Madam Speaker, I am pleased to have the opportunity of giving the government's point of view on Bill C-428.
I must admit in all honesty that this motion by the hon. member for Esquimalt—Juan de Fuca is hard to understand. It asks us to support a huge reduction in retirement pensions. Some people would lose as much as 60% of their benefits.
I am afraid that this proposal would undermine the financial support system from which we benefit today, a system that has proven itself. One need only take a quick look at its history to be convinced of that.
The Canada pension plan was implemented in 1966 with a view to providing a modest income for Canadian workers in the event of disability or on retirement. It also provides payments to surviving spouses, or common law spouses, and to the dependent children of a deceased or disabled contributor.
The Canada pension plan is designed to replace approximately one-quarter of an individual's income up to a set ceiling. The amount paid out depends on how long the person paid into the plan, and how much he or she contributed.
During the last fiscal year, 2002-03, over 4.4 million Canadians received approximately $21.6 billion in CPP benefits. Of that amount, $15.1 billion went to 2.9 million retirees. Over 900,000 surviving spouses and some 87,000 children of deceased contributors received a total of $3.3 billion. Finally, another $3 billion was paid out in disability benefits to approximately 283,000 disabled contributors and 90,000 of their children.
Canada has put in place a support system that makes us the envy of all other countries. We have made giant strides over the past three decades in reducing the number of low-income seniors. The Canada pension plan has played a vital role in that progress.
Do we really want to do anything to reduce the positive effects of the CPP now and in the future? Actuarial experts have determined that the CPP is doing very well. It remains viable with its current contribution rates and will continue to do so for the next 50 years.
By reducing the benefits, we would be changing the basis of the Canada pension plan. The government would be breaching an important contract with all Canadian workers. It is a contract that stipulates that people who contribute to the Canada pension plan during their working years are entitled to receive benefits.
Such a change would completely undermine Canadians' trust in and their support for this plan. Do we want to run such a risk? I also have other concerns about the opposition member's bill.
Does Bill C-428 discriminate? It seems to. It targets a specific group, namely people between the age of 60 and 69. It also implies a reduction added to another reduction. It proposes reducing by up to 60% a pension that has already been diminished for people who file an application for benefits before age 65 and who are fully entitled to do so.
This bill would be a real disaster in terms of financial planning for many Canadians. It would disrupt their retirement planning. The CPP benefits they rely on to ensure their income later would be withdrawn.
This bill would end up punishing people who are saving for their retirement. It would be like saying, “Set aside some money so that we can take it all away”.
What advantage would there be to saving for retirement? This would discourage even those who might have considered working in retirement.
In addition, Bill C-428 would have an impact on other retirement plan providers. Many retirement plans are integrated plans in which benefits are reduced by the amount of benefits paid under the Canada pension plan.
This reduction in benefits would create a gap that private pension plans could not fill. This would result in a substantially lower retirement income for many Canadians. Bill C-428 would affect the integrity of the Canada pension plan, to the detriment of many Canadians at risk, recipients of disability benefits, women, and senior women living alone in particular. Nearly 90% of recipients of survivor benefits are women.
Bill C-428 would also have a major impact on the husband, wife or common law spouse of individuals whose pension was reduced. If they died, the benefits paid to the survivor would be lower. This is clearly a bad initiative.
It is true that certain Canadians have greater financial means at their disposal during their retirement. However, they worked their entire lives, they saved money and they contributed to the Canada pension plan, and now that they are retired, we are going to take a significant portion of their CPP pension from them on the pretext that they have a modest but comfortable income.
CPP pension benefits are taxable, like any other kind of income. What about Canadians living outside Canada who pay taxes in their country of residence? Are they exempt from Bill C-428?
Also, the Government of Canada coordinates the CPP, in conjunction with its provincial partners. They must give their approval. Why would the provinces support a measure that could undermine a self-funding, sustainable national pension plan?
This will never happen. We will ensure that it does not. I listed a number of concerns and problems with Bill C-428, and I cannot find a single reason to justify its implementation, not one. Our government is prepared to make moderate changes to the Canada pension plan, when it needs to do so and when the majority of our partners and stakeholders support the proposed changes.
This proposal has no support whatsoever. The Canada pension plan has been responding adequately to the needs of Canadians for over 40 years. It will continue to do so in the coming years, and Canadians can count on us to see to that.