Alex Shepherd

[Supply, February 24th, 2004]

Madam Speaker, the short answer of course is no. I can agree with the theory. The theory is whether the Canada pension plan board should be investing in industries that subject labour to practices which we would not accept, et cetera.

I understand what she is trying to say, but the problem is due diligence. How much information is the investment board supposed to have?

The reality is that there are many people in this country who would invest in stocks of various companies that have huge reaches around the world, and it may well be that one small part of a company's operation somewhere in Indonesia or elsewhere has some kind of blemish on it. I am not saying that is an excuse, but it is the question of who knows. It is the question of knowledge.

Let us say that I invest in XYZ Ltd., which is a multi-billion dollar corporation, and it owns some small operation indirectly or has a joint venture somewhere where people are being made to work 20 hours a day or something like that. If we do not know that, are we responsible for the investment? Or is she suggesting that we have to somehow investigate every company that is available for investment all over the world for their world activities to quantify what it is that they are doing to make judgment calls?

The point of the matter is that this is not the criteria of an investment board. The investment board, while it takes some of those things into consideration, cannot be responsible for all of the activities of any company that it invests in. It tries to be responsible, but the reality is that it cannot ultimately be responsible for everything that is going on in the world. It just does not have the resources to do that kind of due diligence.

[Supply, February 24th, 2004]

First, Madam Speaker, I can understand that the individual member may be concerned about how her money is invested in this plan, but I can tell the House as a general comment that the Canada Pension Plan Investment Board is a fiduciary agent for all the people in Canada, not just the individual member of Parliament. It has to take some kind of criteria that all the people of Canada are going to agree to. One of those things is that it has a fair and reasonable rate of return.

Some of the investment funds that I quoted were in fact over a five year period. Statistically speaking, those funds were significantly underperforming their indices within the market.

Finally, it is very important to realize what we are talking about here: ethical behaviour. How do we measure this? It is very subjective. If it is a legal activity in Canada, then that can be the only criteria that an investment board can use. If it is not illegal, then it must be a legal thing that we can invest in. We are trying to make a judgment call on people that goes beyond some kind of basic rule of law, some kind of feeling of judgment or something which is just not part of investment criteria.

The member talked about some of the companies. The tobacco industry, unfortunately, is not an illegal activity in Canada. There are many others: the medical science industry, Nortel Networks, all the technology companies, and some of the great and wonderful things we do as a nation. We as Canadians can take some great pride that we are investing in our country. The vast majority of funds in the Canada pension plan is invested in this country to keep Canadians working and to give opportunities to Canadians. I think that is just what the board was originally set up to do.

[Supply, February 24th, 2004]

Mr. Speaker, before question period I was talking about the importance of the so-called cohorts of the Canadian economy and the existence of a significant population in Canada called baby boomers. Canada's baby boom population is the largest in the western world based on demographics. This means that in the Canadian context a huge portion of our labour force will be retiring within the next 20 years.

This will be the greatest change economically to our system in the lifetime of our country. Normally there is a level playing field between new workers coming into the workforce and other workers exiting the workforce. We are going to see a tremendous exodus of workers. This has been predicated by a number of things.

Some people have been saving for their retirement and have been looking forward to it. Other people have been forced to retire because of the mandatory retirement age in Canada which is an issue that is currently under debate. Needless to say, a lot of people between the ages of 55 and 60 see retirement on the horizon.

When people would come to my office wanting to discuss retirement, the first question I would ask them would be when they were going to die. The bottom line is that most people do not want to think about their mortality. Most people want to think they are going to live forever. This makes insurance companies rich because they know that is just not the case.

The simple reality is that people are living longer now compared to 20 to 50 years ago. Those years create quite a challenge for income planners and for people who are trying to make ends meet. For one thing we do not know what the inflationary factor will be. Currently, inflation numbers have been relatively low, but historically that has not always been the case. Those living on fixed incomes are always concerned about what is going to happen to their retirement income.

