Mr. John Richardson

I have just heard the booming voice of the biggest teller of tall tales we have ever heard in this House.

What we have done is avert a crisis and we are doing it responsibly. Our government acting in co-operation with our provincial partners took the lead to restore financial footing of the plan. We held 33 sessions in 18 cities, hearing more than 270 former presentations from Canadians on the plan including young Canadians.

Canadians and young Canadians in particular have no hesitations in asking us to preserve the plan, strengthen its finances, improve its investment practice, and we are doing that. This bill addresses the concerns raised in our national hearings and again we thank the Prime Minister and the Minister of Finance for their visionary leadership on the issue.

However, do not take our word for it. Listen to the words of others. The minister of finance of Ontario, a hero to many Reformers, on February 15, 1997 stated: “We have protected benefits for pensioners and secured a sound financial future for the plan and the people who need it”.

Christopher Clark of the Canadian Council on Social Development says: “It is highly ironic that proponents of dumping the Canada pension plan for private RRSP schemes often defend the idea in the name of intergenerational equity because it would be cheaper. It is neither equitable nor cheaper. As is the case with most quick fix privatization proposals, it sounds too good and easy to be true, and it probably is”.

The head of Business Council on National Issues agrees with him: “This agreement places Canada at the forefront of industrialized nations with problems linked to an aging population”.

Allan Tough, an actuary from Alberta, states in the Calgary Herald the importance of acting now: “With any problem it is better to face up to it now rather than later. The longer you delay, the worse it gets. A 9.9% contribution rate sounds definitely better for my children than going to 14% later”.

David Crane of the Toronto Star commented: “The announcement of higher premiums for the Canada pension plan should reassure Canadians on the long term viability of the plan to which all workers contribute”.

The CPP has become a key component of our national pension system. The amendments to the plan contained in Bill C-2 are designed as a package to stabilize the plan and ensure that it will continue to meet the needs of Canadians. If we continue forward ignoring reform to the pension system we can guarantee there will be no pension for Canadians and that is simply not an option. That is why I stand in my place and support this bold move to save this cherished covenant with working Canadians.

Mr. Gordon Earle (Halifax West, NDP)

Madam Speaker, I am pleased to rise to speak for a few moments on Bill C-2, an act to establish the Canada pension plan investment board and to amend the Canada Pension Plan and Old Age Security Act and to make consequential amendments to other acts. What a title and what a problem the government is creating with this bill.

As has already been indicated by previous speakers, this bill attempts to do a number of things, namely to discontinue the Canada pension plan advisory board and establish a Canada pension plan investment board, the main function of which will be to manage and invest Canada pension plan funds, to amend the contribution, benefit and funding provisions of the Canada pension plan, to tighten the eligibility for disability benefits and the rules for combining survivor and disability benefits and survivor and retirement benefits. It reduces the death benefit, it reduces the maximum CPP retirement pension through its formula for calculating retirement pensions.

Another thing this bill attempts to do involves harmonizing. We in Nova Scotia know that dreaded word, harmonizing, very well because we have the harmonized sales tax. This bill attempts to harmonize the CPP disability benefits with provincial workers compensation benefits and various other benefits, including those received from municipalities and private insurers.

As well Bill C-2 amends the Canada Pension Plan and Old Age Security Act with respect to information sharing, investigations and penalties. Indeed some of the clauses regarding information sharing and investigations require close scrutiny but that will be done at a later time.

Suffice it to say for now that we are opposed to this bill because it erodes the public pension system and the universality of that system. It erodes the system that was established in 1966 to provide all members of the paid labour force in Canada a base upon which to build their retirement income, as well as provide benefits in the case of serious disability or death.

The changes to the public pension system as proposed by this bill continue the trend of the Liberal government of penalizing the most vulnerable members of our society: low income workers, many of whom are women, the disabled and seniors. Again with respect to seniors, the changes proposed by this bill regarding OAS and GIS have profound implications for seniors and the income they can look forward to under the new seniors benefit proposal.

The government is creating more difficulties for people by introducing a bill that will force low income workers to pay more in contributions, that will cause fewer people to obtain benefits by tightening the eligibility for disability, that will create greater clawbacks on seniors' incomes, that will take away a person's right to have his or her own benefit by consolidating the income of both spouses. Rather than creating these kinds of difficulties through Bill C-2, we believe the government would be better advised to spend its time correcting the problems which already exist in the Canada pension plan rather than creating new problems.

I am referring specifically to the kinds of problems which we see every day in our constituency offices. By far the largest volume of case work in Halifax West concerns Canada pension plan disability. The same I believe is true in other NDP metro ridings and I am sure across the province and perhaps even across the country.

The main complaint is the lengthy process and red tape which applicants must go through before a final decision is rendered. First is the initial application with numerous forms and medical reports to assess eligibility. Apparently almost everyone is now rejected at this initial level in keeping with a decision over the last few years to apply the definition of severe and prolonged disability more strictly for eligibility purposes, and Bill C-2 would put further restrictions on eligibility.

Following a rejection at the first level there is an appeal by way of a request for reconsideration which must be filed with the minister within 90 days. Then there is a second level of appeal to an independent, note the word independent, review tribunal. This must be filed within 90 days but may be extended at the discretion of the minister. Finally, applicants or the minister may appeal a decision of the review tribunal to the pension appeals board within another 90 days. Claimants dissatisfied with the board's decision may then ask for a reconsideration within 90 days but this would entail more waiting and would likely be to no avail.

