|| That, in the opinion of the House, in light of the legitimate concerns of Canadians that pensions and their retirement security may not be there for them in their retirement years, the Government of Canada should begin to work with the provinces and territories to ensure the sustainability of Canadians’ retirement incomes by bringing forward at the earliest opportunity, measures such as:
||(a) expanding and increasing the CPP/QPP, OAS and GIS to ensure all Canadians can count on a dignified retirement;
||(b) establishing a self-financing pension insurance program to ensure the viability of workplace sponsored plans in tough economic times;
||(c) ensuring that workers’ pension funds go to the front of the line of creditors in the event of bankruptcy proceedings;
||(d) in the interest of appropriate management of the CPP that the Government of Canada immediately protect the CPP from imprudent investment practices by ceasing the practice of awarding managers performance-based bonuses; and
||(e) take all necessary steps to recover those bonuses for 2009, ensuring managers in the future are paid appropriate industry-competitive salaries.
He said: Mr. Speaker, I want to thank my friend from for seconding this important motion.
I am most pleased to rise today to speak to the NDP motion and the reforms needed to protect and enhance the lives of Canada's seniors as they live out their sunset years. I am, at the present time, crossing Canada on a listening to seniors tour, and Canadians have been quick to tell me accounts of their fears and their concerns for their futures.
While I was in St. Thomas, I heard from Vanda, who told me how she had to start paying $90 a month for a prescription that her husband, who had recently had a stroke, needed, because it had been delisted by the province of Ontario. As a result, they did not know where the money was going to come from. Especially when people are on fixed incomes, that can be almost a tragedy.
I also heard from Joyce in Elliot Lake, who related how hard her life had become due to the fact that on a yearly basis, she had to pay almost $2,100 a year for her hydro.
Today, far too many seniors are forced to live this way, just one crisis away from a financial catastrophe. Many seniors are also worried that their private pension plans will not be there for them when they retire, as in the case of Nortel. They wonder if they will have any pension at all.
Seniors are also quick to condemn the bonuses being paid to Canada pension plan executives. They have seen the media reports, such as the case of CEO David Denison, who saw his pay triple since 2005 by taking home bonuses amounting to $7.4 million. That is in addition to a $400,000-plus yearly salary.
Seniors are also quick to tell anyone who will listen how unforgivable those bonuses are when so many seniors across Canada are living near or in poverty. The bonuses during good times are already viewed by the public as symptomatic of financial industry greed. Today, given the frightful economic times that we are living through, the fact that the same managers, who lost $17.2 billion, are expecting and accepting massive bonuses is not only indefensible, it is obscene.
We in the NDP believe in removing bonuses from the administration of CPP and taking away the incentive plan for managers. The one they have now causes them to take potentially unacceptable risks in the investments they make. I do not quarrel with anyone who proposes appropriate industry standards for salaries, but having said this, the game afoot today across the corporate community is to load up salaries with performance bonuses, retention bonuses and other perks.
I recall in the 1970s, when I first joined Bell Canada, talking to a manager regarding our pay practices at Bell. He had a saying, and it is very true, “A fair day's work for a fair day's pay”. I agree with that notion and Canadians agree with that notion, but I would suggest the corporate community, especially the financial community, has forgotten just what fair is. Never mind that according to economist Toby Sanger, in the last 10 years, the CPP fund would have made $13 billion more than it did if it had been invested in government bonds, rather than in a diversified portfolio of equities, real estate and bonds.
These managers have not been producing value-added returns above risk-free bonds, and over the past four years, they have not achieved the returns required for the long-term sustainability of CPP.
These managers have repeatedly defended their bonuses by pointing out that their performance is graded according to a rolling four year average of the fund's performance. My reply to them goes like this. In the fiscal year 2009, the losses in the fund wiped out four years of contributions, and the fact that senior managers are still in line for bonuses is simply not acceptable.