Today's debate is apropos. As I mentioned earlier, the Canada pension plan is one of the three pillars of our pension system.

The first pillar is the old age pension for which everyone is eligible regardless of whether they worked or not. Unfortunately it is income tested. Those individuals who are wealthy get a certain portion of that clawed back through the income tax system.

The bottom line is that everyone is eligible for the old age pension, the first pillar but there is also the guaranteed income supplement goes along with that. It basically ensures that most people will get at least something in the neighbourhood of $12,000 a year. Most of us recognize that $12,000 is significantly below the poverty line set for various provinces; I believe generally speaking it is about $20,000. Anyone living strictly on old age pension and the guaranteed income supplement will be under significant pressure economically.

The second pillar of the retirement plan is the Canada pension plan which we are talking about today. For many Canadians this along with the old age pension will be the only income that they will receive in their retirement.

I used to practise as an accountant. I can remember that a number of clients would come to me to file their income tax returns because it was the only way they could get what in those days was called the Ontario tax credit. I was quite surprised at the number of people who fell into this group and were trying to make ends meet on this very limited amount of income.

When we talk about poverty, many of us think about single moms and so forth who obviously do live in poverty, but there are many single women, many seniors generally who live in poverty in this country. It is really quite a shock and quite a shame. I always call them the silent poor. They do not stand outside Parliament waving signs and so forth and complaining. They hardly ever write to their members of Parliament. They seem to bear this as a charitable plight on our society, but these people are not receiving enough income to live in dignity.

We should always be concerned that the income level be reinforced. In fact, I have always been one who has supported increasing the guaranteed income supplement to ensure that some of those people have at least a little more money than they currently have.

Today we are talking about the second pillar which is the Canada pension plan. In order to get the Canada pension plan the individual must have worked, must have had contributory earnings. Many people have chosen to stay at home and are unable to access the Canada pension plan in the first place.

Be that as it may, the government realized that the Canada pension plan needed to be reformed a number of years ago. It took some very significant measures to ensure that the Canada pension plan would be sustainable, that is to say, there would be an income flow from that plan to people who were eligible to receive it.

One of the second parts of reforming the plan was to allow the Canada pension plan to go into market driven investments. Prior to that the Canada pension plan was lent back to the provinces. The federal government basically lent the money back to the provinces. The provinces then issued provincial government bonds and basically built most of the schools. As I understand it, most of the schools in this country came from Canada pension plan money.

The unfortunate aspect is that while some people would say that the provincial government debt was pretty secure, at the same time it also had a very low yield. With regard to this yield, some people ask what is the difference between 4% and 5%? Quite frankly, 1% of deviation on investment capital extrapolated over 20 or 30 years is quite significant.

It was realized that if the Canada pension plan was going to be sustainable, it had to be invested in other areas of the economy that would at least give us a fairly good rate of return. When I say a good rate of return, most investment managers try to balance their portfolios and put so much of their money maybe in fixed income government securities, investment grade rated corporate bonds, and then look at the securities markets. They look at the debt ratings. Moody's, Standard & Poor's, Dominion Bond Rating Services are some of the agencies that they use to ensure that these investments are secure.

The motion before us today talks about changing that criteria. It talks about adding another criteria and basically talks about generalities, something called Canadian values. I dare say that to think of the broad range in Canadian values, it would be very difficult to do that in a guidance system for an investment portfolio. Obviously some person's values whether it was to do with the steel industry or something else could be quite different from another person's. It is a very subjective argument about how we want the Canada pension plan to operate in the first place.

I go back to the history of the Canada pension plan and why it is set up the way it is. People generally thought there would not be enough money to sustain the plan and to ensure that people would get an adequate income from it.

It seems to me that the motion attacks the very assumptions that were made that established the board in the first place. It asks them to consider some other kinds of criteria which are not primarily related to return on investment.

Some people will suggest that using the return on investment as the sole criterion gets some strange results in the sense that presumably we may invest in industries that pollute or whatever the case may be. I suggest it is not the import of those people who are doing the investing; it is the import of government.