The administrative procedures and hearings involved in all of these are long. It is not uncommon to have applicants waiting for years before a final decision is rendered, sometimes with sad consequences.

A constituent applied four years ago and has since developed terminal cancer. Last month he was told his application had been approved but even now it appears that the department is backtracking and wants more clarification on a range of items. This person is suffering with terminal cancer and is still unable to get disability benefits.

My constituency assistant had a meeting with two CPP officials last Thursday. He was informed that there has been an attempt, which started last June, to speed up the process by regionalizing the services somewhat. However there is still a backlog at the pension appeals board level. The board is backlogged and is unable to hear cases expeditiously.

Figures that we have obtained from Human Resources Development Canada suggest a trend starting in 1995 to reject most of the applications for CPP disability. In 1993 they approved 69%. This was down to 44% in 1995 and sank to 33% in 1996. I am told that Nova Scotia has the highest per capita CPP disability claimants. If that is the case, this trend of rejecting applications is particularly harsh in our province.

A major problem with this program is that the minister can and often does automatically appeal any decision below the appeals board level. When the independent review tribunal has ruled in favour of an applicant the minister can appeal that decision, and the matter becomes bogged down in a time consuming process. No doubt the primary reason for this tactic is to save money, but this is being achieved on the backs of the disabled.

Another troubling issue is that recipients of CPP disability benefits who try to work are penalized. Benefits are withdrawn if they work for over three months. This is most discouraging to the disabled who usually have to go through considerable personal sacrifices to supplement meagre benefits with a meagre income. The system should be working to improve the lives of the disabled, not to penalize them for trying to seek a more active and productive life.

In conclusion, we cannot support Bill C-2 as it does nothing to correct the problems that are currently experienced, but rather introduces measures to make life even more difficult for low wage workers, women, young people, seniors and the disabled.

I wish to move a subamendment. I move:

That the amendment be modified by inserting after the words “young Canadians” the following: “and more particularly, to women, the disabled, those eligible for survivors' benefits, and low income Canadians”.

The amendment is in order. Debate is on the subamendment.

Mr. Guy St-Julien (Abitibi, Lib.)

Madam Speaker, it is a pleasure for me to speak on Bill C-2, which will have an impact on the future of Canadians.

In keeping with tradition, I would like to thank the electors of Abitibi who put their trust in me for the next four years.

I represent the largest riding in the ten provinces of Canada. It covers an area of over 802 square kilometres and has a population of 92,000. To give you an idea of its size, it is equivalent to more than half the province of Quebec. There are four PQ members of the National Assembly doing the same work I am as a federal MP. In other words, in the riding of Abitibi, there are four provincial MNAs and that costs four times as much.

To get back to the bill, in compliance with the law, changes to the Canada pension plan must be approved by at least two thirds of the provinces representing two thirds of the country's population. This requirement has been met.

This bill represents a significant step toward preserving, as we said we would, the Canadian income and retirement system. The changes will ensure the plan's viability over the long term while making it fairer and more affordable for future generations of Canadians.

They recognize that the Canada pension plan is fundamental to the public pension system. The proposed changes will strengthen our system to permit it to continue to provide Canadians with the opportunity to create for themselves new and sufficient retirement income.

To ensure the future of the Canada pension plan for all Canadians, last February the federal and provincial governments agreed on changes to the plan to ensure its long term financial viability, while making it more fair and more affordable for future generations.

The proposed changes have the support of the federal government and the provinces of Newfoundland, Nova Scotia, New Brunswick, Prince Edward Island, Quebec especially, Ontario, Manitoba and Alberta.

However I must point out that Quebec administers a plan which parallels the Canada pension plan, that is, the Quebec pension plan. The Government of Quebec, through the Hon. Lucien Bouchard, recently announced amendments to the Quebec pension plan comparable to the proposed changes to the CPP, with the result that premiums will be the same.

Let us take a look at this new investment policy. There are approximately two years' worth of benefits in the CPP at the present time. The assets not immediately required to pay benefits are placed in non-negotiable instruments issued by the provinces. The provinces pay interest on these loans at the rate of long-term federal government bonds, as set at the time they were issued.

Greater capitalization of the CPP will result in significant growth of the assets from approximately two years of benefits to four or five years of benefits over the next twenty years. A new investment policy is necessary to get the best return possible in the interests of contributors. A higher return on the plan's assets will help hold the line on increases in premiums.

The ministers of all provinces, including Quebec, agreed on the following measures. The assets of the CPP will be invested in a diversified portfolio of instruments in the best interests of the contributors and beneficiaries. This new policy is consistent with that of most other pension funds in Canada, and in particular with that of the Quebec pension plan.

The assets will be managed in a professional manner, independent of governments, by an investment board, which will periodically report to the public and to the various governments on its activities.

Finally, with respect to investments, the board will be subject to rules similar to those applying to other pension funds in Canada.

I noticed that schedule II contains a comparison of existing CPP provisions and the proposed changes. This is something we should also mention: early retirement, from age 60, no change; normal retirement, at 65, no change; late retirement, up to 70 years of age, no change. There is no change in the new bill to the maximum annual earnings with pension entitlement, indexed to salary.

There will be no change to the ceiling for the combined survivor's and pension benefit in the new bill. All benefits, except death benefits, are now fully indexed. There will be no changes.

There are several stages to go through still. The bill complies with the terms and conditions agreed upon with the provinces in February regarding such things as a move toward fuller funding, with the new investment policy, changes to the formula for calculating certain benefits and a tightening of the administration of benefits.