Recently at the House finance committee, Phil Benson from the Teamsters Union said:
|| The performance bonus should be, “Guess what, folks? We're in a recession, tough times, but don't worry. Your pension is still there”. That's a performance bonus.
One thing I am sure of is that Canadians will appreciate the section of today's NDP motion which demands that government secure the repayment of those bonuses.
The genesis of my seniors tour came about when I was visited by a prominent seniors group. One of my guests stated to me that seniors feel invisible to their government. This group was also wondering why their government has given $14 billion in yearly corporate tax breaks while doing nothing for them.
Last fall I told another story in this House that is worth repeating. It is the story of a senior who came into my office with a letter in his hand from the government saying that his pension had increased by 42¢. He was so upset he had tears in his eyes. He said that not only does the government not give a damn about seniors, but it goes out of its way to insult them.
As we face down the worst economic crisis in 70 years, Canadians have been vividly reminded why we have a social safety net in the first place. I say to members today, now is the most opportune time in our recent history to undertake a complete review of the benefits paid under OAS, GIS and CPP. This must be done with an eye to increasing benefits immediately to raise seniors out of poverty.
Recently an economist at the Canadian Labour Congress reported that an annual infusion of $1 billion would raise all seniors above the low-income cutoff. According to Statistics Canada's 2004 estimates, there were 219,000 Canadians living below the low-income cutoff, which is the way many organizations measure poverty in Canada. An even more sobering statistic is that of the 219,000 seniors living in poverty, more than 60% were single, unattached women. That is nothing short of a national disgrace.
It is clear that with the bailout of GM and our ballooning deficit, this is not a time of business as usual in Canada. I would suggest if the federal government can buy a serious stake in two auto plants, Canada can afford to invest in those plans designed to protect us all in our senior years. We could do so much more and we must do so much more for all Canadians.
Today only 38.5% of Canadian workers have workplace pensions and nearly one-third have no retirement savings at all. More than 3.5 million Canadians are not saving enough in RRSPs for what used to be called their golden years, and 75% of workers are not even participating in a registered pension plan. Clearly, the notion that retirement savings can be adequately accounted for through purchases of RRSPs does not work, and urgent government action is needed.
As a complement to today's motion, I am in the process of tabling other bills designed to promote transparency and responsible investment practices in the management of public related pension fund assets. My private member's bill, Bill , would enhance public disclosure rules and severely curtail the ways in which the assets of public sector pension funds can be invested, with an eye to all but eliminating a fund manager's ability to invest in risky financial instruments.
Another bill I have drafted does the same for the remainder of the federally regulated pension funds. These are the public sector pension funds. I also have been drafting a bill to require federally regulated pension funds to over-fund themselves by 20%. We could think of it as a rainy day fund, so that in the better times we prepare for the downturns that will come eventually. The bill would also amend the Income Tax Act to permit the deductibility of contributions or an excess surplus of, for example, up to 30% of ongoing corporate liabilities.
The last bill I am preparing would amend the Income Tax Act to provide substantial tax incentives to employers who wish to create a defined benefit pension plan for their employees.
The next issue I would like to speak about is that Canada needs a pension benefits guarantee fund. There is a need for this. Federal leadership is urgently required to set about working with the provinces to develop a pension insurance regime to ensure workers actually receive the retirement benefits they have earned, even if their employer goes out of business. We insure our cars and homes and we have deposit insurance for our savings, so why not insure our pensions?
Such an insurance system could be comparable to what exists through the Canada Deposit Insurance Corporation for bank deposits, RRSPs and tax-free savings accounts. The system could be funded by contributions from federal workplace pension plan sponsors administered by the federal government and designed to ensure efficiency and fairness to all parties.
Another notable model worth studying is the American Pension Benefit Guaranty Corporation. Like the Canada Deposit Insurance Corporation, the Pension Benefit Guaranty Corporation is not financed through general tax revenues but through the following measures: insurance premiums paid by the sponsors of the defined benefit plans; assets from the pension plans it takes over; recoveries of unfunded pension liabilities from plan sponsors' bankruptcy estates; and investment income.