If the government sees illegal activity occurring within the economy generally, it is within the power of the government, whether it be federal, provincial or municipal, to regulate and to enforce pollution control and pollution abatement. There are various ways of doing that. There is no history, as I understand it, that the Canada pension plan has ever invested in illegal activities.

I believe that we have to reject this motion because it is certainly not predicated on the best interests of Canadians generally.

I go back to saying that with the money that is actually in the Canada pension plan, there is a trust established between the people of Canada and their government. The trust is that we will put the money in this plan, that it will be managed safely and appropriately but that at the same time there will also be a proper return on investment.

I go back to the pressure that is being created by the demographics of our nation. I just want to turn to the original motion of the NDP which talks about Canadian values. There is no more important value, I do not think, than people retiring and living in dignity. People worry that the money coming from the Canada pension plan may not be adequate enough, and most people would suggest it is not in any case. Even if the money were less adequate than it is today because of investment management decisions that we as a legislature superimposed on the Canada pension plan, it seems ludicrous that we would want to threaten those people who live on fixed incomes or who depend on money coming from the Canada pension plan, that we would be prepared to take more risk, or if not more risk, to take less return on investment.

An interesting study has been done on so-called ethical mutual funds. I am not complaining about these funds; I am just looking at the sole aspect of return on investment. There are a number of them and I have never heard of them because I am not interested. There is Acuity Clean Environment Balanced fund, Acuity Clean Environment Equity fund, Desjardins Environment fund, Ethical Special Equity fund, Ethical Balanced fund, Ethical Growth fund, and Ethical North American fund. The one thing all these funds have in common is that they are underperforming their own indexes within the mutual fund business; that is to say they are all underperformers.

The point I am trying to make is that twisting the arms of people who are managing the Canada pension plan, making them make decisions which are not in the best interests of the beneficiaries of those plans, who are Canadian citizens, is not in the best interests for the long term social values that I believe this country was founded on. I suggest that the whole motion by the New Democratic Party is a fallacy and it should be rejected by the House.

[Supply, February 24th, 2004]

Mr. Speaker, I am happy to enter into this debate on the NDP motion. As I read it over before getting up to speak, and also in researching my speech, I was taken aback by one profound thing. The money people contribute off their paycheques into the Canada pension plan does not belong to legislators or the government.

That money is left with the government in trust and people are concerned about that aspect in and of itself. It is not our money to play with. It is no different than other people's money that is held in trust, whether it is through an estate or other fiduciary relationship. It is given to the government in trust and the trust is allocated in such a way that its orientation is to invest people's money in the best way possible so that they will get a return on their investment.

Why is that important? It is very important because the whole concept of the CPP, originally founded in 1967, was to ensure that those people who were working would be able to put aside certain amounts of money for their retirement. It addressed people who were unable or could not save, and so forth.

It was kind of a forced savings and it is one of the pillars of our pension system. We have the old age pension, the Canada pension plan and private pensions. Unfortunately, many people do not have the last one, that is private pensions. In fact, there are those in our country who do not have the second one either, the Canada pension plan. There are many people simply trying to live on the old age pension which is very difficult to do.

The other aspect--and I speak from one of my previous vocations, a certified financial planner--is that in Canada we are witnessing that people are retiring a lot younger than they ever did before through voluntary retirement, and some would suggest forced retirement. The flip side of that is that we are living longer so the retirement years are becoming more extenuated.

Canadians are looking toward to those retirement years and are starting to ask a lot of questions about the CPP. One of the questions they are asking is: “Will we have enough income to live in dignity and respect?”

The NDP motion is sort of circular because it talks about activities that are contrary to Canadian values. It does not spell out what Canadian values are and certainly, Canadian values are not that a lot of our seniors should live in poverty.

It is incumbent upon us, from an administrative point of view of the Canada pension plan, to ensure that these moneys are invested effectively and efficiently so they generate the best possible return.

