Scott Reid

[Bilingualism, October 4th, 2002]

Mr. Speaker, the hon. minister is quite right that I represent an Ottawa riding, however I was born in Gatineau.

The fact is the minority, of which I was once a member, is restricted in its rights by provincial law. Municipal services are restricted by provincial law. It is against the law in Quebec for the City of Gatineau to provide full services to its minority. This is not true in Ontario, yet we have not heard a single word from a single minister on that side of the House defending the rights of that minority.

My question to the minister is: why are the rights of one minority in the national capital area not protected as well as the other?

[Bilingualism, October 4th, 2002]

Mr. Speaker, in 2001 municipalities on both sides of the National Capital Region amalgamated to form the two cities of Ottawa and Gatineau. Since that time the Liberal government has been relentless in its pursuit of official bilingualism on the Ontario side, but only on the Ontario side.

It has repeatedly demanded that Ottawa's bilingual status be entrenched in provincial law and transferred several million dollars to city hall for this purpose. Not one federal minister has uttered a single word in defence of the rights of the large English speaking minority in the City of Gatineau.

What is the reason for this double standard on minority language rights in the national capital area?

[Speech from the Throne, October 2nd, 2002]

Madam Speaker, I rise on a point of order. Questions and comments are not prepared speeches. I cannot help but notice that the hon. member is reading from a prepared text--

[Canada Pension Plan, June 17th, 2002]

Mr. Speaker, I rise on a point of order. My amendment points out that there is an absence of information as to how this bill will affect the Canada pension plan.

I am unaware, because I have not seen the 19th report and neither has anyone in the House, whether or not that is in fact addressed in the 19th actuarial report of the chief actuary. In fact these reports tend to be structured so as not to include that kind of information. Until we have confirmation on this sort of thing, I fail to see how we can go forward. I believe that the substance of my amendment in fact is very much valid.

[Canada Pension Plan, June 17th, 2002]

Mr. Speaker, when I left off a couple of days ago, I was making reference to the way in which the legislation and this series of changes to the Canada pension plan was modelled by the former minister of finance, the member for LaSalle--Émard, to allow moneys in the Canada pension plan to be used for purposes other than the goal of achieving a maximum rate of return. First, I was in the process of pointing out to the members of the House how this had the effect of reducing the likely rate of return that would be achieved through the Canada pension plan investment fund.

Second, I was demonstrating, through a history of the minister's prior actions on RRSPs, old age security and earlier changes he made to the Canada pension plan, how this was part of a pattern he had demonstrated of repeatedly seeking to accomplish other goals with pools of money in our various pension plans, how this would have the impact of greatly reducing the amount of wealth available to Canadians when they retired and how this would cause a great deal of damage to the economic interests of all Canadians, both those currently at retirement age and those who would eventually be of retirement age.

Having gone through this demonstration, I pointed out that the finance minister had based his model on the Quebec pension plan and on the Caisse de dépôt et placement, which is the vehicle by which the government of Quebec invests its pension moneys. In fact I quoted from him. On a number of occasions he had made it quite clear that the Quebec pension plan and the Caisse de dépôt et placement was his model. He went so far as to describe himself as an apostle of the Caisse de dépôt et placement.

Members on this side of the House have a problem with this. We feel that the only suitable use for Canada pension plan moneys is to invest them to achieve the maximum rate of return. No other consideration should be taken into account, not regional development, which the minister has suggested, not stabilizing the economy, which is an idea that has been floated and not dealing with any social goals that might occur. Raising the best rate of return is the only consideration that should be taken into account.

I want to describe what happened a few years ago when the first stage of this transition of the Canada pension plan was underway. The National Post and the Ottawa Citizen carried a column by Andrew Coyne and he commented a little on these changes. I will quote from what he said at that time. He said, referring to the former finance minister, that he “confesses to being 'an apostle' of the Caisse de dépôt's approach”. Then Mr. Coyne asked:

Is this what we really want: a mammoth, government run investment fund, with the money and the mandate to take controlling stakes in private firms, hire and fire directors, block takeovers and otherwise tilt the scales in the capital markets to suit the whims of the government of the day? Socialism by the back door? Is the Canadian Caisse, as Martin is already calling it, to be the vehicle for the same mix of nationalism, dirigisme and plain-old cronyism for which the original is justly famous?

