Bryon Wilfert

[Interparliamentary Delegations, October 31st, 2002]

Mr. Speaker, pursuant to Standing Order 34(1) I have the honour to present to the House, in both official languages, the report of the 9th General Assembly of the Asia-Pacific Parliamentarians Conference on the Environment and Development held in Seoul, Korea, in July 2002.

I also have the honour to present to the House, in both official languages, the report of the 23rd General Assembly of the ASEAN Inter-Parliamentary Organization, IPO, held in Hanoi, Vietnam, in September 2002.

[Canada Pension Plan, October 22nd, 2002]

Mr. Speaker, it is astonishing how the member can stand up and talk about everything other than the true facts.

The fact is that we have an independent board. The big picture is do we want Canadians to have a sustainable CPP or not? From all the evidence, I think the majority of Canadians do. We have undertaken that review since 1997 in conjunction with the provinces and we are now implementing the final stages of it.

In terms of return on investment, maybe the member missed it earlier. The fact is that as of December 31, 2001, the return was 6.2% as against any other publicly funded pension plan, such as OMERS, the teachers' plan, et cetera. In other words, we have an excellent board that is undertaking to make the kinds of investments which are secure for Canadians.

Again, I go back to the member. Does he think that the approach taken here, with the consent of the provinces, which I know his party is always concerned about, is one where there is a balance between the market and providing security for Canadians in the long run?

[Canada Pension Plan, October 22nd, 2002]

Mr. Speaker, I heard the hon. member's comments and I am not sure if he read the bill. The bill will consolidate all CPP assets under one independent board to enhance risk management. I am not sure whether the member is for it or against it, but I want to make it very clear that the board has been brought together by the fact that the ministers of finance of the provinces and the federal government consult and nominate members to the board.

There was some question about who was on the board. I think there was some question as to the quality of its members. Let me just suggest that the quality of its members is outstanding. There is Dale Parker, corporate director, former president and CEO of the Workers' Compensation Board of British Columbia. There is the retired former chairman of the Toronto-Dominion Bank, Richard Thomson. A former economics professor and business executive from the University of British Columbia is on the board. We have an outstanding list.

The fact is that the provinces and the federal government nominate these people. They have to have a strong background in the fiscal sector and investment ability. We know that public and pension management experts say this is an extremely well-run board. It is at arm's length of government. It is free to pursue courses of action which some of us have talked about today. What is important is that this is a board that has been supported by all the provinces and the federal government and is of the highest quality.

Does the member support the changes which the provinces and federal government have unanimously come to? Does he believe that we should throw people out into the marketplace who do not necessarily have a lot of dollars--

[Canada Pension Plan, October 22nd, 2002]

Madam Speaker, the hon. member ended on rather a sour note which I am surprised at since all the provinces support it as well as management investment pension board representatives.

There were three areas he mentioned. One was the independence of the board which I have talked about before, which is beyond reproach. There is discussion about the arm's length of the board. It is clearly able to invest in any sectors that it wishes. In fact that again is very clear. It has the full authority to develop a plan and it does.

How is the plan working? It is working rather well. In comparison to others, OMERS as of December 2001 annual returns for selected public sector pension funds was minus 3.4%. Ontario teachers was minus 2.4%. The caisse populaire was minus 5%. CPP was plus 6.2%. That is not a bad record.

The member pointed out the foreign property rule. I point out to the hon. member that foreign property rule strikes a balance to investing in Canada and elsewhere. We have seen some increases in this over the years from the 10% limit of 1971 that has gradually moved forward to the 30% limit of January 2001.

Finally, I personally find offensive to suggest this is a tax grab. First of all, the money will not go into general revenue, it will go into a separate account toward people's pensions, which is what we are all in favour of here, and not to government coffers. The short term economic impact of the increase in CPP has been well known for a long time.

The opposition cannot have it both ways. On the one hand it says we are not properly funding it and therefore the thing will run out and we have done a lousy job. On the other hand we recognized this with our provincial partners and we fixed the problem with the support of the provinces. The opposition now turns around and says the rates are too high. Sometimes in politics it is better to be a listener than a talker and I wish some of the members on the other side would listen to what this legislation says.

Could the member explain to us, if all the provinces and the federal government support this legislation and support the changes, and people in the pension fund management sector support it, how is it that they are all wrong and he is right?

[Canada Pension Plan, October 22nd, 2002]

Madam Speaker, I rise on a point of order. The hon. member again indicated that there was a direct correlation between Liberal Party contributions and the members of the board of directors. It is very clear that this is not the case. I have documented clearly--

[Canada Pension Plan, October 22nd, 2002]

Madam Speaker, my colleague across the way made some comments which, as I had indicated in my speech, I want to reinforce because I was concerned there was some suggestion about the politicization of the CPPIB board of directors.

