberal solution of bilking Canadian workers and employers out of billions of dollars to pay for a plan that is unquestionably unfair to younger generations in our society.

The Canada pension plan was devised over 36 years ago by a Liberal government with a noble objective, one which I believe all members then and now can agree on, to provide retirement security to all Canadians and to reduce poverty among seniors. A mandatory pension plan was devised and paid for through equal payroll contributions and deductions from workers and employers.

Back in 1966 Canadians were told that their payroll deductions required to fund the Canada pension plan would never go above 5.5%. However, how times change. When the plan was designed it was assumed that there would be six taxpaying workers for every dependent retiree. Of course, we know that has changed significantly. The member for South Surrey—White Rock—Langley just talked about the changing demographics in our society. Anybody who does not have a plan to deal with that is in for some nasty surprises.

We know that the birth rate in Canada for every two people is 1.2, not even a replacement factor for those people. It will certainly have a major impact on how governments operate and how we will continue to fund retirement savings with a bigger percentage of our society being in the older category and less people in the younger group paying the bills.

From 1966 to 1982, annual Canada pension plan contributions exceeded the plan's annual benefit payouts. The funds were invested in provincial bonds and the plan's assets accumulated to almost $24 billion. Beginning in 1983, however, contributions fell short of benefits. Nevertheless, the interest on the $24 billion was sufficient to keep the overall CPP in surplus for another 10 years. By 1992, the pool of assets had grown to $42 billion.

However, in 1993, the year this current Liberal government took office, was the year that the culmination of contributions and interest could not produce the revenue required to cover the stream of benefits. That was a major turning point. The Canadian pension plan's chief actuary warned that without changes the plan would be in very deep trouble, especially when the baby boomer generation began to reach 65 in about the year 2012.

By 1997 Canada pension plan's assets had fallen to $35.5 billion. During the fall of that year the Liberal government introduced Bill C-2 which was designed to save the Canada pension plan by the only way it knows how to govern: take more money from Canadian taxpayers. We see it over and over again and again this year in the Speech from the Throne.

The Liberal government showed its contempt for Canadian taxpayers and Parliament all at the same time by invoking closure after a mere eight hours of debate on a huge issue that Canadians needed to be concerned about.

Starting in 1998, Canadians saw their take home pay shrink as contribution rates for both employees and employers were jacked up in a series of increases to the Canada pension plan.

Canada pension plan premiums went from 5.5% on the average industrial wage income to 9.4% where it is currently. By 2003 it will be up to 9.9%. That is a staggering 73% increase and the biggest tax grab in Canadian history. What is really scary is that the former chief actuary of the Canada pension plan had suggested during that time that a rate higher than 9.9% was necessary to save the pension plan. However that did not suit the former finance minister's plans for his political career and instead of listening to the chief actuary he had him fired. That solved a lot. I guess what goes around comes around. Eventually the former finance minister met the same fate himself and he was fired.

With more money flowing into the Canada pension plan as a result of these jacked up rates, the plan's total revenue exceeded benefits slightly in 1998 and by 2000 contributions alone were high enough to cover all the benefits. By the end of 2001 Canada pension plan assets were approaching $48 billion. Yet despite extracting all that money from Canadian taxpayers, the Canada pension plan's unfunded liability is estimated to be a whopping $430 billion. Just in case people cannot relate that to what is currently in the plan, the current plan's assets are approaching $48 billion but the liability is $430 billion. It has almost 10 times as much in liability as we have funds to cover it.

The current chief actuary of the Canada pension plan, the one who replaced the one fired by the finance minister, admits that the contributions will once again fall short of benefit payouts but the government is betting on the Canada Pension Plan Investment Board to beat that system. We heard from the member for Burnaby--Douglas that he was concerned about that because the Canada Pension Plan Investment Board had losses when the market went down.

The member for Lanark—Carleton, who spoke before me, also has a big concern with this. Our concern is not so much that there is a Canada Pension Plan Investment Board, it is that government tends to use these boards for political expediency and political operatives. Pressure can be put on these boards to invest in favoured companies that happen to give a lot of money to the governing party of the day, and which maybe the Liberals favour. We know the Quebec pension plan has had difficulty managing its money wisely and it tends to be politically motivated.

