Mr. Speaker, as I have listened to my hon. colleagues across the way, it has become clear to me that the opposition party has no understanding when it comes to the economy. New Democrats simply fail to understand the negative economic impact their proposal would have on families and communities from coast to coast to coast.
May I suggest to my NDP colleagues some background on the current state of the global economy and the risks that still exist that could derail Canada's recovery.
When the global recession hit in 2008, our government helped steer Canada through immensely challenging economic times. Indeed, Canada performed better than most countries during the recession and throughout the recovery. However, despite this relatively strong economic performance, global economic challenges remain, especially in Europe and the United States, our largest trading partners.
The NDP might be interested to know that global growth has been much weaker than expected. Growth in advanced economies, such as Canada, has stabilized at a relatively slow pace, while growth in emerging markets has slowed. The Euro area continues to grapple with a sovereign debt crisis that weighs on consumer and business confidence.
That is not all. Just south of the border, slower than expected growth, as well as uncertainty about the stability of the United States' finances, pose the greatest risk to the Canadian economy. It is not surprising that for this reason, the International Monetary Fund recently revised downward its outlook for real GDP growth in both advanced and emerging economies. Indeed, the IMF projects that growth in advanced economies will average just under 1.2% in 2013.
We all know that Canada is a trading country. We depend on a strong global economy for exports, especially to the United States and Europe. While economic growth in Canada has remained resilient, Canada is not immune to weaker economic performances beyond its borders. For this reason, it is not surprising that global economic weakness has weighed on demand for our exports, which has put downward pressure on Canada's real GDP growth. Furthermore, this weak global economy has depressed the prices of our exports. This, combined with low inflation at home, has resulted in weaker nominal GDP growth.
Let me clarify what this means. It means that despite Canada's relatively strong economic performance, there are a number of economic challenges that remain in the global economy. While the NDP might prefer that Canada become a protectionist country, the reality is that economic conditions beyond our borders have impacted Canada and will continue to. Simply put, we are not out of the woods yet. Canada's economy, while improving, remains fragile.
On this point, I can speak from my own personal business experience in private practice as a business owner for over two decades. The last thing employers and workers want during uncertain economic times is higher taxes. Higher taxes on employers will reduce their ability to grow their businesses by investing in more equipment and by hiring more workers. In the case of workers, higher taxes take more of their hard-earned money out of their pockets and can cause hardship for families trying to make ends meet during turbulent economic times.
While the members of the NDP may not realize this, CPP contributions are a payroll tax on employers. To increase payroll taxes on employers, when the economy is still recovering, would not only harm Canada's economy but would kill jobs, putting many Canadians out of work.
The NDP does not seem to understand that we cannot tax our way to prosperity. Not only do New Democrats not seem to understand this in the context of the Canada pension plan, they also do not seem to understand it in the context of business tax rates.
Just a couple of weeks ago, when I asked point blank if he would increase taxes on Canadian businesses, the leader of the NDP again confirmed that he would. Why, when other countries around the world are lowering their tax burden on job creation, would the leader of the NDP commit to increasing taxes?
I am not sure that the leader of the NDP, or anyone among the NDP ranks, understands how crippling a tax hike can be to businesses, especially when they are still trying to cope with a fragile economic recovery. It is clear that the NDP members do not, because if they did understand, they might grasp the economic consequences of their own proposal.
Indeed, the NDP wants to expand the CPP. This would effectively hike payroll taxes for employers and take money out of the pockets of hard-working Canadians. In fact, this radical plan would severely stunt economic growth. The NDP plan would force contribution rates to increase by an average of $1,600 per year per person. This means that a family with two workers at home could be forced to pay as much as $2,600 in additional taxes every year.
Not only would the NDP proposal cost Canadians their hard-earned money, but it would also cost them their jobs. The NDP plan could kill up to 70,000 in Canada. I would like to ask the members of the NDP how they feel about killing 70,000 Canadians jobs.