Canada may choose not to follow the American model but could create some form of pension insurance uniquely its own or a hybrid of other plans, like schemes from Switzerland, Sweden, Germany or Japan. The Netherlands has chosen to directly guarantee its pension plans with strict investment regulations and requiring that the pensions are fully funded at all times.
A recent OECD working paper put the matter succinctly when stating “no scheme to provide pension insurance can work without adequate funding rules”.
The OECD document stated:
|| Strict funding and investment rules should be seen as complements to any pension guarantee scheme.
|| Good funding rules can achieve almost all of what a guarantee scheme is striving for, are arguably easier to design and manage and, especially when combined with other measures.... If a guarantee scheme is successfully combined with funding rules or other protection measures it can effectively perform its task as a 'last resort' benefit protection measure.
Another clause in the motion calls for “ensuring that workers' pension funds go to the front of the line of creditors in the event of bankruptcy proceedings”.
Ken Georgetti of the Canadian Labour Congress recently stated before the finance committee:
|| Critically, for the sake of genuine fairness, we need to ensure that the full value of workers' pensions is protected in bankruptcy proceedings. If Canadians shouldn't be in the front of the line when it comes to protecting them, who should be?
I would take a moment to remind the House that if the current government were to only enact certain clauses of a bill that is already the law of this land, the clause would be unnecessary. The Wage Earner Protection Program Act, which enacts changes to the Bankruptcy and Insolvency Act and the Companies' Creditors Arrangement Act, was given royal assent in December 2007. The purpose of that act is to ensure that workers' pension funds go to the front of the line of creditors in the event of bankruptcy proceedings. The Wage Earner Protection Program Act sets out provisions to ensure that unpaid wages in the event of bankruptcy are paid to workers and sets up super-creditor status for the unpaid pension contributions.
Elements of the amendments to the above pieces of legislation were enacted by the governor-in-council in the summer of 2008. However, not all aspects of the changes were implemented, leaving some glaring loopholes.
The NDP leader, the member for , has raised this on occasion in the House. He stated:
|| Mr. Speaker, the truth is that the government will not act even when it is the law.
|| In December 2007, Parliament took action to protect Canadian pensions by adopting Bill C-12 to amend bankruptcy laws. Section 39(2) prioritizes unpaid pension contributions in the case of bankruptcy. Sections 44 and 131 ensures that the court cannot unilaterally overturn a collective agreement. Section 126 prohibits a court from sanctioning restructuring plans unless all unpaid wage claims and pension obligations have been met. It is the law but the government has refused to put it into force. Why?
As I was considering my remarks for today, it was during that time that we were marking the 65th anniversary of D-Day, the Normandy invasion. We as a grateful nation marked that occasion as we should to show our veterans, their families and the following generations the importance of the sacrifice that generation made for us all. Successive Canadian governments claim to support the generation of sacrifice that we honoured this past week, but this year we heard stories of veterans who are now living in poverty and living in the streets. That is not acceptable for the veterans of Canada, nor any senior in Canada.
This Parliament must find a way to build up and fortify OAS, CPP and GIS so that they better serve the needs of those for whom they were designed. Today's NDP motion is intended to start, in a very public way, a national discussion on the future of our retirement security system. Whether it is CPP, OAS, GIS or private pensions, Canadians know these plans must be looked into to ensure that they are available for them when they retire.
Canadians need to know there will be a level of pension income for their retirement to ensure that they will spend their final years in financial security and with the dignity they deserve.
Before I am even asked, I would like to address the issue of cost. Will this motion not require billions of dollars of taxpayers' money to implement? My response is this: How expensive will inaction be?
The government is already indirectly bailing out pension plans, not to mention that it will soon have to do something for all of those people who have no pension plans. Seventy-five per cent of private sector workers who are not participating in a registered pension plan today have not been able to save for their retirement. Today 3.5 million Canadians are not saving enough in RRSPs. This situation, if unaddressed, will cost taxpayers heavily in the years to come. I would suggest the price of inaction is simply not an acceptable option.