That is a good question.

There are no guarantees of non-intervention on the part of the Canadian Caisse de dépôt et placement in the Canadian economy. All we have right now as guarantees is the goodwill of the people who are running it, the people who are appointed by the Department of Finance to the 10 man board that runs the Canada pension plan investment board.

Going through the commentary of the individuals who are on the board, I am somewhat encouraged for the short term by the current appointees. In particular I am encouraged with the situation with John MacNaughton who is on the board. I will quote from an interview that was reported in the Financial Post about two years ago when he was appointed to the board.

He was asked about some of the interventionist activities that the Canada pension plan investment board might make. I am quoting not from him but from the article which paraphrases him. It states:

Unlike high-profile U.S. pension funds such as California Public Employees' Retirement System, Mr. MacNaughton has no plans to be a crusader on corporate governance. For him, a solid board of directors is every company's best watchdog.

Nor does he intend to mimic [the] Teachers' [plan] by joining other outside investors to force change in executive suites.

...Mr. MacNaughton is adamant that the government will never be able to use CPPIB [Canada Pension Plan Investment Board] to support any industrial strategy. Nor will he heed a government plea to restore calm if the stock market tumbles.

I am reassured about Mr. MacNaughton, but as another article which I quoted in my prior remarks a few days ago pointed out, Mr. MacNaughton is dispensable and over time it is not inconceivable, indeed, given the record of the government it is a virtual certainty, that more politically compliant individuals will be placed on the board. Moreover, the pressure to do so will be there.

Looking at the results of this kind of model, the obvious question is, what kind of results can we get? We do have a model. It has been in existence for nearly 40 years: the Caisse de dépôt et placement. What kind of rates of return does it have? I am looking at the 16th statutory actuarial report of the Chief Actuary of Canada, who reports that from 1966 to 1995 the average real yield after inflation on the Quebec pension plan account, which has always been invested in the manner in which the Canada pension plan account will now be invested, was a little under 4%. By comparison, the average of the largest private managed funds in Canada was just under 5%. Compounded over several decades these are huge amounts of money, particularly when the government is talking about an investment capital of over $100 billion. This adds up to an almost incomprehensible sum of money, which is deliberately being forgone.

I say deliberately because the proposals put forward by the former finance minister when he was proposing this Canada pension plan investment scheme stated that the projected rate of return on the Canada pension plan, once inflation is taken into account, is 3.8%, that is to say, less good even than the Quebec pension plan has been achieving, less good than that substandard, sub-market rate of return.

I should mention as well that if we examine just the rate we would get by using a passive index, a passive North American index would have produced a substantially better rate of return. It would also have been, and this is a remark I will be returning to later, insulated from the government's long term policy of allowing the dollar to fall and therefore all investments that are demarcated in Canadian funds to fall as well. None of this is contained in the bill and that is just unacceptable.

With the Quebec pension plan, what do we see it being used for? There are many things I could point to, but in general it is the industrial and economic development of Quebec. I do not want to suggest that the idea of regional development is not a worthwhile goal. It is not a worthwhile goal when we are talking about the hard-earned savings of Canadian taxpayers who are depending on this money for their future. The result of the regional and industrial development plans in Quebec has been a very unsatisfactory rate of return and those funds that have been focused upon real estate developments and so on have been the worst funds in terms of rate of return in Quebec, achieving in fact in many cases a substantial negative return. That is to say, it is just lost.

As well, we have seen the Quebec pension plan funds being used during the last referendum period to help the government of Quebec shore up its short term credit, so that in the event of a yes vote the government of Quebec would not have had to refinance its debt for two years. That may be an intelligent strategy if one is trying to break up the country and is worried about a lenders' strike. It was not a wise strategy for the moneys in that plan. It was completely unacceptable. That kind of use of funds is not prevented in the legislation.

I do not think the Government of Canada would seek to do quite that with the money, but we can see the argument being made that we have a unity crisis and we need to use the money for something else because we have a unity crisis and we need to shore up the unity of this country. How can we say that Canadian pension plan moneys should not be used for this? Is there anything more sacred than the unity of the country, than child poverty, than regional development or than whatever the policy demands of the government at that time might happen to be? This is simply unacceptable.