I want to make it clear to the House and to this member that the board of directors is independent and accountable. The ministers of finance federally and provincially appoint directors with high qualifications. There is consultation with the provinces. The directors are chosen from a qualified list of candidates recommended by a joint federal-provincial committee, one from the federal government and from the nine participating provinces. The criteria that is used for this nominating process is a public document and is out there for the public to see.

In making the appointments it should be emphasized that the directors must have proven financial ability and relevant work experience for them to carry out the objectives of the CPPIB. As a result the people who sit on that board of directors have extensive business, financial and investment expertise.

I want to emphasize the independence and the quality of the board because the hon. member implied that somehow there may be government, that is, Liberal Party bias in the selection. That is of course nonsense given the fact that nine participating provinces and the federal government are nominating a list of candidates. Both Conservative and New Democratic governments as well are nominating. It is important for the public to know that the independence is there.

I am sure that this was maybe an oversight by the member, but I wanted to emphasize this on the public record and any comment that the member might make. Otherwise I was pleased with his comments about the direction of Bill C-3. I also want to emphasize that these proposals have the support of all of the provincial and territorial governments involved and the changes are now before the House.

[Canada Pension Plan, October 22nd, 2002]

Mr. Speaker, I am pleased to present Bill C-3 for second reading in the House today.

Bill C-3 would amend the Canada pension plan, CPP, and the Canada Pension Plan Investment Board, CPPIB, Act in order to accomplish a prudent and accelerated transfer of CPP assets to the CPPIB. This transfer would represent the final step in the process of transferring CPP assets not required to pay current pensions and benefits to a market based independent investment organization. Before discussing the bill, I would like to take a few minutes to provide some background that will help to put these measures in context.

As hon. members know, the federal government is fully committed to making Canada's retirement income system secure to all Canadians. Today Canadians from all walks of life take this system for granted without realizing that it did not always exist. Years ago caring for older citizens and those with disabilities was solely the responsibility of individual families. With the introduction of the Income Tax Act in 1917, the federal government was able to adopt national social programs such as Canada's first old age pension in 1927, which at that time included a means test.

Following the second world war other programs such as employment insurance, family allowance and a universal old age security program were introduced. There was also a need for a public pension plan, a portable national pension, that could be carried from job to job and from province to province. This need was met in 1966 with the introduction of the Canada pension plan, a compulsory earnings based national plan to which all working Canadians could contribute.

The CPP provides wage earners with retirement income and financial assistance to their families in the event of death or disability. Set up jointly by the federal and provincial governments, the CPP was designed to complement, not replace, personal savings and private employment pension plans. It should be noted that Quebec administers its own complementary plan, the Quebec pension plan.

As hon. members know, the Canada pension plan is one of three supporting pillars of Canada's retirement income system. This system is a blend of public and private pension provisions and is considered internationally as one of the most effective ways to provide for retirement income needs.

The first pillar is our old age security program provides public pensions for senior citizens and ensures all Canadians a basic income in retirement.

The second pillar is the Canada pension plan, the focus of today's debate.

The third pillar, the private component of the system, includes tax assisted fully funded employer sponsored pension plans, registered retirement savings plans and other private savings.

Some 30 years after the Canada pension plan was launched concerns were raised about its sustainability. In the early 1990s the Chief Actuary of Canada warned that CPP assets, the equivalent of two years of benefits, would be depleted by 2015 and that contribution rates would have to increase to more than 14% by 2030 if the plan remained exactly as it was. These concerns needed to be addressed. After all, future generations of Canadians, including our children and grandchildren, needed assurance that the plan would be there for them at a reasonable cost.

As the plan's joint stewards the federal and provincial governments subsequently released a document entitled “An Information Paper for Consultations on the Canada Pension Plan” which outlined the challenges facing CPP in the coming years and options for reform.

In February 1996 the federal and provincial governments announced that joint cross country public consultations with Canadians would be held on the Canada pension plan to find out what ordinary citizens wanted to see done. Guided by panels of federal, provincial and territorial elected representatives, extensive consultations were held in every province and territory. Governments heard from actuaries, pension experts, social planning groups, chambers of commerce, seniors groups, youth organizations and many concerned individuals.

A common theme emerged during the consultations. It became clear that Canadians wanted the government to preserve the Canada pension plan by strengthening its financing, improving its investment practices and moderating the growth costs of benefits.