It is always important to keep our people informed of what goes on in Parliament.

Mrs. Elsie Wayne (Saint John, PC)

Mr. Speaker, for the first time in our history a whole generation of Canadians is unsure that it will be able to enjoy the same quality of life that their parents did.

Many Canadians worry that some of our most fundamental institutions and values, such as health care and the Canada pension plan, might not be there for them and their families when they need it.

Canadians know that they can no longer count on the federal government for everything. There was a time when they did, no matter which political party was there. We all know that. Everybody was looking for the government to take care of them, and the political parties were only too happy to promise everything. Canadians have every right to expect the federal government to set the right priorities and policies, and to chart the right course to achieve what they need for the future.

We need an innovative, realistic plan that sets new priorities for government as part of a long-term vision for our future. One of these priorities is security of retirement for all Canadians, and more especially, the restoration of the Canada pension plan.

Canadians are looking for leaders that are committed to maintaining the CPP as a central component of our social safety net. They want obligations of the CPP to be clearly defined. They want it to be put on a sound financial footing, and they want it to be managed efficiently now and in the future.

What is wrong with the CPP? For one thing, it is bordering on bankruptcy. The rapid aging of our population is one of the main reasons. I know that because they just have to take a look at my grey hair. My hon. friend across the way might have a little dye in his—I am not sure—but I think he is almost as grey as I am.

Today, for every person of retirement age there are five persons of working age. In 20 years, there will be one person of retirement age for every four persons of working age. When today's youth retire 40 years from now, that ratio will be just one to three. We have young pages sitting here. We want to make sure that they have a good retirement pension plan.

In 30 years, the average age of Canadians will be higher than the present average age of the population of Florida, with no corresponding adjustment in temperature.

A lower birth rate and increased life expectancy along with a sharp rise in disability claims also puts new stress on the CPP. The CPP has also been jeopardized by inadequate contribution levels and inefficient plan management as a consequence of faulty legislation.

CPP funds, for instance, have been lent to the provinces at the rate Ottawa pays on its 20-year bonds. This is less than what the provinces pay other bond holders. It is also less than what private sector plans earn. No wonder Canadians think the government cannot add.

The CPP must be changed now if it is to provide pensions in the future. Older Canadians have earned the right to a secure retirement. Middle class workers cannot afford to pay more, and I know that because I had a young mother come to me just last week. She came with her husband and said “It will cost us $700 more, Mrs. Wayne. We have two children. We are trying to save every month for their education. We don't want any handouts but we can't afford that $700 more”.

Younger Canadians want the CPP to be there when they need it, and they expect it to be flexible. They expect government to plan for the future in the same way Canadians plan for their future.

How are some proposing to preserve the CPP? The Liberal plan to fix the CPP is an $11 billion tax hike on working Canadians and employers over the next six years. This is coupled with already punitively high EI levels which the Minister of Finance has refused to lower, despite a substantially high fund surplus. Such a traumatic tax grab would have a devastating affect on job creation. This is an attack on the middle class taxpayers, families and small businesses.

The Reform's plan is even simpler. Just scrap it and replace the CPP with super RRSPs. That is even more scary when we remember that at its last convention the Reform Party advocated eliminating the RRSP plan. I do not know whether it has any plan at all?

Under the Reform Party's plan Canadians would be given recognition bonds to reflect the CPP credits they have already earned. This approach would leave young Canadians paying for the CPP benefits of their grandparents, for the recognition bonds due to their parents and for their own retirement savings. On top of all of that, it fails to provide any numbers as to how it will pay for its proposals. It reneges on a commitment to Canadians made by successive governments. It ignores the profound attachment that Canadians have for this social program in favour of an extreme ideological position.

Individuals also have to assume the risk of inflation in their investment decisions under the Reform Party's plan. The disability coverage now included in the CPP would be eliminated.

Both the Liberal Party and Reform Party solutions are shortsighted and self-defeating. The security, affordability and stability of the CPP are an integral part of the Progressive Conservative Party's plan to address the economic and social insecurity felt by so many Canadians.

We set out three key benchmarks to do so. Make the CPP self-financing, offset premium increases with tax cuts and encourage more RRSP savings. How would we meet these objectives? We would increase CPP contribution rates to levels adequate to ensure the long-term viability of the plan. However, these increased contributions would be offset by the substantial reductions of personal income tax rates and EI premiums. This means putting more money into the plan without asking Canadians to pick up the tab and without creating more threats to job creation. We would also make provisions to finance the extra cost per year of seniors benefits resulting from demographic change.

Canadians also need to know that never again will their pension funds be mismanaged the way they have been in the past. They deserve a greater return on their investment. To ensure this we would transfer all CPP funds to a separately managed Canada pension trust as is already done in Quebec. We would structure the Canada pension trust to be completely independent of the government of the day. We would select the Canada trustees on a non-partisan basis, recruiting experts in the financial business and actuarial community in consultation with the provinces.

The mandate of the Canada pension trust and its trustees would be to advise the government on required contribution levels and to select the best private managers acceptable to the industry to invest the funds growing surplus to secure long-term returns.

It is most important that we guarantee all our young people today, not just the ones who are sitting in the House, but those across the country that there will be a retirement plan, a Canada pension plan for them. It is up to each and every one of us in the House to make sure that this happens. Now it is our generation's turn to become nation builders. Part of that responsibility is to ensure that Canadians of all ages and all circumstances can count on a secure retirement.

I look forward to debating this issue in the future because this must take place.