Finally there is the question of the use of the moneys for political intervention and the potential for the kinds of misuse of funds that we see being virtually endemic in the government. I do not want to suggest that this was ever part of the plan when this strategy for managing Canada pension plan investment funds was being set up. It is merely a likely consequence and one against which there is no protection.

I want to turn, then, to the question of the way in which some limits are put on the Canada Pension Plan Investment Board as to how it can invest the money. I have already mentioned that the fund is interventionist, but I think it should be pointed out just how severe a problem this is. One of the rules that governs the Canada Pension Plan Investment Board, and this is a rule that is being set in place by this piece of legislation, is that the rules that apply to RRSPs with regard to foreign content will also apply to the funds in the bill. Therefore, the hundred billion dollars or more in this fund will be kept within the Canadian market. Only 30% will be allowed to be placed outside of the Canadian market.

The Canadian market is approximately 2% of the world market. It is the market in which we are all participants by virtue of being participants in the Canadian economy. Our salaries are denoted in Canadian dollars and are paid in Canada. We find that all of our real assets, our non-pension assets, are trapped within the Canadian economy, which means that if it goes down we have no insurance against that because of the fact that the Canada pension plan and its moneys are kept within this economy rather than in the other 98% of the world economy. This is a severe problem that increases the risk on Canadians and Canadian pensioners.

We know what kind of impact this can have because we can look at the rate of return that RRSPs have been able to achieve when they are subject to similar rules. A few years ago, Keith Ambachtsheer, a noted pension expert in Canada, did some research and published a report which indicated that as a result of this rule applying to RRSPs they achieved on average a rate of return which was 5% lower than it would have been had that money been invested more broadly on the international market.

I will just quote from the Financial Post , which stated in 1995 that:

Ambachtsheer's research showed that the price of this limitation on diversification is a significant increase in risk to achieve the same return. In addition, he estimated a conservative balanced portfolio subject to the...limit [on foreign investments] earned approximately 1% less on average each year over the last 10 years than an unrestricted portfolio.

This is what we will impose on our national pension pool of investments. I have talked about the risk increasing because we are trapped in this same pool of money. We have all our eggs in the same basket, our pension moneys and our non-pension moneys. However, that is not the only kind of risk that exists. There are currency risks, of course, and there are others, such as if the stock market takes a tumble. Again, a smaller stock market is far more likely to take a tumble than the world as a whole.

Here is a question that was raised in an article in the Financial Post on July 17, 2000. The author asks this question:

But suppose 15 years down the road, the CPP Investment Board has $100-billion or more tied up in the stock market and the market threatens to plunge 40%. Would Canadians be willing to have the Investment Board sit tight and see $40-billion in collective pension assets go up in smoke?

It is a good question, is it not? It is a question that this legislation forces us to ask because it does not protect us from this kind of risk. Indeed, it forces this kind of risk upon us.

There are other problems. When we are a large player in a small market we affect the market with everything we do. In a small market, a large player that goes in to purchase a stock has the effect of driving up the price of that stock, which means it automatically pays a penalty, a fine, simply for having moved in that direction. When it sells a stock it automatically drives the price down by virtue of the fact that it is a substantial proportion of the market itself. That has the effect of causing it to pay a fine when it gets out of a stock.

Therefore, in fact, an actively managed portfolio that dominates the Canadian market, as this fund will, will have the effect of driving down the rate of return on investments. I want to suggest that this is a consideration that was not taken into account when the 3.8% rate of return was projected. I see nothing in the government's documents that indicates it was ever considered. That means that the rate of return is very likely to be below the 3.8% the government projects.

That in turn means that when the next crisis in the Canada pension plan comes along, a crisis fomented on the Canadian people by the government and in particular by the former finance minister, we will face the same kind of decision that occurred on the part of the former finance minister five years ago when he was dealing with the last crisis in the Canada pension plan. Aside from raising the rate of Canada pension plan payroll tax, which he did by a substantial amount, he also reduced Canada pension plan benefits to seniors by about 5%. That was the first step. We can expect, if this plan goes into effect, a lot more of that sort of thing. Anybody who is a senior now or who will be a senior in the future had better think about that. That is the almost certain consequence of this structure for these investments.

