Mr. Speaker, while listening to the speech by the NDP member for Palliser earlier, I was getting more and more concerned when he was depicting the entire legislation in terms of where the Canadian Alliance and, before the Canadian Alliance, where the Reform Party stood in terms of pensions, and of course misrepresenting considerable things.
I thought the exercise of opposition in the House of Commons was to hold the government to account and to deal with legislation put forward by the government, not to create or exacerbate divisions between the opposition parties.
I found most of what was said by the member for Palliser to be essentially irrelevant to the debate and counterproductive.
I would like to be irrelevant to the debate for a moment just to point out some things that the same member for Palliser recently said in the House of Commons that were basically contrary to where people are coming from.
I will quote briefly:
--in response to the member's specific questions, the position that I take, and I believe would be shared by a majority if not all of my caucus colleagues, is that if it has not specifically hurt a minor in the production of it, if it is created by people's visual imaginations and if the main purpose of it is not simply about pornography and sexual exploitation, then under the laws people do have a right to their own imaginations and thoughts, however perverse the member might think they are.
I want to hold that member accountable for a defence of child pornography in this place which I find indefensible. If he wants to carry out what I consider to be uncharacteristic descriptions of the Canadian Alliance, then I will ask him to be accountable for his actions in this place.
It is really my job today to talk about Bill C-3, which is a step in the government's attempt to put all the CPP assets under a single entity called the Canada Pension Plan Investment Board. We have had quite a bit to say about this board over time. I have heard the NDP member for Palliser and I have heard Liberal members say how wonderful it is that the Canada Pension Plan Investment Board will copy or emulate the Caisse de dépôt et placement du Québec.
I think this is clearly a backward step and one that we should all be very concerned about. We will end up with a very large, in a Canadian context, government run investment fund with the money and the mandate to essentially, within our small economy, take a controlling stake in private firms, to hire and fire directors, to block takeovers and to tilt the scales in capital markets.
All of this can be done at the whim of the government who is responsible for the appointees to this board. We are entirely captive of the goodwill of those government appointees to the board to put priority on the shareholders, the Canadian public, who are the eventual recipients of the Canada pension plan, as opposed to their political masters.
We know from recent history that the Caisse de dépôt et de placement in the province of Quebec has been used consistently for political initiatives. It was, for example, heavily used in the lead up to the last referendum when the Parti Québécois wanted to ensure that it had a two year period after the referendum before it had to go to the markets for money. That was all put in place ahead of time on the basis that if it won the first couple of years could have been a real difficult time.
It put the aspirations and needs of its separatist movement ahead of the aspirations and needs of either current or future pension recipients. We know that the former minister of finance, the member for LaSalle—Émard, would love to designate the Canada Pension Plan Investment Board direction to be utilized for all kinds of social policy and economic regional development initiatives as opposed to allowing that board the freedom and independence to seek the maximum rate of return for its shareholders.
This is part of a pattern that is consistently demonstrated by the Liberal government in most initiatives that it takes. There is in every case an attempt to utilize the board or the institution or the crown corporation in a way that would benefit the Liberal Party of Canada and its attempt to retain control in this place in the national governance of the country.
I find this very problematic. Although we are heartened by some of the comments from the people who have actually been appointed to the board, that is not good enough. We are not talking about good intentions here. We are talking about the inevitable reality of poorly designed legislation that would allow the entire exercise to come under the political control of the minister responsible for the board .
We can talk about some of the details of performance that would demonstrate quite clearly what kind of problems we could get into with rates of return when we attempt to emulate something like the Quebec model.
The Chief Actuary of Canada reported that from 1966 to 1995 the average real yield after inflation on the Quebec pension plan account, which was invested as it would be under what is envisioned by this bill, was under 4%. If we compare that with the average of the largest private managed funds in Canada, it came in at just under 5%.
If we were to take the huge amounts of investment capital that would be invested by the Canada pension plan and compound that over several decades, like the example I gave from 1966 to 1995, that would be a huge differential. We are forgoing that money by allowing this kind of scheme to be the operative scheme for the Canada pension plan.
When the former finance minister, the member for LaSalle--Émard, put these pension plan proposals forward, he projected a rate of return of his Canada pension plan after inflation to be 3.8%, even less than what was being achieved by the Quebec pension plan. Why would the former minister be targeting that kind of a rate of return unless he had strong designs on using it for political purposes and knew that it would reduce the rate of return? What kind of a message does that send about how caring our government is about the future incomes of our seniors? Even if those motivations were not there the inevitable result of this kind of legislation eventually would be that we would end up with that kind of a consequence.
A big problem with the current arrangement of the legislation is that the moneys that the Canada Pension Plan Investment Board invests would have to follow the same rules as an organization that we as individuals are stuck with in terms of investing in RRSPs, that is, dealing with Canadian content and how much we are allowed to invest outside of Canada. Canada has about 2% of the world's capital market. What that means is that a large pool of money is funnelled into a very small capitalization. This increases the risk for Canadians and for Canadian pensioners.
I believe that we need to free the Canada Pension Plan Investment Board and individual Canadians from these restrictive Canadian content rules.
The Canada Pension Plan Investment Board would look at $100 billion tied up in the stock market potentially as a large investment indeed. To demonstrate how insignificant Canada's capital markets are, when we look at that number, it is instructive to realize that yesterday's announcement of AOL Time Warner's loss for last year came in at $100 billion in the U.S. Here is one company that lost approximately the asset base of the Canada pension plan.
The other aspect that could show up is that in a very down market, we could end up with a large captive drop in the market of anywhere from 30% to 40%. That is why we need to spread the risk. That is why we need to get beyond these restrictive Canadian content rules that are tying up too much of the capital base into a small market.
We did have a crisis in the Canada pension plan during the tenure of the former finance minister, the member for LaSalle--Émard. What happened then? We watched the payroll burden for Canada pension plan contributions increase. That is a job killer; it is hard on employers and employees. There was a reduction of about 5% in the CPP rates to seniors. Those were not happy measures and were counterproductive. If we had that once before, we are potentially looking at a situation under this legislation that would be exacerbated, in other words, actually made worse.
What could we to look at? We could look at, for example, a year of investment where the Canada pension plan would be invested in a passive fund as opposed to the active engagement of choosing a capital mix. This could be done by contrasting the Quebec pension plan with a passive investment, and guess what? The passive investment plan in the example of the first year of operation did twice as well as the Quebec pension plan.
I find it puzzling to hear so much support coming from the government and the NDP in terms of them saying this is an enlightened measure when what it is sure to do is reduce pensions for seniors and put us in peril of political manipulation of the entire pension assets of this country. I find this totally unacceptable. We need a better context than what the government is providing for our pension assets.