Mr. Charles Hubbard (Miramichi, Lib.)

Mr. Speaker, congratulations on your selection as Speaker. We hope all members of the House will co-operate with you. I know you are doing a very fine job with it.

I am from the Miramichi. This is my first speech since the new Parliament began. Today we in the Miramichi have heard of the resignation of our premier. His absence from New Brunswick and the political scene in Canada is certainly going to be a great loss for all of us as Canadians. I want to pay tribute to the many years that Frank spent, some 15 years, representing Miramichi, and for the past 10 years as premier of the province of New Brunswick.

Over that period of time he had to exert a good deal of effort looking at the pension funds in the province of New Brunswick and trying to find some solutions to their funding for future generations.

Today as we consider the Canada pension plan, my constituents and Canadians in general would be shocked to hear some of the statements that are being made by members opposite. I have heard very few complaints about the plan not being effective. I have heard very few concerns about people not wanting to participate in the plan. It is looked upon as a very important part of that great income security system that the Liberal Party and Liberal governments have made for this country over the past several generations.

Today in Canada there are approximately five million Canadians who in one way or another are receiving payments from the Canada pension plan. We have approximately 3.7 million plus another 1.2 million under the Quebec pension plan. Of that group some 2.4 million Canadians and 800,000 under the Quebec plan are receiving retirement benefits. In the disability portion of the plan we have some 300,000 Canadians in other provinces along with another 50,000 people in the province of Quebec.

It is a good plan. However, in the next few years the plan will need more money to support future Canadians as they require the benefits from it.

When I hear of the demands of the opposition that we should move away from a Canada pension plan and toward a system of RRSPs I have to remind the House that RRSPs do not have the great benefits that are shared by those who participate in the Canada pension plan.

Today contributions to the plan are some 5.85% shared by employees and employers. However, future contributions will eventually reach some 9.9% to be shared by those two groups.

The CPP does not only include retirement. It also includes a great number of other benefits to the Canadian people. Those who pay into the plan are protected against disability. Those who pay into the plan have their spouses protected in case of death or disability. Those who participate in the plan have their children protected until they either finish school or if they continue in school, until they are 25 years of age.

This plan is essential and is regarded as being essential by most Canadians. It is a form of income security. There is a basic understanding among the Canadian workforce that workers will be able to receive benefits if they become sick for an extended period of time, if they become injured and they cannot work or if they eventually are not able to participate for other given reasons.

It is very important for us to share in the great benefits the economy of this nation has. We must make sure as members of Parliament that we indicate to Canadians that we are willing to participate in a program where all Canadians can share in the benefits of our country.

We know there are private plans out there. When the committee looks at the Canada pension plan bill it realizes that it has to look at some of the concerns that are being expressed here today.

The member for Saint John, for example, recommended that we should look in terms of maybe trying to reduce income tax as we increase Canada pension benefits. Certainly this might be a fact that could be considered by our Minister of Finance.

We might also look at how various calculations are made. It is certainly important that we look at how the plan will affect us in the future and how the calculations will try to make sure that we get the optimum level of interest in terms of where that plan is invested.

I think it is good that we are moving away from the system whereby the funds were available to the provinces at very low interest rates. It certainly will give a better return to the investment. We have an investment of nearly $40 billion and probably through a better system of investing on the open market the plan can gain more money for future people involved with Canada pensions.

I would hope, in terms of the eventual outcome, as it goes to committee we can look at the many suggestions that are being made to the House today, that we will eventually come up with a good system by which all Canadians can participate and by which all of us, in terms of being members of this Parliament, can ensure that Canadians are guaranteed a safe and secure pension plan that will apply to all workers in the country.

Mr. John Reynolds (West Vancouver—Sunshine Coast, Ref.)

Mr. Speaker, this is the first opportunity I have had to speak since the election. I want to thank Herb Grubel who represented Howe Sound before me. I know Herb served this House very well in the one term he was here. He is now back at Simon Fraser University and working with the Fraser Institute. I know all members would like me to wish him well. I would like to, on behalf of all the constituents, thank him for the job he did while he was here.

I would also like to congratulate you, Mr. Speaker, on your re-election and the election of all the deputy Speakers. I was here 25 years ago making a speech in this House in 1972 as a Conservative member of Parliament. It is quite interesting to listen to the speeches in this debate. In 25 years some things do not change.

I thank the constituents of West Vancouver—Sunshine Coast for sending me back. As my youngest son said to me, that was a quarter of a century ago. It was before he was even born, but I have six other children who were already born. I am not sure they enjoyed my time when I was here before because it is a lot different when you are 30 years of age with five children and be a member of Parliament than it is when you are 55 years of age and you have all your family grown up.

I can thank my constituents for sending me here. I know I am going to enjoy this session. I am certainly enjoying being a Reform member of Parliament. When I look back and read the first speech I ever made in this House, I could say most of the same things today. A lot of things do not change.

Let us look at the Canada pension plan. I heard my good friend, the member of the Tory party, speaking a couple of times before me talking about what the Tories would do and I listened to what the Liberals would do, yet this plan is $560 billion in debt. Some things just do not change. We have a major debt in this country and we have a pension plan that is not working very well in this country.

I think the people in this country, as this debate goes along, are going to start really wanting to know what is happening with the Canada pension plan. Where are they going to be when they want to retire? I think it is pretty scary. It is scary when I hear Liberal members on the other side. I heard a member from the Conservative Party talking about how Reform wanted to cancel the RRSP. The election is over. They should get that nonsense out of their heads. This party never said it was going to cancel RRSPs. Our plan for the Canada pension plan is one that should be listened to by the Canadian people and should be listened to by all sides of this House because it makes a lot of common sense.