There is an alternative, which is to use an index, to use what is called a passive investment. Earlier I mentioned the California public employees' retirement system, the largest privately run investment fund in the world. That pension fund invests its assets passively by simply purchasing a basket of stocks that mimics the Wilshire 2500 index of American stocks, which is basically as close to a publicly traded index as possible in terms of reflecting the United States economy. The reason this pension system uses this system is that even though it is in a vastly larger market 10 times or 12 times the size of the Canadian market, nonetheless it finds that trying to get actively involved results in lesser rates of return. It simply does not want to get into that sort of thing. I think we should follow this example. I should point out that we actually have some experience in Canada with a comparison between active and passive management of publicly managed funds, which extends over the past few years.

In its first year of operation, the Canada pension plan investment fund was simply invested in a passive index that mirrored the Canadian market. By contrast, the Quebec pension plan was actively managed on the model that it is now suggested the Canada Pension Plan Investment Board should follow. The result in that first year was that the Canada pension plan investment fund, which was passively managed and which simply mirrored the index of the Canadian market, did more than twice as well in that year as the Quebec pension plan. So why on earth would we want to go from something that is working, I would suggest, not perfectly well but tolerably well, to something that is following a model that is clearly dysfunctional? It makes no sense.

That is without considering the problems I have mentioned with regard to potential political interference in corporate governance and in the internal affairs of the Canadian economy. The government talks at great length about a pension plan investment board that is at arm's length. We have seen that this is an easy matter to overcome if this government or any future government chooses to set that rule aside.

However, what we really want is a pension plan and a pension fund that is politician proof, not at arm's length but politician proof. The legislation was brought to the House in great haste in an effort to make it look like the government has an agenda. It was brought here despite the fact that there is no report from the chief actuary stating what the implications of the legislation are for the pension system and that is something that the existing legislation clearly states is not acceptable. It makes it impossible for us to know whether this suggested series of changes will accomplish the goals that the government claims they are going to accomplish.

For this reason, I move that the motion be amended by replacing all the words after the word “that” with the following: This House declines to give second reading to Bill C-58, an act to amend the Canada Pension Plan and the Canada Pension Plan Investment Board Act, since the bill is not accompanied by a report of the Chief Actuary of Canada who reported to the government that the changes proposed in the bill will increase CPP assets by approximately $75 billion over 50 years and that members of the House cannot evaluate the impact of these changes properly without a report.

[Employment Insurance, June 14th, 2002]

Mr. Speaker, I rise today to remind the House that last September I brought to the attention of the minister responsible for employment insurance that department's inability to meet the service delivery standards it had promised in Kanata and other parts of eastern Ontario affected by the downturn in the high tech industry.

It is now eight months later and benefit delivery is still taking six to eight weeks, exactly what was happening before. The promise had been service delivery on benefits in 28 days. I know of nowhere in eastern Ontario where the service delivery standards are being met or are even seeing improvements in performance.

Yet the government demands immediate payment from taxpayers. Anyone who is late paying their taxes or program premiums for employment insurance can expect the swift imposition of interest charges and penalties.

It seems the government feels it can hold itself to a lesser standard than that which is expected of contributors to the very program from which it is now denying benefits. Canadians deserve more.

[Canada Pension Plan, June 14th, 2002]

Mr. Speaker, I thank the member for Palliser for his insightful intervention.

Let me continue to give a number of citations from the former finance minister. The next one is from September 26, 1997. This is very important because it indicates the direction in which he and this legislation are planning to take this vast pool of hard earned Canadian money. I quote:

I have always been an apostle of the Caisse de dépôt and I think having a Canadian Caisse de dépôt to manage the savings of Canadians is very important.

That was stated by the former finance minister as he was setting up the board that we are now seeing put into place. The Caisse de dépôt et de placement in Quebec manages the Quebec pension plan. This is the model he is looking at. This is the model he has been leading up to in all these quotes.

What is the result of the use of this model? The result is poor returns on investment. The Caisse de dépôt et de placement has produced returns according to the chief actuary--

[Canada Pension Plan, June 14th, 2002]

Mr. Speaker, I am rising today to respond to government Bill C-58, an act to amend the Canada pension plan and the Canada Pension Plan Investment Board Act.

