Mr. Speaker, what we are debating here this morning is the reform of the Canada Pension Plan. On September 25, the Minister of Finance tabled Bill C-2 dealing with the Canada Pension Plan reform, among other things.
This reform has three main components. First, fuller funding. As you know, this is the amount that must remain available to meet commitments to those who are entitled to benefits. At present, there is enough money in the fund for two years. The minister's proposal is to increase this period to five years.
The minister also proposed the establishment of the Canada Pension Plan Investment Board to increase the plan's rate of return.
Finally, the minister proposed stricter eligibility criteria, particularly in the case of disability benefits.
I must point out right now that, on the whole, the Bloc Quebecois agrees with the general principles of this reform. However, we have a number of concerns that I will address shortly.
Looking back, we will remember that a draft bill was presented in February 1997. This bill was followed by a revised bill, which was presented last July.
In addition, the changes put forward by the federal government have been well received by at least two thirds of the provinces representing two thirds of the Canadian population. All in all, eight provinces, including Quebec, have endorsed the proposed changes. To date, only British Columbia and Saskatchewan have not given their approval.
At any rate, these changes, this new set of measures will not take effect, first, until Parliament passes the legislation, and second, until the necessary orders are approved by two thirds of the provinces representing two thirds of the Canadian population. We understand that the government plans for the new measures to be in place by January 1998, if everything goes well.
Let me give you a brief overview of the current status of the Canada Pension Plan. As we know, it was absolutely necessary to review some aspects of the plan, since it had become unsustainable. At the rate things were going, there would have been no money left in the fund by the year 2015, at which time contribution rates to the Canada Pension Plan would have had to be raised from 6 percent to 14 percent.
It is to be noted that Quebec, which has had its own plan for a few decades, would also have had to increase its rate from 6 percent to 13 percent. Indeed, the Quebec Pension Plan is also under review for the same reasons, even though it is in better financial shape than the CPP.
Therefore, the reform we are talking about today in this House concern Quebeckers only in an indirect way. However, the Quebec and Canadian governments have always harmonized the main elements of the two plans, primarily because of a common desire to accommodate those who have contributed to both plans.
Over the years, some 1.73 million people have contributed to both plans during their career. By harmonizing their contribution rates, the two governments are also acting responsibly from an economic point of view.
I would like to take a moment and explain, for the benefit of those Quebeckers who are listening to us, what is going on in Quebec and show how it relates to what we are discussing here today.
To ensure that the Quebec Pension Plan would fulfil its role, which is to pay benefits, the Quebec government tabled Bill 149 dealing with the Quebec Pension Plan and amending various legislative provisions. The bill went through second reading in June and should pass third reading soon after the National Assembly reconvenes for a new session.
The fact is that the CPP reform concerns Canadians more than Quebeckers. In fact, less than half of 1 percent of residents of Quebec receive CPP benefits. Last August, the number was 12,882 people. Those Quebeckers receiving CPP benefits are individuals residing in Quebec who have worked all their lives in another province and who, accordingly, have contributed only to the CPP. An example would be a resident of Hull who had worked all his or her life here in Ottawa.
Another example would be members of the Canadian Armed Forces and of the RCMP who live in Quebec but must still contribute to the CPP. To the extent that these people have contributed only to the CPP, they receive CPP benefits, even though they live in Quebec. Finally, there are those people receiving CPP benefits who then move to Quebec.
It is obvious, therefore, that the CPP must be able to meet its obligations to the Canadian public. I would take this opportunity to point out, however, that more than a new bill is required.
A plan, once in place, relies on the tools at its disposal, and nowadays the tools take the form of computers and, more broadly speaking, computer systems. It is known that the CPP falls short in certain areas that have been criticized by the Auditor General and that we hope will soon be corrected, because it is a very large drain on the system not to be able to operate at peak efficiency.
I would also point out that the plan itself seems to be having trouble changing over to more efficient computer systems: $350 billion has already been spent on this and there is still a problem.
I also want to point out that the Auditor General found a certain lack of rigour in the administration of the disability plan. The fact is that at the present time, the Canada Pension Plan does not do regular evaluations to ensure that people receiving disability benefits are still entitled to them, so that costs have spiralled dramatically in recent years.
I would like to consider another aspect of the bill put before us by the minister. This legislation would establish the Canada Pension Plan Investment Board. As you may have noticed, and I suppose everybody in this House has, it was largely inspired by the Caisse de dépôt et placement du Québec. However, unlike the Caisse, the federal board will have no economic mandate, only a mandate to obtain the best possible rate of return.
I would like to expand somewhat on this difference, because it intrigues and almost worries me.
We know that in Quebec the Caisse has been an unqualified success as an economic development tool for Quebeckers. To a certain extent, I can only congratulate the Minister of Finance for taking his inspiration from a tried and true Quebec formula.
I think we all agree that sometimes it is nice to see others trying to emulate our own success, but I also understand why the Minister of Finance did not want to go beyond a simple mandate of getting the best possible rate of return.
After all, across this country, there are regions that sometimes feel neglected when they do not get the same investments or attention given other regions. I think the Canada Pension Plan Investment Board could be in trouble if some of its investments went to certain regions rather than others. The problem would become a political football in no time.
Fortunately, Quebec does not have to worry because it has set up its own system for contributing effectively toward its economic development.
I would like to say a few words about the government's reform objectives. Briefly, the government wants to make the system viable, affordable and equitable. First of all, the system's viability must be ensured for future generations. In fact, the objective is to guarantee that seniors and future generations will continue to enjoy their retirement benefits.
