Paul Szabo

[Members Of Parliament Retiringallowances Act, June 8th, 1995]

Mr. Speaker, I had not intended to speak on the bill, but I think members have raised a number of issues that bear commenting on and require me to remind the members of what is being proposed in the bill.

I would like to address the general feeling of many of the speakers that the pensions of members of Parliament should have the same provisions as those applicable to the private sector.

One of the aspects of private sector pension plans the members have not given any consideration to whatsoever is the vesting differential. Vesting is the point at which the contributions of the employer become the property of the employee. Consider a corporation with a pension plan that contributes x dollars to a plan, which is matched by the employee. Let us say they contributed $1,000 each. There would be $2,000 in that plan. That accumulated amount starts to accumulate to the benefit of the employee following a two-year tenure of employment. After two years of employment an employee who is a

member of a normal private sector pension plan automatically starts to accrue and accumulate benefits.

If the members really wanted to provide all of the details they would have to take into account the differential in the vesting being imposed upon members of Parliament and the vesting benefit that is available in the private sector.

If we were to go to a system where vesting in the private sector was applicable to members of Parliament, that means each and every member of Parliament would automatically at the end of two years of service start to accrue and be entitled to a pension. That means that the vast majority of members of Parliament who never did reach six years of service would automatically be included. In fact the cost of the pension plan would more than double. In a quick calculation I did here on my laptop computer, I find that it would almost triple the cost of pensions to the House of Commons simply by changing the vesting benefits.

I honestly believe that the government has come forward with certain provisions that are absolutely necessary. The government, in its election platform, said that members' pensions should be reformed. There were two specific commitments, as the hon. parliamentary secretary outlined to the House. First, there was the eligibility. Under the current plan, members of Parliament would be eligible to be entitled to a pension if they served six years in aggregate in this House.

Under our Constitution a House must turn over at least every five years, so the six years is actually a very critical period. It means that a member of Parliament has to be elected at least twice, and in some cases in our history it has been more than twice. It could be three and sometimes four times that members have had to run simply to accumulate six years simply because of Houses collapsing before their five-year mandate might be available.

The six years really is a critical period, and it does, as all members know, eliminate a vast majority of members of Parliament from ever qualifying for pension benefits. Those are the differences that I think would have to be rationalized if the hon. members of the Reform Party would like to somehow move this to a system compatible with the private sector.

The second item the government committed to in its red book was to end double dipping. I am very proud to say that the Prime Minister did not wait until this legislation came forward to bring in effectively the end of double dipping. The first example was with regard to the newly appointed governor general, who was a member of the Senate and entitled to receive a pension. The governor general was asked and accepted to reduce his salary otherwise payable as the governor general by the amount of pension. The double dipping is eliminate.

There are other examples in which the double dipping has effectively been eliminated even before this legislation has come forward. Those are the kinds of things the government has committed to and is doing, even in the absence of the legislation. That is important to point out.

Finally, as was pointed out earlier, in response to the need to demonstrate to the public that there was a goodwill effort to deal with this issue, the Prime Minister went further than his commitment in the election. He went further by proposing that the rate of accumulation of pension was going to be reduced. It is called the accrual rate and it has been reduced from 5 per cent to 4 per cent.

With the changes that have been made in addition to the commitments in the red book, the cost of the pension plan is going to be reduced by some one-third. Changes that have been made have been very significant changes.

For some hon. members and I know for many of my own constituents and Canadians across the land, there is a compensation question here they would like to have resolved.

The Reform Party whip has suggested we eliminate perks, pensions, and everything and simply pay members $150,000 a year. The member has determined, based on the work and research his party has done, that $150,000 a year is the salary we should be paid to compensate us for the contribution we make in this place.

I do not want to debate with any hon. members what the value of my work is to the House. Certainly under any criteria I would never suggest that $150,000 a year would be appropriate for this job. It is an absolute ludicrous suggestion. I do not think that the Canadian people, if they really knew what the Reform Party had in mind, would consider any of this rhetoric as being in any way credible.

Very often in debate members have raised certain examples where a person is going to get a pension which by the time he or she reaches age 75 will have accumulated in value to $3 million, $4 million, $6 million and so on. Let us get the facts right. They are working with numbers and people have to be cautious about numbers. Let me give an example of what this pension plan would mean to me, the member for Mississauga South.

If I should serve six years I will be entitled to a pension which will accrue at 4 per cent a year or 24 per cent of my salary. My salary is $64,400 a year. That means I will get approximately

$15,000 a year in pension but it will not be payable to me until I reach age 55, some seven or eight years from now.