I heard a member on the other side the other day talking about Bre-X because our plan would involve using the private sector. What would happen to all these poor pensioners if they had been involved in Bre-X? Even the member does not know how pension plans invest their money or it is just a straight scare tactic. There are bad companies every year in the stock market.

Companies that invest in the stock market do not just invest in one company. The Ontario teacher's pension plan in 1995 was worth $25 billion, in 1996 $35 billion and in April 1996 was up to $41 billion. It probably had shares in Bre-X. Most Canadian pension plans did. It was on the Toronto stock exchange. Thank God it was not a BSE stock or we on the west coast would have taken all the heat for that one.

Bre-X was a disaster as far as a stock is concerned. But all the pension plans went up last year even with the Bre-X situation. If we look at the average return, the Ontario teacher's pension plan has earned 16.7% in 1997 so far and over four years it averaged 12.1%. That is not a bad return. The overall performance in the private sector is 8% to 10% but the teacher's plan is 16.7% and the CPP, 2%. By the year 2000 it will be 1.8%. How can we expect any Canadian to think they can retire on a pension plan that is going to give them 1.8% to 2%?

The private sector in this country does a good job. Why are we here not more concerned about a government that wants us to do a CPP that will only give a small amount of money? The CPP is going to have $10 billion annually by the year 2003. It is a tax grab. It is like the EI. There will be a few billion in the bank. Where is going to come from? It will come from the people who work, the people who want a fair pension when they retire. Every member in the House knows what they think about our pension plan. This plan does not come anywhere close. Most guys who retired after the last election get as much in a month as these people will get in a year with this plan.

Even the Quebec pension plan is better managed than the CPP. It is a province that has its own pension plan and it has done a better job than the federal government. Maybe my province of British Columbia should look at opting out the CPP and getting its own pension plan. Maybe it could do a better job.

Individual premiums are going to increase from $945 to $1,645 per year, and this is what the average Canadian has to think about. To the average taxpayer that is a lot of money. We are talking about $700.

A lot of people are probably a bit jaded about the money, but to the average constituent $700 is a lot of money. If there are two people working that is $1,400, over $100 a month. We in the House have to start thinking about the average Canadian and not relating to our pension plan which is what we are doing overall.

What are average Canadians going to do when they have to put out this extra money? How are they going to look after their families? We in the House do not seem to think much about that.

We are asking the young people to assume a national debt of $600 billion and now we are asking them to pay the CPP debt at the same time. Young people in this country are getting very frustrated because they cannot get ahead. They want a better pension plan and a better tax system. We all know that. The debate in this House in this session is the lead off to why we are going to see a revolution in this country to change the tax system. The CPP is just going to be the start. People are fed up paying more and more money to the government for fewer services.

The Liberal minister said they are going to get a better return on investment by setting up a new CPP investment board appointed by cabinet. Even the Liberals laugh at that because they know. At least they could bring it to the House or to committee so we could all look at where it was going.

We have some of the best companies in the world here in Canada. Some American companies have been bought out because they have been very successful in the mutual fund business. Why are we not using those companies just we are suggesting? Use the companies in Canada to help us invest the CPP. Put it right into the private sector which has done well. A politically driven board is not going to solve the CPP problems in the country.

The CPP needs an overall review. It was a nice thought when it was started because we all wanted a pension plan. But it has not worked and people cannot live on $8,844 per year. Anybody who thinks they can is not looking at reality.

Modern day pension plans are defined contribution plans. These take many forms, but in these plans the contributor personally owns the contribution and the accrued growth. That is what is extremely important and the public should remember that, defined contribution plans.

My party is looking at this type of plan to help Canadians get a plan which will give them something they can retire on.

The government is asking employees and employers to increase their CPP contributions. That will hurt small business. If we took a portion of that money and put it into a private sector plan, instead of retiring on $8,000 a year the numbers could get up to $24,000, $30,000 or $40,000 based on what people have been investing in mutual funds over the last 100 years since they have been available.

Any member of the House who has RRSPs in a mutual fund company will know that they have grown a lot more than the CPP in the last few years. Why do we not give Canadians the chance to have their individual account where they can see the money going in every month and receive a statement every month showing the growth in the plan, which would be protected by both the government and the private sector?

If the government does not believe in that it does not believe in this country. It does not believe in the private sector which runs this country. That is a shame.

Canadians have to take some responsibility for their own plans and the way to do that is by allowing them to participate.

I want to talk about the Ontario teachers pension plan and other major pension plans in the country. Those plans are doing better than the government pension plan. They are being run by the private sector. Even the most socialistic of groups that have a pension plan run by the private sector is doing better than it would with the CPP.

I implore the government to listen to what is being said in the House. Let us look at the pension plan which the Reform Party is recommending to Canada. Let us ensure that this debate goes on long enough so that Canadian people will know that this plan is the second biggest tax grab in our country's history.

Hon. Don Boudria (Leader of the Government in the House of Commons, Lib.)

Mr. Speaker, we have been unable to reach an agreement pursuant to Standing Order 78(1) or 78(2) with respect to proceedings at the second reading stage of Bill C-2, an act to establish the Canada Pension Plan Investment Board and to amend the Canada Pension Plan and the Old Age Security Act and to make consequential amendments to other acts.