In 1997 the federal and provincial governments adopted a balanced approach to CPP reform so that the plan could meet the demand of the coming years when the baby boomers would be retiring.

Changes to the plan included limited changes to benefits and their administration, a moderate increase in CPP contribution rates and the building up of a larger asset pool while baby boomers were still in the workforce. The asset pool would be invested in the markets and managed at arm's length from government for the best possible rates of return. All together these measures ensured that a contribution rate of 9.9% would be sufficient to maintain sustainability of the plan indefinitely.

These reforms, which were endorsed by the provincial and federal finance ministers five years ago, will help ensure that Canadians have a pension plan on which they can always depend.

In the three actuarial reports since the reforms, the chief actuary has confirmed the long term viability and financial sustainability of the CPP.

A new market investment policy to be implemented by an independent organization, known as the Canada Pension Plan Investment Board, was a key element of CPP reform. The CPPIB was set up in 1998 and began operations the following year.

Before the CPPIB was established, the CPP investment policy dictated that all funds not immediately required to pay benefits and administrative costs had to be invested in provincial government bonds at the federal government's investment rate. This represented an undiversified portfolio of securities and an interest rate subsidy to the provinces.

The creation of the CPPIB, with a mandate to invest in the best interests of CPP contributors and beneficiaries and to maximize investment returns without undue risk of loss, meant that CPP could be partially funded, in contrast to the 1966 “pay as you go” CPP. The CPPIB reflects a fundamental policy change with respect to investment CPP funds.

The CPP funds that are not needed to pay benefits and expenses are transferred to the CPPIB and prudently invested in a diversified portfolio of market securities in the best interests of contributors and beneficiaries. Certain CPP assets will remain with the federal government and are the focus of Bill C-3 which I will discuss in a moment.

Before doing so, I want to point out that the CPPIB functions within an investment policy framework that is similar to other large public pension plans in Canada, such as the Ontario Teachers' Pension Plan and the Ontario Municipal Employees' Retirement System, OMERS.

For example, it operates under similar investment rules which require the prudent management of pension plan assets in the interests of plan contributors and beneficiaries and is free to hire its own independent professional managers. The Canada Pension Plan Investment Board is subject to the foreign property rule like other pension funds.

I would like to make a few additional comments about the CPPIB and how it functions before discussing the bill.

It is important to understand that the governance framework of the CPPIB was designed to ensure full transparency and accountability. Because the CPPIB operates at arm's length from governments and is responsible for billions of dollars of retirement funds belonging to CPP contributors and beneficiaries, it is imperative that the board be fully accountable to the public and governments. CPPIB funds are managed prudently to the highest professional standards, with qualified managers making investment decisions.

Let me assure the House that the CPP Investment Board is fully accountable to CPP plan members and federal and provincial governments. It keeps Canadians well informed of its policy operations and investments in a number of ways.

First, the CPPIB makes its investment policies and financial results public. Second, it releases quarterly financial statements. Third, the CPPIB publishes an annual report that is tabled in Parliament. Fourth, the board holds regular public meetings in each participating province at least every two years to allow public discussions and input. Fifth, the CPPIB maintains a very informative website.

Full accountability is also assured through a robust process, with strong checks and balances, that is in place for identifying and appointing CPPIB directors. Great care was taken in structuring the CPPIB to ensure that its board of directors was independent and accountable to CPP contributors and beneficiaries.

Following consultations with the ministers of finance in the participating provinces, the federal government appoints directors with high qualifications. The Minister of Finance also consults with provincial ministers of finance and with the board of directors on the appointment of the chair of the CPPIB.

Directors are chosen from a list of qualified candidates recommended by a joint federal-provincial nominating committee which is comprised of one representative from each of the nine participating provinces. The criteria used by the nominating committee to identify potential candidates for director have been made public. In addition, in making appointments to the board of directors, consideration is given to ensuring that a sufficient number of directors have proven financial ability or relevant work experience to ensure that the CPPIB carries out its objectives. As a result, individuals who sit as directors have extensive business, financial and investment expertise.

I am pleased to say that the independence and quality of the CPPIB of directors has received strong support from public and pension management experts.

Independence from government in making investment decisions is critical to the CPPIB success and public confidence in the CPP investment policy. This is of the utmost importance because the money that the CPPIB invests today, and the higher returns earned, will be used by the CPP to help pay the pensions of working Canadians who will begin retiring 20 years from now.

Let me turn now to the measures we are debating today.

Through Bill C-3, the federal and provincial governments are implementing the final steps of CPP reform launched in 1997. All CPP assets remaining with the federal government would be transferred to the CPPIB over a three-year period. These assets include a cash reserve and a large portfolio of mostly provincial government bonds. These asset transfers will represent the last steps of the path established by the federal-provincial governments in 1997 to invest in CPP assets not immediately required to pay benefits in the market by an independent professional investment board.