I think members have been using age 75 as a period to which we would be getting the pension on average. Therefore, between the ages of 55 and 75 getting paid that $15,000, the net present value of those payments is $460,000. That is also a big number but it is a number which is made up of a $15,000 annual payment over 20 years with an assumed rate of interest of some 4 per cent which is the rate we get if we should not make our six years and we get our funds back.

The most important point I wanted to raise is the point I raised initially with regard to the vesting. Members really must consider the differential in the vesting provisions available to private sector pension plans and those that are imposed on the members of Parliament. It does have a significant impact on the calculations and it also has a significant impact on the rationale as to eligibility.

If those members believe that every member of Parliament, and I stress every member of Parliament who serves two years, should get a pension when they reach age 55, my figures show that the cost to the House of Commons would triple.

[Petitions, June 8th, 1995]

Mr. Speaker, pursuant to Standing Order 36, I wish to present a petition that has been circulating across Canada. This petition comes from my riding of Mississauga South.

The petitioners would like to draw to the attention of the House that managing the family home and caring for preschool children is an honourable profession which has not been recognized for its value to our society.

They also state that the Income Tax Act discriminates against families who make the choice to provide care in the home to preschool children, the disabled, the chronically ill and the aged.

The petitioners therefore pray and call on Parliament to pursue initiatives to eliminate tax discrimination against families that decide to provide care in the home preschool children, the disabled, the chronically ill or the aged.

[Supply, June 7th, 1995]

Madam Speaker, I thank the hon. member for the comment. I think the important principle here is that when the government considers changes to the way it operates, its procedure and expenditure management system and many of the decisions referred to by the member, it consults. It has consulted extensively right across the country. The important phrase is to get government right. It has to be done properly.

The direction of the government and the proposals it has put forward will more fully implement the will of the House to get government right.

[Supply, June 7th, 1995]

Madam Speaker, I thank the member for noting that a number of ideas and proposals have been tabled by the government with regard to the expenditure management system, many of which I outlined in my comments.

We are working late. We expect the debate will carry on until 10 p.m. We have votes following that. I understand there are some 63 votes.

The House through its co-operative approach to House business has adopted a new approach to deal with the votes members take here. The other evening we did manage to get through some 19 votes in a very short time. That is the kind of example that bodes well for the suggestion the member has made that possibly the entire process of the estimates tabled by the President of the Treasury Board could be streamlined so that we could put some focus on those areas, particularly where changes, adjustment or reductions are being proposed by hon. members, and that the debate be focused on those items.

That is a productive approach and I encourage all members to make that input in the House and directly to the President of the Treasury Board. I am sure productive suggestions such as that will get very careful consideration.

[Supply, June 7th, 1995]

Mr. Speaker, I am honoured to speak in support of full supply for the 1995-96 main estimates.

In the preparation of these main estimates, the government made not only the tough spending and program choices necessary to meet its fiscal targets; equally important, it has taken steps to ensure that control over spending becomes a permanent feature in the management of the government's programs.

As announced by the President of the Treasury Board on February 15, 1995, a new expenditure management system, EMS, is being implemented. This represents the most significant overhaul of the government's expenditure system since the early 1980s.

EMS is a system designed to ensure that we keep spending under control and provide the best programs and services possible within the resources available. Among its key features, EMS emphasizes the ongoing review of programs and managing through reallocations. This is significant because new initiatives as well as most cost increases in existing programs will be financed through reallocation from lower priority programs.

The central policy reserves, which were traditionally a source of funds for new initiatives and did not encourage the ongoing review of existing programs, are being eliminated. A contingency reserve will continue to cover the risk of statutory expenditures exceeding their projections. It would be used, for example, to respond to changing economic conditions. In addition, the Treasury Board will continue to manage a small operating reserve. However, the role of the reserve will be altered from funder to banker. Departments borrowing from the operating reserve will have to repay advances with interest in future years.

In addition, in cases where reallocation is not feasible priorities for access to the operating reserve have been established. In considering requests priority will be given to funding bridge financing projects that offer significant productivity payback, meeting urgent health and safety requirements and protecting the essential integrity of critical programs and the capital asset base.

To ensure that we stay on track and reduce the deficit and meet our fiscal targets program planning will become more closely integrated with the budget planning process. Decisions on new initiatives and major spending reallocations required to finance these new initiatives will generally occur during the annual preparation of the budget.