Pursuant to Standing Order 78(3), I give notice that, at the next sitting of the House, I will be moving a motion for the purpose of allotting a specified number of days or hours for the consideration and disposal of proceedings at that stage.

Shame, shame.

Mr. Roy Cullen (Etobicoke North, Lib.)

Mr. Speaker, I would like to congratulate the hon. member for West Vancouver—Sunshine Coast on his maiden speech in this House after an absence of 25 years. Perhaps there was a good reason for his return to debate the retirement system of Canada. I know the member opposite has a distinguished career in public service in British Columbia and I welcome his return to the House.

I am very pleased to speak to Bill C-2, an act to establish the Canada pension plan investment board and to amend the Canada pension plan. This bill is a very important piece of legislation.

We cannot let our seniors down and we have to ensure that all Canadians have a sound pension plan for the future.

We realized some time ago that the Canada pension plan was not on very sound footing. We also understand that Canadians look to the federal government for leadership when it comes to the retirement income systems of Canada. We realized that the Canada pension plan is not unlike many pension plans around the world, whether they be private or public pension plans.

We knew we had to put the plan on a sound financial footing. There are many pension plans facing the same challenges. With changing demographics, changes in the birth rates and increasing life expectancy many pension plans in the public sector and in the private sector are facing challenges. It is not uncommon in the private sector to have unfunded pension plans, which only recently companies are beginning to address.

While the situation we found ourselves in with respect to the Canada pension plan was nothing that we are particularly proud of, it is not unlike many situations in many countries and in many private pension plans. Our government is taking the lead by making amendments to the act and by putting the Canada pension plan on a sound footing.

We realized that we had to make the plan fiscally sound, so we began consultations across Canada. We spoke to all Canadians. Canadians told us that they wanted the federal government to play a leadership role.

We worked with the provinces and basically we began to look at three different scenarios. One scenario was that we increase the contributions to the Canada pension plan. The second alternative was that we decrease the benefits under the Canada pension plan. The third scenario was that we look at some combination of the two.

We sat down with Canadians, we sat down with the provinces and we came up with a solution that I think is the fairest and most reasonable solution. In doing so we have avoided radical changes to benefits.

With respect to contributions, the rates will rise over the next six years to 9.9% of contributing earnings. That is 4.95% for each employee and employer. We avoided the increase of 14.2% that was actually estimated by the chief actuary.

Bill C-2 will establish the Canada Pension Plan Investment Board which will allow the invested funds to be put to uses that typically most pension funds have the capacity to invest in. They will not be restricted to debt instruments. They will have the capacity to look at equity and in so doing, they will be able to earn a greater return from the pension plan funds that are invested. This legislation will allow that to happen. Notwithstanding the fact that the Canada pension plan until this point in time has not had the flexibility that other pension plans would be permitted, the pension plan has still yielded an average of about 10% which is not good enough.

But when the opposition parties rant and rave about this hopelessly inadequate Canada pension plan I think they should sharpen their pencils. They talk about a real rate of return of 6%. A real rate of return is the nominal rate of return minus inflation. They say their self-directed super RRSP given that kind of return will put the Canada pension plan system on a sound footing.

First, Canadians are saying that they want a public pension system. Canadians are saying they want the federal government and the provinces involved. If Reform members say they want a real rate of return of 6%, then a lot of pension plans would be doing very well with a real rate of return of 6%.

We also have to look at the experience of other countries. There are some small countries that have experimented with the proposal that Reform discusses. What we have determined is that the administration costs for these super directed RRSPs or private plans are approaching 10% even though we do not have a lot of experience with them. There are only a few years of experience. Compare that with the administration burden of the Canada pension plan at 2%.

The proposal by the Reform Party would certainly make a lot of stockbrokers, investment advisers and retirement planners very rich and wealthy, but I am wondering what it would do for Canadians. In a self-directed RRSP would the average Canadian citizen have to sit there at night and work over all the numbers or hire some investment counsellor? What about the Canadian public not all of whom have the sophistication of the investors sitting opposite? How are they going to deal with securing their retirement future?

I guess it would do very well for all the friends of the Reform Party, their investment brokers and counsellors. Perhaps that is where they have been getting these suggestions from. Have they actually been listening to Canadians? I doubt it very much.

Another irony is that with the Reform proposal even though Reformers will not put it out very publicly, contributions will go to 14% whereas our contribution rate maxes out at about 9.9%. It will do very well for all the investment advisers and stockbrokers in the Reform Party's constituencies, but what about the average Canadian?

The private plan Reformers are proposing does not have the features of a public pension plan. For example, what about people who become disabled? Is that part of their plan as well? Will they look after them? What about survivor benefits? Does their proposal contemplate that scenario?

Our legislation on which we have a consensus of the vast majority of the provinces does not affect people who are disabled. It treats them in a fair and equitable manner. It contemplates survivor benefits. And it does not affect anybody over 65 years of age as of December 31, 1997. The benefits will remain fully indexed to inflation and all the current retirement ages remain the same.

I think we have struck a very reasonable balance. In fact if we look at the ratio of the changes we made to the benefits as opposed to the contributions, 25% can be attributed to the changes in retirement benefits and 75% can be attributed to changes in the contribution rate and also the actuarial estimates of the income that will come from this more advantageously managed fund.

Those who say that the CPP is a tax grab either do not understand economics or they do not understand tax. The contributions to the Canada pension plan go into a separately administered fund. They never hit consolidated revenue ever, ever, ever. Members should read the estimates and they will discover that the Canada pension plan is a separately administered pension plan. It goes nowhere near the revenues of the government. If that is not political hyperbole to say it is a tax grab, I don't know what is.