We must also strike a balance between contributing generations by quickly establishing a stable long term contribution rate.
Finally, levels of contribution must parallel the growth of the economy, because we certainly need that.
For the benefit of those watching in Quebec, I would like to make a few cursory comparisons between the proposed reform of the Canada Pension Plan and that of the Quebec Pension Plan. There are similarities and there are differences. Let us look first at the similarities.
Contribution rates will rise rapidly. They will rise over the next six years, peaking at 9.9 percent in 2003. They will then remain stable. This is exactly what Quebec intends to do. In both cases, plan viability is what counts.
Another point is the new policy on Canada Pension Plan investments. As I mentioned a few moments ago, certain features of the investment board were taken from the Caisse de dépôt et placement du Québec. I repeat: Quebec is happy to have provided the example for Canada.
The plan is also periodically reviewed. The federal-provincial examination will be conducted every three years rather than every five. That is a good thing. It will mean no loss of control over changes to the plan and permit adjustments should problems or unforeseen circumstances arise.
We should also note the basic exemption under which no premiums will be collected on the first $3,500 in earnings. This will remain unchanged in both Canada and Quebec.
Starting in 1998, the pensions of the newly retired will be calculated on the average of five years' rather than three years' maximum pensionable income. This represents a slight reduction for new recipients, because the average over five years, generally speaking, will be slightly less than that calculated over three years. It must be said, however, that Quebec too is intending to do likewise for the same reasons of good management.
It is to be noted that neither current beneficiaries—that is those who are collecting a survivor's pension, a disability pension or combined benefits—nor those people aged 65 or more on December 31, 1997, will be affected by the proposed changes. These changes will only come into effect on January 1, 1998. Benefits will not change for those who are currently collecting a pension and those who will start doing so before the end of this year.
All CPP benefits will remain fully indexed, as will QPP benefits. Retirement age, which is normally 65 but can be earlier at 60 or later at 70, will remain unchanged under the Canada Pension Plan and the Quebec Pension Plan.
The CPP fund, which currently has the equivalent of two years of contributions, will now have a reserve equivalent to five years of contributions. Quebec will make the same change to ensure the sustainability of its plan.
New rules of calculation will apply to combined benefits for those who are collecting both a disability and a survivor's pension, or retirement benefits and a survivor's pension. When these rules are tabled, a thorough review will have to be made to avoid any injustices. I can assure you that the Bloc Quebecois will pay close attention to this all important consideration for those affected.
Not everything is the same between what is being proposed by the finance minister and what the Quebec government intends to do: there are differences too, which I will now discuss. First, let us take a look at the death benefit. What is a death benefit? It is a lump sum payment to help the close ones of a deceased contributor to pay for part of the funeral costs. The benefit is payable for any worker who contributed for at least one third of his or her contributory period, the minimum being three years.
In Quebec, the current system provides a death benefit equivalent to six times the monthly retirement benefit, up to a maximum of $3,540 in 1996. The federal plan is currently identical to the QPP in that respect. The new program which Quebec intends to implement as of next year will provide for a standard amount of $2,500, regardless of the contributor. This amount will be indexed. In the system proposed by the Minister of Finance, under the Canada Pension Plan, the death benefit will be equal to six times the monthly retirement benefit, with the maximum being set at $2,500 a year instead of $3,540.
As we can see, there is a difference. First, the Quebec Pension Plan will be more generous than the Canada Pension Plan because the fact is that funeral benefits are the same for all workers, regardless of how long they have lived. The Quebec Pension Plan recognizes this reality.
The second difference concerns disability benefits. The federal government is experiencing many difficulties in implementing its disability benefit. Last year, the auditor general sharply criticized the federal government for the uncalled for—and I would say exorbitant—increase in the cost of disability benefits, an increase caused mainly by regulations that are too lax and a follow-up, let us face it, that is non-existent. Indeed, as I like to say, when the auditor testified before the committee, he mentioned the Quebec Pension Plan as an example to follow.
At present, the federal disability benefit system is overspending. This is due to lax administration, whereby the federal government considers more people eligible for a longer period because there is no periodical reassessment of the need for these benefits to be maintained.
Through the proposed changes to the disability pension under the plan laid before this House by the finance minister, the federal government intends to repeal the federal directive providing for any person to be declared disabled if unable to perform his or her own job even if he or she could perform another job, thereby making the administration of the plan much stricter.
There is another difference. Current federal requirements for disability benefits limit eligibility to those who have contributed to the plan for two of the past three years or for five of the past ten past years. The federal government, according to what the Minister of Finance proposes, intends to limit eligibility to those who have contributed for four out of the last six years, which should reduce eligibility considerably. In Quebec, those who have contributed for two out of the last three years, or five out of the last ten years, or for half of the contribution period, are eligible for disability benefits. This makes allowance for progressive diseases, which is very important. The Government of Quebec will therefore recognize, and quite rightly, a proportionately higher number of disabled people.
There is another rather complicated difference. It has to do with the way in which the Canada and Quebec pension plans are calculated. The difference is complex, as is the calculation. The Bloc Quebecois intends to keep an eye on this issue to ensure that every citizen is treated fairly.
In conclusion, the Bloc Quebecois is in agreement with the general objective of the reform, which is to preserve the viability of a public pension plan. This reform will ensure that future generations will also have access to a public pension plan. However, the Bloc Quebecois demands—I repeat, demands—that administration of the CPP be rapidly modernized in order to meet the harsh criticism recently formulated by the auditor general with respect to this plan.
The Bloc Quebecois will also ensure that the government's proposed reform does not depart from the principles of social justice so dear to all Canadians and all Quebeckers.
