Mr. Speaker, I will be splitting my time with the hon. member for Rimouski-Neigette—Témiscouata—Les Basques.
I am proud to have introduced and to lead off debate today on the following important motion:
That the House call on the government to commit to supporting an immediate phase-in of increases to basic public pension benefits under the Canada and Quebec Pension Plans at the upcoming meeting of federal, provincial and territorial finance ministers.
The meeting is to take place later this month at Meech Lake.
New Democrats are demanding that the government take immediate action on this incredibly important issue. The Ontario Liberal premier calls it a “huge economic crisis”. Pension security is one of the key challenges of our time. There is a rare opportunity now to find a lasting solution and I believe we must seize that opportunity.
It is rare to find an apparent consensus of provincial and territorial finance ministers that the CPP needs to be increased, along with its Quebec equivalent, le Régime de rentes du Québec. This agreement is mirrored by a remarkable agreement among leading economists, the Canadian Labour Congress, the Canadian Association of Retired Persons, even the editorial board of The Globe and Mail, all saying we must act and we must act now. It is also supported by Bernard Dussault, who was of course the chief actuary of the Canada pension plan and old age security program from 1992 to 1997.
The government seems to want to offer us a false choice. It does not have a viable alternative to increasing the retirement savings of workers. It simply points to voluntary saving schemes, RRSPs and the “pooled” registered pension plan. It simply does not understand the importance of economic security for hard-working families or the importance of urgent repairs to our frayed social safety net to Canada's economic security. If we do not act to improve our pension security, we may consign an entire generation to a retirement in poverty. Failing to provide a safety net for those in their senior years will be a betrayal of that generation. It will be another cruel example of our kids inheriting the largest social, economic and ecological debt in Canadian history.
Although great strides have been made to help the seniors of our generation, our children and grandchildren will simply not be able to retire in dignity. Women, especially, will be hurt. Ironically, if we do not fix the Canada and Quebec pension plans, a future government may very well likely have to pay for social assistance to help that generation in order to make sure those people are taken care of. In other words, it will be the taxpayer who foots the bill rather than a shared investment program between employers and employees.
Right now, only 13.8% of Canadians have access to a workplace pension plan. Less than a third of Canadians have access to a defined benefit plan and only 17% of employees in the private sector have access to a defined benefit plan, down from over 30% in 1982.
In 2008, 122,000 to 567,000 seniors were living in poverty, depending on how one defines that term. These numbers tell a story of an increasingly insecure retirement future for Canadians. It is clear that if we do not act to secure pensions, the very stability of Canada's economic future is at risk. However, as The Globe and Mail has noted, we have an enormous success story in Canada. The Canada Pension Plan Investment Board has provided remarkable returns in virtually every year, except the year after the economic downturn of 2008. For example, over the last 10 years, the board has earned an annualized rate of return of 5.5%, even after taking into account inflation. That is certainly better than the returns on most RRSPs.
In fact, just today, Statistics Canada said the CPP and Quebec pension plan grew at a rate of 13.7% between 2011 and 2012, outpacing all other pension assets. By contrast, individual registered savings plans grew 8% over the same period, yet Conservatives appear to be refusing to expand this effective investment tool for the benefit of all Canadians.
Those who argue against increasing the CPP and QPP usually have two key arguments, and I will address them both.
The first is, as they say, is to do the right thing for our next generation, which would be taking a risk with our fragile economic economy.
The second, they say, is that we should just keep on going with the voluntary programs that the insurance companies and others provide, pooled pension plans and the like, and that should do the trick.
Let me examine these arguments in turn.
First, on the economic consequences, if recent history is a guide, then an increase in the CPP will not have the dire economic consequences the government predicts. Professor Rhys Kesselman, Canada's Research Chair in Public Finance at the School of Public Policy at Simon Fraser University wrote inThe Globe and Mail:
—the historical record is that the CPP premium rate hikes initiated in the 1990s to restore financial balance did not hamper an economic expansion. Between 1997 and 2003 CPP premiums were hiked 70 per cent while the country’s employment rate rose strongly and steadily except for a slight dip with the 2001 economic downturn.
Things were fine, in other words, and it did not have an economic increase.
Professor Kesselman also makes clear that the employer's CPP premium is not, as the government terms it, a “payroll tax”. He has written an award-winning book on payroll taxes and he concludes that taxes come from consolidated revenue. Premiums for CPP, of course, come from employer and employee contributions.
As a recent Globe and Mail editorial put it:
Since the proposed CPP premium hikes would provide workers correspondingly higher benefits in retirement, they are not like an ordinary payroll tax increase. Rather, they are like an individual’s payment for improved insurance coverage. This premium-benefit linkage means that CPP premiums lack the disincentive effects of most taxes.
He goes on to say, “Concern over the effects of CPP premium hikes is unwarranted and should not be allowed to block this important policy reform any longer”.
In addition, even if the finance ministers agreed next week to enhance the CPP, it would not come into effect until at least 2016 anyway. The government keeps telling us the economy is going to get better, which should therefore be another reason to go ahead and not delay this important reform any further.
The second argument the government and others have used is that it should be a voluntary and not a mandatory program increase.
How can people be expected to voluntarily save when Canadians already have the highest household debt rate in history? To suggest people should voluntarily save, and that will do the trick, ignores the reality that most working people and an increasingly large number of middle-class Canadians as well are not able to save.
The money must be there when people reach retirement. Therefore, why take a chance on a voluntary program? As I have said before, only a minority of workers have RPPs, RRSPs, or any savings. What is going to happen to the majority?
By way of conclusion, if the government opposes this motion, it has to tell Canadians what it intends to do instead. If the Liberals and the Conservatives say that a voluntary program is just fine, they have to explain how that will actually help young Canadians who cannot save.
Last December, the Minister of Finance said that he and the provincial finance ministers, “had agreed on a way forward on increasing CPP and Quebec pension plan benefits”. Unfortunately, he seems to have changed his tune.
We need a plan for the future of Canadians and our economy. We strongly urge the government to stop standing in the way, work with the provinces and immediately begin phasing in an increase to the CPP and QPP. The time to act is now.