In conclusion, this plan is going to secure the future for all Canadians. It is going to make sure that we look after our current seniors. I am hoping that all members of this House will support this very important bill.

Mr. Antoine Dubé (Lévis, BQ)

Mr. Speaker, I am pleased to take part in the debate on the act to establish the Canada Pension Plan Investment Board and to amend the Canada pension plan and the Old Age Security Act and to make consequential amendments to other acts.

The bill is now at second reading, the stage at which we deal with the underlying principles of the legislation. Like all Bloc Quebecois members who spoke before me, I fully agree with the principle of the bill, since the overall objective of the reform is to preserve the sustainability of a public pension plan. I insist on the word “public”. The Reform Party would rather have private plans. Yesterday, their leader tabled an amendment which basically says: let us stop considering the bill. The Reform Party is opposed to this legislation. It would prefer a super RRSP.

This is my fifth year here, but I am still surprised at some of the things I see in this House, such as the tabling by the NDP of an amendment to the amendment by the Reform Party. As I understand the rules, the purpose of an amendment to an amendment is to improve the original amendment and it implies that we agree with it. It is quite surprising to suddenly see the NDP agree with the Reform Party to reject a proposal from the Liberal government.

I was among those who congratulated the member for Madawaska—Restigouche, first for defeating the former Minister of Human Resources Development during the last election—which is a praiseworthy accomplishment in itself—but also for his speeches on employment insurance.

While the intention may be good, the means used create confusion, unless the words “women”, “disabled”, etc., are added, because it implies that the two parties agree with the Reform Party's amendment seeking to reject the idea of a public pension plan for Canadians, including a number of Quebeckers.

I should point out for the benefit of those who are listening that less than 1% of Quebeckers are affected by this bill, since the Quebec pension plan is in effect in our province. That figure is made up of Quebec residents who, at one time, worked in another province and came back to live in Quebec, and of people who served in the armed forces or the RCMP.

So, at this stage, the issue is whether or not we support the idea of a public pension plan. As for the Bloc Quebecois, I reaffirm that we are in favour of a public pension plan, because it is not true that everyone has the possibility individually, over his or her lifetime, to prepare for retirement by contributing to an RRSP. This is not the case for low wage earners, and I am also thinking of those who are becoming more and more common, unfortunately, the single mothers—and single fathers too—who have difficulties the whole time they are raising their children, even when the children have reached young adulthood and are still pursuing their studies. It is hard for many people, therefore, to contribute to an RRSP.

We absolutely must have a public pension plan so that opportunities at the time of retirement are as equal as possible. I would therefore invite the new NDP members to reflect on this, for I am sure that it falls in line with their usual values.

When one is in favour of something, and has very little time, there is no point in arguing the point further, but I would like, as the member for Lévis, to—

The hon. member for Charlotte, on a point of order.

Mr. Greg Thompson

Mr. Speaker, under the rules of the House, there should be a minister present and I believe that is not the case.

According to someone much more familiar with the rules of the House than the Chair, there is no such requirement.

Mr. Antoine Dubé

Mr. Speaker, the members of the Conservative Party with little to say are interested in points of order.

Two initiatives from groups in the riding of Lévis are similar. While they agree with the principle of a public pension plan, they want people to prepare for retirement as early as they can.

Accordingly, the Association des coopératives d'économie familiale (ACEF) in my riding yesterday invited me to attend the launch of a training course intended to help people of all ages prepare for retirement. They will of course get information to prepare them to save, even a little. I think this applies not only to the people in my riding, but to all ridings, because even if the program is the creation of the south shore ACEF it will be available to all the ACEFs in the various regions of Quebec.

I invite those interested to contact the ACEF. The entire program is aimed at enabling people to come to terms increasingly with the need to prepare for retirement. In 1996, seniors groups met at a summit in my riding. Among other things, they discussed at length the issue of information on retirement and the ACEF responded to their need.

I am concerned about this. Members who sat in the last Parliament will recall that I was the training and youth critic. Since then, I have aged and, since May 15, at 50 years of age, I have been eligible to join seniors clubs. I know many of our colleagues opposite are also in the same position, which means they are able to plan for their own retirement and, more importantly, to help other people do the same, and walk them through the process. As members of Parliament, we have a duty to monitor legislation, and this one in particular.

To conclude, we support this legislation because it is designed to help future generations plan ahead so they are not faced with an empty fund at some point in time. Had the government not introduced this legislation as it did on September 25, action would have been deferred unduly and we would have found ourselves in a situation where the financial security of those coming after us might have been jeopardized. That is why we are in favour of immediately making changes to the plan by, first, increasing premiums because fuller funding is required right away to build a fund out of which pensions can be paid to those who will come after us.

We, members from Quebec, are pleased to note that, from time to time, the federal government imitates the Government of Quebec. As you know, the Caisse de dépôt et placement du Québec is in charge of making sure that the revenue from premiums is invested in businesses to produce the best possible return.

One of the objectives of this bill is to have the board see to it that the amounts collected in the form of premiums are invested in a such a way as to produce the best possible return to ultimately make the retirement fund grow. We, in the Bloc Quebecois, have nothing against that, since, in Quebec, the Caisse de dépôt et placement—which dates back to 1964, I think—has worked wonders and, moreover, fosters economic development.

I will conclude by repeating that we are all in favour of this. At the same time, while being in favour of a public pension system, I think individuals should be encouraged to plan for their retirement, within their means, as early as possible.