Not only that, I would like to know how the NDP members feel about doing something to which small business owners are strongly opposed.
I am going to share with the NDP what business owners think of its proposal. It might be interested to learn that a recent survey by the Canadian Federation of Independent Business revealed: 65% of businesses said that they would freeze or cut salaries if the Canada pension plan contribution was increased; 48% said they would reduce investment in their business; and 42% said they would decrease the number of employees.
Do not just take my word for this. I wish to quote from an economist of the Canadian Business magazine, Larry MacDonald, regarding how expanding the CPP would adversely affect businesses:
There doesn't seem to be a real need for it....A jump in CPP premiums makes it more expensive for businesses to maintain a workforce and could lead to job losses.
Not only would this put Canadians out of work, but it would also make things worse for those who stayed employed.
At the end of the day, the money to pay workers needs to come from somewhere. If more is being taken in the form of payroll taxes, then how are employers going to pay their employees?
According to Laura Jones, the executive vice-president of the Canadian Federation of Independent Business, “small businesses report that a mandatory CPP increase would force many to lower wages and even reduce their workforce”. Why, at the time when the economy is starting to rebound, would the NDP want to slap down workers by cutting their wages?
How would this help Canadian families? The only thing this would do is make it more difficult for Canadians to meet their mortgage payments, enrol their children in after school activities or, even worse, afford the grocery bills.
The NDP needs to consider the ramifications of its proposal, because it seems pretty clear that it has not given this much thought as to how this would impact employers and employees.
Not only does this proposal make no economic sense, but it overlooks the fact that Canada currently has a retirement income system that is the envy of the world.
Since 2006, our government has introduced a number of measures that have enhanced the well-being of all seniors by providing them with the services and financial support they need.
It seems clear the NDP has not taken note of this, so I will take some time to explain Canada's retirement income system to it and, perhaps, it will see why it is the envy of the world.
Through the Canada pension plan, we are providing a secure, indexed, lifelong retirement benefit. To ensure the CPP remains on solid footing, it is regularly reviewed by the federal and provincial governments, which are the joint stewards of the plan.
The NDP may be interested to know that the last financial review of the CPP, completed in 2012 by federal, provincial and territorial ministers of finance, confirmed that the plan was sustainable for at least the next 75 years. This is at the current contribution rate of 9.9% of pensionable earnings. In other words, there is no need to increase the contribution rate at this time.
Canada's retirement income system also provides tax assisted private savings opportunities to help encourage Canadians to accumulate additional savings for their retirement.
I am also talking about retirement savings plans, like the registered pension plan and the registered retirement savings plan, both of which are very efficient vehicles in helping retirees.
The RPPs are sponsored by employers on a voluntary basis and can be either a defined contribution or a defined benefit with employers and, in many cases, employees responsible for making these contributions.
The RRSPs are voluntary, individual, defined contribution savings plans. Employers may provided a group RRSP for employees and may remit a share of contributions on behalf of their employees.
Contributions to RPPs and RRSPs are deductible from income for tax purposes and investment income earned in these plans is not subject to income tax until withdrawn.
The cost of the tax assistance provided on RPP and RRSP savings is currently estimated at approximately $24 billion per year in forgone revenue for the federal government.
However, that is not all.
In addition, the tax-free savings accounts, a flexible, tax assisted savings account that was introduced by our government in budget 2008, is a valuable tool to help Canadians of all ages meet their savings goal. The tax-free savings account helps all adult Canadians, including seniors, to meet their ongoing savings needs on a tax deferred basis. This includes those who are over the age of 71 who are required to begin withdrawing from registered savings plans like the RRSP.
However, that is not the only way our government is helping Canadians ensure they have more money available when they retire. Since 2006, our government has introduced a number of measures to assist seniors and pensioners. Together, these measures are providing about $2.7 billion in additional annual targeted tax relief to those Canadians.