There are several advantages to putting all CPP assets under one independent, professional organization.

To begin, consolidating all assets under one organization will put CPP on the same footing as other major public pension plans, thereby providing fund managers with the flexibility to determine the best asset mix and investment strategies to manage risks and optimize returns for all CPP assets.

Analysis undertaken by the chief actuary of Canada indicate that CPP assets fully invested in the market would be expected to earn a greater return and thereby grow more rapidly for the benefit of present and future CPP contributors.

The benefit of the transfer of assets under Bill C-3 is very significant. Based on the financial projections in the chief actuary's 19th report, CPP assets would increase by approximately $85 billion over the next 50 years and by $72 billion in 2050.

Obviously this welcome result would add considerably to the soundness of the Canada pension plan and enhance the confidence of Canadians in their public pension plan. In addition, transferring the CPP bond portfolio to the CPP investment board over three years would provide for a smooth transition for capital markets, provincial borrowing programs and CPPIB.

Finally, all changes in the CPP and CPPIB legislation would require the approval of the provinces. I am happy to report to the House that provincial and territorial governments unanimously support these changes. This is important. Also, before the new legislation comes into force the provinces would need to formally approve the changes.

Bill C-3 essentially completes the process that the federal and provincial governments began in 1997 of investing CPP assets in the market by an independent professional investment board.

The end result of this move for the Canada pension plan would be increased performance, better diversification, and enhanced risk management of the entire CPP portfolio.

I wish to remind the House that during the 1997 public consultations on CPP reform, Canadians told their governments to fix CPP and to fix it right. Canadians also told their governments to preserve the CPP by strengthening its financing, improving its investment practices and moderating the growth costs of benefits. The provincial and federal governments have addressed these requests.

I should mention that the transfer of CPP assets to the CPPIB would have no impact on the Quebec pension plan which is administered separately from CPP.

The establishment of the Canada pension plan in 1966 was one of the most important public policy initiatives ever undertaken in the country. The plan reflects a national belief that retirement for working Canadians should not be a time for hardship. It also captures the Canadian value of shared responsibility among contributors and governments to provide reliable support to wage earning Canadians after they cease active work.

Ours is a government with a conscience. Together with the 1997 reforms the measures in the bill would ensure that the Canada pension plan remains on sound financial footing for future generations. With the transfer of all CPP assets to the CPP investment board Canadians can now feel secure that prudent, sound investment diversification, as well as increased performance would result.

I urge all hon. members to support the passage of this legislation without delay.

[Government Programs, October 10th, 2002]

Mr. Speaker, first I would say to the hon. member that this is the government that has gone from a $42.5 billion deficit to back in the black. We have had five balanced budgets. When it comes to fiscal management and fiscal prudence, the government needs to take no lessons from the opposition.

I would point out that the Speech from the Throne has outlined a number of key initiatives of the government and we intend, through the budget process, to deliver in a timely and effective manner that Speech from the Throne.

[Resumption of Debate on Address in Reply, October 9th, 2002]

Mr. Speaker, I am not sure if I heard any questions, but I did hear a lot of ranting. Let me see if I can respond at least in part to what I consider to be absolute nonsense from the member. He should know better.

First of all, I never suggested anything about waste. Obviously every government has to be accountable. One of the ways we are accountable is through the Auditor General.

Our good friend across the way mentioned money being wasted. When governments are held accountable, they respond. They say, “We had some shortcomings and we are responding”. The Auditor General said that in many cases.

I hate to hear about a billion dollar boondoggle. It is utter nonsense. There was not a billion dollar boondoggle and the member knows that. Yes, there was a bad paper trail. Yes, there was bad accounting. Yes, we had to do better. The minister has responded in kind. In fact, the Auditor General said so, but the member does not want to say that.

As far as the issue of health care is concerned, I have heard this argument from the member and other members before. I want to set the record straight. The provinces have the same taxing ability as we do. The province of Ontario cut taxes, which is its right, but at the same time it turned around and told this government it wanted more money for health care. It is about priorities. If the province's priority is tax cuts, then more power to it; but if it is health care, then make it health care. Do not make it both.

The member said that we are not spending money on health care. In September 2000 the Prime Minister, who held no gun to anyone's head, received agreement from all the premiers. They said they wanted x number of dollars, and were handed $21 billion plus for health care. They said that was what they needed. The ink was not yet dry and suddenly early Alzheimer's set in. The provinces claimed not to remember any of this and said they needed more money. Why? Because they had money sitting in a bank in downtown Toronto. The Quebec government, the Ontario government, and the British Columbia government demanded more money.