The bill's function as stated by the government is to achieve the following four goals: first, it would permit the transfer of money from the Canada pension plan account to the Canada Pension Plan Investment Board; second, it would permit the transfer of assets held by the finance minister to the account for technical reasons; third, it would apply to the Canada pension plan fund the 30% foreign content limit that applies to registered retirement savings plans and employer and union sponsored pension plans in Canada; and fourth, it would deal with assorted housekeeping and technical amendments.

Those are the stated goals of the bill. It has other goals in mind as well, but before I speak to them I will turn to the remarks made by the hon. government House leader with regard to the government's compliance with its obligations under subsection 115(2) of the Canada pension plan. The Canada pension plan says a report of the chief actuary is required when the House is proceeding forward with a bill dealing with the act. Subsection 115(2) states:

--the Chief Actuary shall, whenever any Bill is introduced in or presented to the House of Commons to amend this Act in a manner that would in the opinion of the Chief Actuary materially affect any of the estimates contained in the most recent report under this section made by the Chief Actuary, prepare, using the same actuarial assumptions and basis as were used in that report, a report setting forth the extent to which such Bill would, if enacted by Parliament, materially affect any of the estimates contained in that report.

Moreover, the report must be laid before the House of Commons by the Minister of Finance forthwith. Subsection 115(8) states:

Forthwith on the completion of any report under this section, the Chief Actuary shall transmit the report to the Minister of Finance, who shall cause the report to be laid before the House of Commons forthwith on its receipt if Parliament is then sitting, or if Parliament is not then sitting, on any of the first five days next thereafter that Parliament is sitting, and if at the time any report under this section is received by the Minister of Finance Parliament is then dissolved, the Minister of Finance shall forthwith cause a copy of the report to be published in the Canada Gazette.

This answers the question the government House leader raised as to whether he could submit such a report or whether a report could be submitted while the House of Commons was not sitting. It could be and should be. It is difficult to have an intelligent debate in this place on the bill when we lack the requisite actuarial data from the Chief Actuary of Canada to determine what the likely effects of the legislation would be.

This is no small matter. We are talking about amounts in the tens of billions of dollars. The speaking notes given out by the government indicate that the proposed changes in the legislation would shift the earnings of the fund by $75 billion. That is not pocket change.

This is the result of a material effect on the fund. For those of us trying to come to an intelligent understanding of the legislation, the question arises as to whether the extra $75 billion would allow the 9.9% contribution rate to the fund to fall. This would have a substantial impact on employment prospects for Canadians. A reduction in a job killing payroll tax would be tremendously beneficial.

On the other hand, would it mean the CPP would be unsustainable without the projected $75 billion infusion of cash? If that is the case, what we are really discussing is how to avoid a financial calamity which would deprive many Canadian seniors and all of us of our anticipated pension benefits under the Canada pension plan.

We are discussing the issue in parliament without knowing which of these two situations is the case because we do not have the report of the chief actuary. While the government may not be infringing the law or the rules of the House by bringing forth the bill without having produced a report from the chief actuary, the rules of good governance are very much infringed.

Quite frankly, the bill is before the House at this time for the same reason a flurry of other bills have been rushed forward in the last few weeks. About three weeks ago one of the newspapers, the Globe and Mail or the National Post , published a warning that we could expect a large number of bills to be rushed forward in every department to give the impression the government had something on its agenda while it floundered around trapped by internal controversy over its leadership. Bill C-58 is one result of the government's effort to create an impression of energy and activity or sound and fury signifying nothing.

I am not saying the bill is not an appropriate matter to be considered by the House. It is absolutely necessary that the House consider the bill in a timely fashion when the appropriate work has been done by the authorities delegated to carry out these tasks under the Canada pension plan. I am referring to the chief actuary with whom I have worked in the past and whose office does excellent work when given the chance to so do. I am also referring to the Minister of Finance.

The appropriate course of action would have been for the government to bring forward the bill in the autumn after a report had been done by the chief actuary and tabled in the House. I gather that this will happen prior to committee stage. However second reading of the bill is not being conducted in as informed and intelligent a manner as it should be. We are all the losers for that.

Again, we are not talking about pocket change. We are talking about $75 billion. We are talking about the retirement money that would keep millions of people across the country living at the standard they have been promised. We are talking about money that would be taken off people's paycheques whether they wanted it to be or not, money that could not therefore be put in their RRSPs or used in manners that could allow them to build for their pensions.