That does not mean that people who are entrusted with the money can invest in illegal activities. They cannot obviously invest in the drug trade or anything else that would possibly pay higher returns. They must invest in a milieu within our country which ensures that they go through an institutional order. We have a rule of law in the country.

They are required to invest through recognized stock exchanges and through the rule of law. I challenge the New Democratic Party, or anybody else who supports this motion, to point out to me any company that the CPP board has invested in that is carrying on an illegal activity in the country.

It is not for the investment board to make judgment calls on what is or what is not a good investment. It is simply a matter of that determination taking place in the general public and through our legal system. If something is an illegal activity then obviously the company would be reviewed and adjudicated and so forth. That is not a concern of the Canada Pension Plan Investment Board.

I want to expand on this aspect of retirement years. I am 57. I was born in 1946. I see myself on the leading edge of the so-called baby boom generation.

I have talked to a lot of people of my generation. They say their major concern is that they will not have enough money to retire. It is a terrible thing to think that people are concerned that they will live too long, but that is a possibility. There has been so much medical science in our country that it has allowed people to live better and healthier lives for a longer time. However, at the same time, people are worried that it has been too successful, that they will live to the point where they cannot afford to carry on a normal lifestyle.

There are other areas where this kind of thing has happened in government. Government pension plans in the civil service, historically--

[Ballistic Missile Defence, February 17th, 2004]

Madam Chair, I am happy to enter into this important debate. Once again I would like to state my unequivocal opposition to Canada proceeding with a ballistic missile defence.

We have heard here a number of times, whether in fact the American administration is spending $14 million or $3 billion on future projections or historical projections, and no one has disputed the fact, that the Americans are actually spending money on research for weapons in space.

Where I come from, if the road sign says “weapons in space”, we do not want to go down there because the likelihood is that when we get to the end of the road that is where they will be.

We have not talked much about the stability that this system will entail. It is clear that the system is inaccurate. At best we have heard some of the testing results have not been perfected. It is not a perfect system.

All the so-called rogue states, which we are supposed to be protecting ourselves from, have to do is have more ballistic missiles and they will hit their target. Clearly, it is an escalation of the arm's race.

This reminds me of when I went to the Kurchatov Institute, the Russian institute that started its nuclear program. People from the institute told me that they only got involved in the program because the United States started it. That was when the whole nuclear race started. We are just entering into another phase of this.

Let us talk about the technology of the program. I have some quotes here from the American Physical Society. These are the physicists who actually designed and built these missile defence systems. This is what they had to say last July. According to the analysis, the basic science and technology needed to intercept a solid fuel missile would require unrealistically large and powerful interceptor missiles. To get enough coverage would mean putting over 1,000 interceptors into orbit at a cost to the U.S. taxpayer of $40 billion just to launch.

This is a lunacy program. It cannot be justified from a defence point of view nor from an economic point of view.

The other argument is that we are protecting Canadians. How many viewers out there seriously believe that Toronto, Vancouver, St. John's or any other capital in our country is under threat of nuclear attack today? Very few of us would actually believe that to be true.

The American perception is that it is true of them. What is the key to this element? Canada is a huge territory. Clearly, if people are going to attack the United States they must traverse over Canadian airspace.

Once again, this same American Physical Society says that in the unlikely event that either ABMs or lasers could be made to hit a missile, they would not destroy the hardened warhead. It goes on to say that a successful intercept of a missile launched from either North Korea or Iran runs the risk of dropping the missile warhead and its cargo of nuclear, biological or chemical weapons on either Russia or Canada.

We start off with a basic premise that we are protecting our citizens but would we not in fact be putting them in more danger if we were to actually bring these nuclear weapons and have them land on our territory?

The other argument in this whole debate is that it is a free ride; that the Americans are so interested in us rubber stamping their program that they are willing to give us a free ride.