Ms. Judi Longfield (Whitby—Ajax, Lib.)

Mr. Speaker, I am pleased to participate in this debate. We are discussing the future of our national retirement plan, the Canada pension plan.

The legislation was introduced after talking to Canadians. We asked them about their future and they responded. They asked us to preserve the Canada pension plan. They told us that they needed to know it would be there when they retired or if they became disabled. They also told us they wanted to see some changes. They asked for better financing of the plan. They asked for improved investment practices. They asked that the growing costs of benefits be slowed to ensure the long term stability of the plan.

The government has addressed those concerns. We have put forward a bill that has the support of each provincial government representing two-thirds of our population and three political parties.

I remind members opposite that the bill was first introduced in February 1997 and was a result of joint provincial consultations. It is a first class example of participatory democracy. I cannot think of a better testament to the government's determination to find a solution with broad based support. It goes to our commitment to building and working in partnerships as we confront the challenges facing us on a daily basis.

It is a shame that the governments of Saskatchewan and British Columbia could not see it as the only viable way to guarantee the future of the Canada pension plan, a program I know they value as much as I do.

The CPP is a public plan funded by employer and employee contributions. It is jointly managed by federal and provincial governments. The plan provides retirement pensions and a range of survivor benefits for a family in the event of death.

The Canada pension plan provides a fully indexed pension system. It provides replacement of a quarter of insurable earnings. It provides benefits that are portable and universal. It provides protection against periods of low or no earnings including years spent raising children. It provides benefits to workers who are unable to work due to disability, and death and survivor benefits including benefits for dependants.

Canadians told us they wanted their plan fixed now, not scrapped, not privatized. We have come up with a solution that is fair, equitable and balanced. I am proud to stand here in support of it today.

Our loudest critics are the members across the way. They claim we are ripping off the taxpayer, but the funds generated by this premium increase will not be put into a general revenue fund. They will be held for the sole purpose of providing future CPP payouts. While the fearmongers among us would have us believe this is a sinister tax grab, I remind them that these premiums are no less than a prudent investment in the future of retiring Canadians who are most in the need of this portion of their retirement income.

The critics say they have an alternative. Let us look at their alternative for a moment. Their super RRSP is a fully indexed tax deferred trust fund similar to the conventional RRSPs that promise to pay more with lower contributions, but their scheme does not take into consideration any volatility in the market. It assumes that all investors will make wise investments. It puts all the risks on the worker. It does not provide benefits for children. It does not provide a child rearing drop out provision and it will not provide indexation.

Reform has not indicated a clear plan of how it would implement the system. For example, what contribution would the employers have to pay, if any? How would they deal with seniors who are already benefiting from the CPP? Who would pick up the tab to provide protection for these pensioners?

Reform says it will guarantee benefits for current seniors, but it does not say how it will provide funding for it. Obviously workers will have to pay twice: once for their RRSP and once again to guarantee the benefit for current seniors. The estimate of the funding that would be required is $18 billion a year.

It has been suggested under their proposal that a retiree might collect $117,000 more over the course of 30 or 40 years, or about $25 a week. This scenario is only correct if they do not drop out, if they do not get disabled and if they actually make their contributions. Let us consider how many actually make RRSP contributions now. It assumes they invest wisely. It assumes they will not be ripped off by a disreputable financial adviser.

The cost to administer over 10 million individual RRSPs and insurance plans would be greater than the administrative costs of the CPP. In 1994 administrative costs of the CPP were $20 per contributor while the administrative cost of an RRSP plan are between $125 and $175. The administrative cost of the Chilean system the Reform holds out as being the model actually costs 10% compared with 2% for the Canada pension plan.

Reform would create jobs to profit the insurance industry and RRSP sellers, but it would not provide a better deal for workers. Under the Reform proposal workers would be asked to put all their eggs in one basket, one RRSP account. We support a mixed system where workers receive a basic benefit from the public plan. Under the CPP individual workers can add RRSPs for extra retirement income if they wish.

The Reform plan would require families to purchase separate insurance to cover disability and death benefits already provided under the CPP. This insurance would be expensive. Reformers do not tell us about that when they tout the effectiveness of their RRSP plan.

The Canadian pension plan is family friendly, something I thought the Reform Party cared about. Our plan covers people who leave the workforce temporarily to look after their children. It is a good example of how Canadians help each with special needs. Under the Reform Party everybody looks after themselves. The Reform Party stand on this issue contradicts its commitment to represent its constituents.

The hon. member for Témiscamingue on a point of order.

Mr. Pierre Brien (Témiscamingue, BQ)

Mr. Speaker, Bloc Quebecois members would appreciate hearing the hon. member's speech, regardless of whether or not they agree with it. We would appreciate hearing her and we would ask you to call some Reform Party members to order. We have trouble hearing the speeches.

Ms. Judi Longfield

Mr. Speaker, I remind members that the Canada pension plan is a family friendly plan, something I thought the Reform cared about.

Our plan covers people who leave the workforce temporarily to look after their children. As I said before, it is a good example of how Canadians help each other with special needs. Under the Reform plan every household is completely on its own. Its stand contradicts the Reform Party's commitment to represent its constituents.

The majority of Canadians clearly wants a public plan which demonstrates a basic retirement benefit for all workers and shares some risk of disability and death. The Reform is saying this is not true. Clearly this has the support of eight out of ten provinces.

Canadians reject the individualistic survival of the fittest approach being advanced by some of my hon. colleagues.