The other problem is that in a small market like Canada the huge amount of money has a disproportionate effect on our markets. What does it invest in? At one time Nortel made up 30% of the Toronto Stock Exchange. We know where it is at today and I think the Canada pension plan also knows where it is at because that was one of its major investments at the time, but what else do we invest in if we have to invest in Canada? Even more so, the legislation would restrict the Canada Pension Plan Investment Board to invest 70% of all that it has in Canada. There is a 30% foreign investment rule restriction that ties the hands of the Canada Pension Plan Investment Board.

Employers and the self-employed are feeling the brunt of the Liberal CPP tax grab. The Canadian Federation of Independent Business is currently conducting a letter writing campaign on the subject of the government's job killing payroll taxes. It notes that while employers received a 7¢ reduction in their employment insurance premiums, Canada pension plan premiums went up by 40¢ and they are set to increase another 25¢ in 2003. Everything the employers gained back in the employment insurance premium reductions has been eaten up by Canada pension plan increases.

If the government plans to see the CPP hike through, I would hope that at least it would look at the mangled EI program where revenues far outstrip EI costs and disappear into general revenue.

The worst injustice by the Liberal government and its CPP hike is the intergenerational unfairness. Mr. Ménard admits that every Canadian worker born after 1980 will see their Canada pension plan investment will offer them a 2% return on investment for their retirement. However those who retired in 1995, a different generation, will receive a 9% return on their investment.

What does that say to our young people who are expected to pay the bills? They are expected to pay the bills for our generation's retirement and they will not even have enough for their own as a result of this mismanaged plan. That is totally unfair and it simply will not work. As these young people get into positions of power in government and other places in society they will not accept this. They will throw it off. It seems to me that it would be better to change our plans now than to have a mangled system thrown out down the road in 10 years by the generation that sees this as being totally unfair.

The fact is that the Canada pension plan will take in just under 10% of income to receive 25% after age 65. The average annual payout is $5,500 a year. The best one can hope to receive from CPP is under $9,000 a year.

We talked about how things have changed and are changing in terms of demographics. The number of seniors in Canada will double to 22% of the population by the year 2031. This will place a heavy burden on workers who support pension and health programs.

I am sure that hon. members know if they examine their hearts on this issue that when the young people of today form the majority in this country they will be sorely tempted to change the plan to ensure that they will get some of the benefits that will now only go to the people who are currently in the plan.

The Canadian Alliance does not believe that our future security lies in the wages of a shrinking workforce. Rather, it lies in the vast productivity and production capacity of the economy. We value retirement security as a vital element of independence. The Canadian Alliance policy platform states that we will honour obligations to retired Canadians and those close to retirement under the current state run programs. We will also maintain support for low income seniors. However, and this is a very important distinction, the Canadian Alliance believes that future retirees deserve a greater choice between a government managed pension plan and a mandatory personal plan.

With the objective of giving Canadians greater control of their own affairs and retirement plans, we will eliminate the foreign investment restriction for retirement investments and devise options to allow individuals greater opportunity to save for themselves as we see that the current system failed its original objective from 1966. Times have changed considerably in terms of demographics.

What we are interested in is fairness in the system and a system that will actually work for future generations. That is why we think the Canada pension plan in its current form is failing young Canadians who are coming up. We are concerned that when young Canadians discover this as they become adults and they come into positions of authority, that they will take matters into their own hands and make changes. Instead of waiting for that to happen, let us look forward a little, be proactive and try to devise a plan that works and will work for future Canadians and will respect the demographic change happening in Canada. As I said earlier, we have an aging population.

We hear a lot of chatter from the other side but the fact of the matter is that it is the Liberal government--

[Government Programs, October 10th, 2002]

Mr. Speaker, it is just like we thought, there is no plan. It is just like Kyoto, there is no plan. They are just bumbling ahead right into another boondoggle. That is where they are going.

Don Drummond was the assistant deputy minister to the former minister of finance. He says that these promises are too costly. He says that paying for it would risk falling back into a deficit position. He says that it would abandon any further debt payments.

Could the Prime Minister tell us just why the government will not bring down a fall budget to pay for these promises, for the Prime Minister's legacy?