The establishment of program review and resource allocation as an integral part of the budget process means that the opportunities to propose new spending will be reduced. Ministers are called upon to manage within the resource limits of their respective portfolios.

The government recognizes that funding through reallocation of resources calls for a more strategic approach to resource management at all levels. For this reason, the EMS requires the preparation of departmental business plans. In these business plans, departments are responsible for determining how existing programs must be changed to meet expenditure targets and new government priorities.

The multi-year time frame of business plans will encourage departments to look ahead and examine the major directions and objectives that should be pursued for the planning period, which is the estimates year plus two future years at a minimum.

A major focus of the business plan is the identification of strategies to bring about the major changes and adjustments that are needed. Other elements include the goals, targets, and performance measures that will be used to assess program results and performance information concerning areas affected by the significant changes.

In addition, it is important to note that the business plans take an integrated approach to the management of change by examining all functions that are central to the department in making business adjustments, whether they be financial, human, technological, or capital. Business plans will help departments and central agencies plan in an organized and methodical way to make the adjustments required to get government right during a time of rapid reductions in resources. Furthermore, these plans will enhance the information available to Treasury Board ministers. Decisions on Treasury Board submissions will be made in the context of strategic perspective and clear business direction for each department and agency.

Members of the House of Commons will also be able to review the overall thrust of departmental programs over a multi-year period. In February 1994 the government introduced changes to our Standing Orders of the House of Commons, including Standing Order 81(7), which states:

When main estimates are referred to a standing committee, the committee shall also be empowered to consider and report upon the expenditure plans and priorities in future fiscal years of the departments and agencies whose main estimates are before it.

To assist members of the standing committees in carrying out their responsibility to consider and report on departmental expenditure trends and priorities for future fiscal years, ministers will provide the departmental outlook document directly to the chairpersons of the respective standing committees.

The departmental outlooks are based on the results of the business planning process. They will describe management and operational strategies departments intend to pursue over a multi-year time frame in order to make whatever fiscal and policy adjustments are necessary to deliver government services.

I am confident that parliamentarians will have a better perspective on the issues facing the government and the downstream implications of government spending as a result of the introduction of departmental outlook documents. Departmental outlooks are one example of the government's efforts to improve information available to all parliamentarians on government programs.

The government is also striving to enhance the performance information that is provided to Parliament. In recent years departments and agencies have been developing service standards in order to advise the clients of government programs what level of service they can expect in terms of timeliness, accessibility, reliability and responsiveness, and what action to take if service does not meet these standards. All departments and agencies will have developed standards for their primary services by the end of 1995. The publication of departmental performance in relation to these standards has already begun.

With the expenditure management system parliamentarians have an opportunity to become fully engaged in expenditure planning. Consultation with Parliament is in fact one of the guiding principles of this approach. Parliamentarians will be able to support ministers and their departmental officials in their efforts to reallocate resources and meet our target of reducing the deficit to 3 per cent of gross domestic product by 1996-97.

The government will be consulting us on important initiatives designed to provide better information to Parliament while enhancing the accountability and flexibility of departments in managing their resources. In particular, I would draw your attention to the reform of the estimates currently under consideration. The introduction of departmental outlook documents emphasizes the need to rationalize reporting to Parliament. The current form and context of part III of the estimates and the departmental expenditure plans were derived from information needs defined by parliamentarians over a decade ago. Parliamentarians should now take the time to comment fully on how reporting to Parliament could be improved. The question to consider is how does the government ensure that the part IIIs meet the information requirement of parliamentarians today without placing an undue reporting burden on departments or agencies.

In addition to part IIIs, the reform of the estimates will focus on a number of related issues where changes may be introduced to create flexibilities and incentives for departments to manage their resource requirements through reallocation. The option of increasing the vote threshold for separate capital expenditures, grants, and contribution votes is a good example of the changes being considered in the context of the reform of the estimates.

The current threshold of $5 million was established in consultation with the standing committee on public accounts during the 1970 reform of the estimates. Over the past 25 years the number of separate votes has increased, in part simply as a result of inflation. To expand managers' flexibility to reallocate resources we should consider increasing the threshold at least to a level that would take into account the impact of inflation on capital expenditures, grants, and contributions.

A related option being examined is the possibility of establishing an operating budget vote. Minor capital expenditures are considered to be part of the operating budget. However, for departments and agencies with separate operating and capital votes minor capital expenditures are included in the capital votes. An operating budget vote would allow managers to use the full flexibility of the operating budget to transfer funds between minor capital, operating, and personnel expenditures.