When dealing with these vast amounts of money we should proceed with caution and care. We should never put forward legislation for the purpose of making the government look like it has something on its agenda or is more prepared to deal with affairs of state than it is. We could such achieve propaganda goals through less costly means.

I do not know if the text of the bill is substandard. It may be very well drafted. The legislative drafters may have worked closely with the experts. I do not know. I do not have the report to compare the text of the bill and go through that kind of analysis.

However ill prepared the bill may or may not be, from what we have seen of it the bill's general theme is part of a pattern of pension legislation under the government and more particularly the former minister of finance who was responsible for drafting the bill and all the government's prior bills dealing with pension reform. It is a consistent pattern in which the government has said the purpose of pension funds and moneys set aside for pensions is not solely to achieve the best possible return on investment and therefore the best pension income for Canadian seniors and the best security for all Canadians who will one day become senior citizens. It is rather to achieve other political and social goals, some of which may be very worthwhile.

All this will have the consequence of diverting attention from the solitary goal of producing the best possible return on investment and therefore the best level of retirement income for Canadian seniors and the millions of people coming down the pike who will retire, become seniors and depend on the Canada pension plan and various other plans in our pension system.

I will go through a few examples to make the point. There were three key points in the process of redefining the goals of our pension system under the former minister of finance, the hon. member for LaSalle—Émard. First, in 1994-95, early in his tenure, the minister of finance floated a series of trial balloons. Canada faced a tremendous potential shortfall in its ability to raise revenues. We faced enormous deficits. The minister of finance tried to determine whether he could find ways of clawing back revenue from registered retirement pension plans to put it into the hands of the government so it could be changed from tax exempt or tax deferred money into money that was taxable. This would have had dire consequences for those who depend on registered retirement savings plans to take care of their retirement.

In one example, an article in the Financial Post on December 31, 1994 suggested the government might try to place a capital tax on firms through which RRSP investments are made. RRSPs must be invested through a bank, trust company or some other financial institution. The idea was that the capital tax would be placed on these firms based on the invested amounts. It would have been presented as a tax on corporations. It would in fact have been a tax on RRSP capital.

The former finance minister floated another trial balloon in early December which did not work out well or meet with a positive reception. He proposed a 1% capital tax on amounts in RRSPs every year. This would have caused average Canadians to pay a total of $4,141 extra in tax on their RRSPs over the lifetime of the RRSP, with no benefit at the end to reflect the cost. This would have reduced the amount average Canadians had to pay into their RRSPs. It would have reduced their benefits by 36% to give the government a small financial short term benefit as part of its attempt to pay down and eliminate the deficits.

A trial balloon which was successfully implemented was a proposal to raise from 69 to 71 the age at which individuals are forced to roll over their RRSPs into RRIFs. This has a significant impact on people who are still working at age 69 and can reasonably expect to live for many more years and require substantial retirement income.

Second, the attack focused on old age security. Many people have heard that the Canada pension plan has not been properly financed for the past couple of decades. The old age security system suffers from similar problems. The problems are not accounted for in quite the same way and are therefore not as visible and have not received as much publicity. However many billions of dollars of pension income have been promised which may not be deliverable by the federal government.

To deal with this the former finance minister came up with the idea of replacing old age security or OAS with something called the seniors benefit. Fortunately, such a hue and cry was raised by my own party in opposition, the then reform party, and by seniors groups like the Canadian Association of Retired Persons that the bill was killed. The bill's goal was to raise the clawback, the marginal tax rate paid by senior citizens, on money they received through OAS.

Effectively, billions of dollars would be saved or captured by the government, of course captured in the form of reduced income for Canadian seniors. Moreover it would have had the impact of causing Canadians not yet in their senior years to say there is no point in setting aside money in their RRSPs because when they get to retirement age they can expect to see, depending on their income, as much as 90% of the money they put in taxed back by the government through its new hidden clawback disguised under the name of the seniors benefit. That was the second wing of the former finance minister's effort to change the purpose of our pension system from providing the best possible income for Canadian seniors and on to other government priorities like deficit reduction.

His third attempt was the changes to the Canada pension plan. That process was started in 1997 with an act that was passed by the minister raising the payroll tax significantly and creating the Canada Pension Plan Investment Board. The process is being completed today with the current legislation. I want to give some examples of the things that the new board's mandate will cause it to invest money on a basis other than producing the best possible return on investment.