Let me review some of these tax saving measures.
We introduced the pension income splitting with a spouse. We increased the age credit amount by $2,000. There was a doubling of the pension income credit by $2,000. We increased the amount of the guaranteed income supplement that GIS recipients could earn through employment without any reduction in GIS benefits. We increased the age limit for RRSP to RRIF mandatory withdrawal conversion to age 71 from 69. We introduced the largest GIS increase in over 25 years which gave eligible low-income seniors get additional benefits of up to $600 for single seniors and $840 for couples, helping more than 680,000 seniors across Canada.
Overall, this action has helped remove more than 380,000 seniors from the tax role. In fact, in 2013 a single senior can earn at least $19,800 and a senior couple at least $39,700 before paying federal income tax.
There is still more. Seniors also benefit substantially from the many tax reduction measures our government has introduced. For example, we have reduced the goods and services tax to 5% from 7%. We have reduced the lowest personal income tax rate to 15% from 16%. We have increased the basic personal amount that all Canadians can earn without paying federal income tax. We have increased the upper limit of the two lowest personal income tax brackets, ensuring that a greater proportion of income is taxed at a lower rate.
Clearly, our Conservative government has a strong record of supporting Canada's seniors.
However, not only is our government helping the seniors of today, but we are also introducing measures to help seniors of tomorrow. I refer to the pooled registered pension plan. While the New Democrats are advancing a proposal that we kill jobs and hurt Canada's economy, our government is working with the provinces to introduce this new pension option. The pooled registered pension plan, the PRPP, is a large scale, broad-based pension arrangement. By pooling pension savings, the costs of administering these pension plans will be spread over a large group of people which will allow plan members to benefit from lower investment management costs.
PRPPs will be available to employees with or without the participating employer as well as to the self-employed. This is significant as 60% of Canadians do not have access to a workplace pension. However, with the PRPP, these Canadians will now have access to a low cost workplace pension for the very first time. That means more money in the pockets of Canadians when they reach retirement age.
Not only do PRPPs benefit employees, they also mark a significant advance for small and medium-sized businesses. Small and medium-sized businesses have, until now, experienced significant barriers to being able to offer a pension plan to their employees. However, under a PRPP, most of the administrative and legal burdens associated with a pension plan will be borne by a qualified, licensed third party administrator. Indeed, just this past September Manulife Financial became the first to be issued a licence to administer a federal PRPP.
Here is what Sue Reibel, senior vice-president, had to say about this:
PRPPs have been designed to make it simple and easy for Canadian small businesses to provide a cost effective retirement savings plan to their employees....Today’s approval marks an important first step in enabling many more businesses to help their employees put money away for their retirement...
The PRPP is an effective pension option for millions of Canadians who currently do not have access to a workplace pension plan. That is why we are urging the provinces that have not yet brought forward legislation to implement the PRPP to do so in a timely manner.
If the New Democrats really care about retirement security, they will not be advocating a proposal to kill Canadian jobs. Rather they should be supporting our government's effort to have every province in Canada implement legislation, making PRPPs available all across Canada.
Unfortunately, the NDP does not appear to think that the retirement security of Canadians is important. Believe it or not, the NDP actually voted against our government's legislation that introduced the federal PRPP framework. Indeed, the New Democrats opposed this legislation every step of the way, representing the interests of union bosses rather than the interests of Canadians. They voted against a measure that would help millions of Canadians prepare for their retirement. They pretend to be concerned about retirement security by supporting a proposal that would put Canadians out of work or, at the very least, decrease their wages. This is shameful.
Thankfully, our government is committed to ensuring the ongoing strength of Canada's retirement income system. Not only are we working to introduce measures that would actually help Canadians save for their retirement, like the PRPP, but we understand that during a fragile economic recovery is not the time to increase payroll taxes on employees. Now is simply not the appropriate time to increase the premium for the Canada pension plan.