I want to ask the viewers out there whether they really believe that the Americans are going to give us a free ride. Those are the same people with whom we have disputes over softwood lumber and the selling of our grain into the United States. With those events on our plate do we really believe the Americans will give us a free ride? It may well be that they are not asking for money but surely they are asking for something.

It occurs to me that the Americans cannot implement this system properly without some degree of Canadian consent because, clearly, we have this great territorial land mass. They talk about land based systems and sea based system but the logical next step of course is air based systems, and they must transcend Canadian air space to be effective.

It is clear to me that this so-called partnership is really not a partnership at all. We talk about the ability of Canada to sit at the table. The American military attaché in the embassy came here one day and made it very clear that they were not going to run this through NATO or Norad, that it would be run through the northern command. It will be entirely under U.S. command. We therefore do not really have a seat at the table at all. We will be told what to do.

This is not my idea of a partnership. This is the hypothesis of the argument that we have to be involved with them because it will give us a say. I do not think we have a say at all. What we will have to give up and what the cost will be to Canada will be our independent voice in international affairs, something that is respected around the world.

If we are serious about deterring the proliferation of nuclear weapons, why can we not spend just one-third of the money that the Americans are willing to spend on this program in the area of aid? After all, one of the basic things North Korea, a rogue regime, is asking for is economic aid. Why can we not spend money in these areas and try to stabilize these areas of the world?

The United States spends very little time in support of the United Nations. One of its treaties says that its administration is allowed to take unilateral action against anybody in the world that it does not like. Is that really a country that we want to get into a partnership with? Could we not do a lot better in the world and for our nation if we stood up with an independent voice and said that we do not agree with that, that we want to go somewhere else, to a peaceful world?

[Petitions, February 16th, 2004]

Mr. Speaker, it is my honour to present a petition on behalf of my constituents. The petitioners pray that Parliament passes legislation to recognize the institution of marriage in federal law as being a lifelong union between one man and one woman to the exclusion of all others.

[Petitions, February 5th, 2004]

The second petition deals with child pornography. It calls on Parliament to protect our children by taking all necessary steps to ensure that the materials which promote or glorify pedophilia or sado-masochistic activities involving children be outlawed.

[Petitions, February 5th, 2004]

Mr. Speaker, it is my honour to present two petitions on behalf of my constituents today. One is requesting Parliament to immediately hold a review and a debate on the definition of marriage and reaffirm as it did in 1999 its commitment to take the necessary steps to preserve marriage as the union of one man and one woman to the exclusion of all others.

[Resumption of debate on Address in Reply, February 3rd, 2004]

Mr. Speaker, the fact that we have had successive elections in this country and that Canadians have continued to elect our party tells me that they have made very serious choices about the results of how we have spent or not spent money.

The leader of the member's party, in a dissertation I read today, talks about how we should never reduce the deficit, that if we have a surplus we should spend it. This is absolutely irresponsible. This is the kind of irresponsible spending philosophy that the New Democratic Party has had since its inception. It is the very kind of thing that the people of Canada do not want today.

[Resumption of debate on Address in Reply, February 3rd, 2004]

Mr. Speaker, I actually farmed for eight years. I understand a little about the problems of farmers and I understand the program about which he is talking. I believe it was brought in by Alvin Hamilton, the minister of agriculture at the time. These were actually wonderful projects throughout the western provinces.

I am not even going to pretend to understand the argument about why these things have contracted. The reality is this is a big country and we have limited resources. We are talking about the past and I hope we can focus on a new era of cooperation.

However, the early 1990s was a very difficult time in government, whether it was federal government, the province of Saskatchewan or others. I can well remember the province of Saskatchewan being close to receivership. The reality is we have limited resources. Some of those resources had to change, and no question some people were hurt by it. Things they had before were pulled away from them.

We have all suffered to some extent, but that suffering is behind us. We should look at a new agenda. Wonderful things are happening in Saskatoon in biotechnology. These are things in which we are interested in investing. These are a part of Canada and it is a new era of cooperation in which this government will be very much a part.