This government has said it supports a strong health care system. We will hear from Romanow and we will respond to Romanow. The Prime Minister has said there will be a first ministers conference early in the new year to put the system right in terms of the future.

The national round table on health said a few years ago that health care is not just about money. It is about how money is spent. What we need in health care, and which the member did not mention, is transparency and accountability. When I give money to somebody, I would like to have it accounted for. I would like to know where the money went. Maybe that is what we should say to the province of Alberta. Maybe that is what we should say to the province of British Columbia.

[Resumption of Debate on Address in Reply, October 9th, 2002]

A member opposite says it is nonsense. Unfortunately, the member probably has not read the OECD report and of course it is nonsense if it is something he has not read.

Let us look at other issues. When we want to have strong fiscal anchors, private sector economists expect Canadian growth will average 3.5% this year compared to our friends south of the border where it looks like it will be about 2.3%.

The fact is that we will lead the G-7 in economic growth this year and next. This is an important legacy. The opposition talks a lot about a legacy. The most important legacy under the Prime Minister has been the economic record of getting the fiscal house in order. I know my colleagues would agree that is what is extremely important.

Regarding the debt, the fact is that by paying down the national debt, we save between $2.5 billion and $3 billion a year on interest, this year, next year and every other year. Why is that important? It gives us the opportunity to deal with some of the urban issues, rural issues, social issues, family issues in this country because the government has been fiscally responsible. That is something Canadians appreciate. That is something Canadians expect their government to do and we are doing it.

There are two areas I want to touch on briefly. One is with regard to urban areas, an area of particular concern to me. I live in a very fast growing area of Ontario, an area where there is a lot of congestion and development.

Over the years I have spoken out very strongly about the need for a solid partnership of all orders of government and the private sector with regard to urban issues. When I was president of the Federation of Canadian Municipalities I talked about the need for a 10-year program for urban infrastructure. In fact my good friend from Saint John was there with me. She also supported that and I know she is pleased to see that in the Speech from the Throne. The fact is the government has delivered.

I would point out that between 1993 when this government came in and 2000, the government funded over 21,000 projects with over $15 billion in urban infrastructure along with our provincial, municipal and private sector partners. This is a major accomplishment. When there is a hole in the roof and it is not repaired, it gets bigger and the same is true with urban infrastructure. If we do not deal with it today, it is going to get worse. We have been responsible in working with our partners to deal with that.

We also have announced $2 billion in major strategic infrastructure projects dealing with sewer, water treatment and local transportation. These are very important. The Speech from the Throne recognizes that. That is why there is a 10-year program for infrastructure, to accommodate long term infrastructure needs.

Helping our urban communities respond in a fiscally responsible manner is important. It is important that we have cities that are safe, efficient and environmentally friendly. That is what the government is doing in helping to reduce congestion in our cities.

Extending investments in affordable housing is extremely important. It is another area where the government is stepping up to the plate and doing its part. It is an important signal in the Speech from the Throne.

Extending the supporting communities partnership initiative is something that cities have said is extremely important to them. The government has listened and responded accordingly.

I would be remiss if I did not recognize my good friend the Minister of Labour and her tremendous work on the homeless file. Our government came up with the necessary dollars to assist communities across the country in dealing with the homeless issue, knowing that we alone could not solve it, but in partnership. In the Speech from the Throne we talk about partnership and helping Canadians help themselves. This is all in the context of the strong fiscal anchors that I have outlined.

Canadian families are looking to the government. Families sometimes need the tools to care for family members. We are an aging society. There are family members who are getting older and responding to that issue is important. The government has recognized that in the Speech from the Throne. The government will continue to increase its support for families.

One of the most important policy initiatives is the issue dealing with the child tax benefit. This is very important. The family will benefit by more than $2,500 for the first child in 2004. We had an early childhood agreement with the provinces and territories. Again we are working in partnership.

These are not policies or programs that we are pushing on people. We are working and listening, and by listening we are able to develop these important programs. There is the Canada prenatal nutrition program with $27 million to help pregnant women at risk. Again, this is a very important program. We want to make sure we have strong families.

I should not leave out tax cuts. We brought in the largest tax cuts in Canadian history, over $100 billion. This year alone we are seeing a $20 billion cut by the government. It shows that we are responding. We are bringing down corporate taxes. We are bringing down income taxes. At the same time we are responding to the social needs. A nation is not just a balance sheet of figures; it is about real people and real needs. We can be proud as a government in responding in that way.