In summary, the new expenditure management system will provide for ongoing review of programs and spending to reduce expenditures and identify opportunities for reallocation to higher priority programs. It includes parliamentary and public input into the budgetary process. It introduces better strategic planning and a process for adjustment programs and services through the implementation of departmental business plans. It also improves accountability through a focus on making better performance information available to Parliament and the public.

I remind members the overhaul of the expenditure management system formalizes the approach the government has taken to decision making on spending, namely financing, through reallocation. It is a major step forward in fostering greater fiscal responsibility and making the best use of taxpayers' money in delivering high quality service to all Canadians.

[Petitions, June 7th, 1995]

Mr. Speaker, pursuant to Standing Order 36 I wish to present a petition which has been circulating across Canada. It has been signed by a number of petitioners from Calgary, Alberta.

The petitioners would like to draw to the attention of the House that managing the family home and caring for preschool children is an honourable profession which has not been recognized for its value to our society.

They also state that the Income Tax Act discriminates against families who make the choice to provide care in the home to preschool children, the disabled, the chronically ill and the aged.

The petitioners therefore pray and call on Parliament to pursue initiatives to eliminate tax discrimination against families who decide to provide care in the home for preschool children, the disabled, the chronically ill and the aged.

[Budget Implementation Act, 1995, June 6th, 1995]

Madam Speaker, the member used some words that seemed a little contradictory. In one instance he was admonishing the members to vote the way they believe, yet depending on some other questions, the member is admonishing members to vote along with their constituents. I simply raise this contradiction. If the member really believed that, then he along with at least the other three Reform Party members who are supporting gun control would also represent their constituents and vote for gun control.

The Reform Party took the liberty to produce a pro forma budget to put on the table what its plans would be. As we all know, they were basically to trash social programs and particularly to tax seniors. In the hypothetical situation that the Reform Party did form a government and did have that budget, would the member admit here and now that the Reform Party would have to borrow at least $100 billion before the deficit would be reduced to zero over the term of the mandate?

[Budget Implementation Act, 1995, June 6th, 1995]

Mr. Speaker, I expect that another hon. member would also like to comment.

With regard to the social transfers, the question has been raised as to whether they should be going into one pool. If the Bloc has a problem with grouping them together, knowing full well that the provinces spend the funds wherever they want anyway, would the member agree to mandating that all dollars transferred for health care be spent on health care, that all dollars transferred for education be spent on education, that all dollars transferred for social programs be spent on social programs, and that the provinces would have absolutely no discretion in that spending?

[Budget Implementation Act, 1995, June 6th, 1995]

Mr. Speaker, I would like to make a brief comment and put a question to the hon. member with regard to the social transfer.

As the member well knows, under the Canada Health Act the federal government is empowered to enforce the provisions of that. Those provisions are that our medicare is universal, portable, accessible, publicly administered, and comprehensive.

The transfer presently to the provinces with regard to health care is in the form of both tax points and cash. The member will well know from the current example with regard to the clinics in Alberta that the Minister of Health has indicated that in the event that the Alberta government does not respect and uphold those principles of the Canada Health Act there will be a withholding of the cash amounts relative to the extra billing in Alberta.

Under the Canada health and social transfer, the government has combined the transfer mechanisms primarily because of the cash component. In the event that there was no cash component with individual programs, the government would have absolutely no leverage whatsoever to help to protect those standards and those principles of the Canada Health Act and of the other programs.

The member will well know that the provinces do not necessarily spend the moneys transferred to them. Whether it be post-secondary education, health, or social programs, they do not necessarily direct those funds received for the purpose for which they were given. In fact the provinces have the latitude.

Since the provinces are already spending the money in a form they believe is appropriate for their province, how would combining the transfers for all the programs under one impact, if at all, the present operations of the provincial governments?

[Petitions, June 5th, 1995]

Mr. Speaker, pursuant to Standing Order 36 I wish to present a petition that has been circulating across Canada. This particular portion of the petition comes from the Sarnia, Ontario region.

The petitioners would like to draw to the attention of the House that managing the family home and caring for preschool children is an honourable profession which has not been recognized for its value to our society.

They also state that the Income Tax Act discriminates against families that make the choice to provide care in the home for preschool children, the disabled, the chronically ill or the aged.

The petitioners, therefore, pray and call on Parliament to pursue initiatives to eliminate tax discrimination against families that decide to provide care in the home for preschool children, the disabled, the chronically ill and the aged.