In an article in the Financial Post on July 17, 2000 we read that a number of people were being appointed to the board, including some with excellent credentials, such as a past chairman of the Investment Dealers Association of Canada, John MacNaughton. The article praises that appointment but adds:

The investment board opens the door to demands that collective equity funds be used for collective equity goals--

Collective equity funds are funds in the Canada pension plan investment plan.

--to meet ethical criteria, stabilize the stock market or develop an industrial strategy. And if the politicians so desire, Mr. MacNaughton can be replaced.

No sooner had Mr. MacNaughton announced the board's splendid returns than the NDP finance critic was urging the finance minister to intervene in the board's decision making. He recommended it be instructed not to invest in companies that profit from human rights abuses or threats to health. Mr. Martin replied that Mr. Nystrom's concerns were to be taken “quite seriously”. That is the beginning of a process we are going to see of CPP funds being restricted in how they can be used, being tapped for other uses and when necessary, individuals being appointed to the board who will be compliant in that process.

Another example has been on the former finance minister's mind for a long time. This is from the Toronto Star of January 26, 1990 dateline Halifax.

The Canada pension plan should be broken up, and its money used to set up regional funds to back promising businesses across the country, Liberal leadership candidate Paul Martin says.... Money now going to the Canada pension plan should be channelled into a chain of regional funds across the country.

The following is a direct quote from the former finance minister who was a Liberal leadership candidate then as now:

Take the savings of Atlantic Canadians, kick-start it with federal government money and allow the money to back Nova Scotia entrepreneurs who are going to create jobs, Mr. Martin told students.

[Species at Risk Act, June 10th, 2002]

moved:

Motion No. 21

That Bill C-5, in Clause 10, be amended by replacing lines 39 to 45 on page 9 and lines 1 to 3 on page 10 with the following:

“10. (1) A competent minister may, after consultation with every other competent minister, enter into an agreement in respect of the administration of this Act with

(a) any other minister of the Crown;

(b) any provincial, territorial, municipal or aboriginal government;

(c) a wildlife management board, in respect of any lands specified in a land claims agreement in respect of which the board has authorization to perform the functions specified in the land claims agreement;

(d) any landowner or authorized resource user, or any other person considered by the competent minister to be directly affected by the administration of the Act; or

(e) any other person if the competent minister considers that it is appropriate for the administration of this Act to enter into an agreement with that person.

(2) Before entering into an agreement referred to in subsection (1), the competent minister shall

(a) publish the proposed agreement in the public registry for a period of thirty days; and

(b) after the expiry of that period, consult with all persons who it is reasonable to believe may be affected by the agreement.”

[Main Estimates, 2002-03, June 6th, 2002]

Mr. Speaker, there is a systemic problem that produces the kinds of dilemmas that we get here. It is indicated by the vast amount of money that my hon. colleague just cited.

When government is this large and involved in the economy in so many ways, not just in the overtly public aspects of the economy where we all understand what is involved in running, for example, the Canada pension plan or the various other large programs, but when it is involved in these vast capacities in the private part of the economy, then the potential for a conflict of interest becomes almost overwhelming, almost unavoidable.

Everybody depends upon some form of government largesse to get by. When that is discretionary, as of course it often is, and sometimes it must be when a program is designed in a certain way, the result is that we have in a sense one giant conflict of interest between the public and the private sector. There is no clear dividing line between where the private ends and the public starts. This means that the government can choose winners and losers.

Once the government decides that player A will be the winner and player B will be the loser, inevitably both sides will lobby the government in whatever way they can. They may lobby privately, which is the problem we have been addressing in the House over the past few weeks, but they can also lobby publicly and try to launch campaigns in the media to sway the government one way or the other. We see this most distinctly in the procurement for military goods, which is an area that is definitely unavoidable, but we also see it with other kinds of procurement.

When we have this kind of extensive government involvement in the private parts of the economy, I am afraid there is no solution. The obvious overall solution is to roll back government's involvement and say that government should be involved in providing those services that we would describe as welfare state services on which there is a consensus in this society, and not in doing other things beyond those services and the maintenance of law, order, defence and the other basic functions of government.