The Conservative government can choose to continue to respond to the developing crisis in a piecemeal ad hoc fashion, or together we can devise a comprehensive long-term strategy that will put Canadian seniors on a more solid fiscal footing.
Over time, with adequate pension funding rules in place, the cost of the guarantee fund would actually be negligible as it would not be needed as pensions would be adequately funded. In the near and interim period it will be potentially expensive, yet failure to act will also cost both in terms of dollars and in terms of lives. There is no escaping the fact the government will have to come up with massive amounts of money one way or the other.
I remind members that CPP and QPP are self-financing. It then becomes a question of whether Canadians are prepared to pay more for security in their senior years and to do so as part of a secure public plan. Canadians certainly face insecurity today in the context where private options, such as RRSPs or defined contribution plans, leave Canadians uncovered and victimized by the market, that is, if they are those who can afford to contribute in the first place. Quite simply OAS and GIS are for those who cannot afford to contribute to the CPP, and that is where the cost may lie.
We accept the fact that as a result of increasing the benefits and increasing eligibility to include currently excluded groups the cost will rise. However, as I said earlier, in an age when the government is spending more than $100 billion to relieve banks of mortgages, that does not seem like much to relieve our deserving senior citizens.
We would also suggest a beefed up CPP is the cheapest way for working Canadians to pool risks, take the burden off individuals and secure their senior years.
Regarding private plan insurance, the proposal in the motion is defined as self-financing. It would require a small increment on top of the contributions to cover insurance premiums. Once we have brought them into the plan, they would remain fully financed by employers and employees but would have the security of CPP.
Never again should Canada's seniors feel invisible to their government. We can take our valued retirement income support system and make it better. Today's seniors have worked hard all of their lives and in my view they have already lived through far too much turmoil and grief.
The worldwide economic crisis has certainly made it clear that it is critical for this Parliament and for the government to adopt a coordinated national plan of action to protect seniors. This is the NDP's call to this Parliament to rise to the occasion of a great national need. Let us roll up our sleeves and come together as Canadians and do the work necessary to confront this critical need.
Here today I say to the opposition parties, to the and to the government, the NDP is here to work for the benefit of all Canadians, especially seniors. Join us. This is the time and place to enhance Stanley Knowles' dream of sustaining and maintaining the dignity of all Canadians in their old age.
Mr. Speaker, I thank the House for the opportunity to comment on the motion before us today.
This government stands with hard-working Canadians who want to be able to count on their pension plans for a stable retirement.
We realize that Canadians, particularly seniors, are worried about their pensions. The current financial market turmoil and uncertainty is a concern for all of us, including older Canadians who have worked hard and saved diligently for their retirement years and rely on their pensions and savings.
Contrary to what the hon. member may be suggesting, we have acted, and acted early, to help protect all Canadians from the financial crisis battering our shores, a financial crisis that I might remind my friend did not originate in Canada but is impacting Canadians through no fault of anything we have done in this country. It is a crisis that major financial organizations agree Canada is handling exceptionally well because of our strong domestic fiscal policies.
Both the IMF and the OECD project that Canada will first of all experience the smallest contraction in the G7 for 2009, and as well, it will have the strongest recovery in the G7 for 2010.
A recent IMF report stated:
|| Canada is better positioned than many countries to weather the crisis. It has taken proactive steps to stimulate demand, ward off deflation, and enhance the toolkit for dealing with worsening financial strains if they emerge. Thanks to these factors, the strains evident in other countries, especially in the financial sector, are markedly less serious in Canada.
Even OECD Secretary General Angel Gurría declared,
|| Effectively, Canada will be one of the first to come out of the recession.
How is our country acting to protect the pensions of Canadians? In the November 2008 economic and fiscal statement, our government provided temporary solvency relief to federally regulated private pension plans that have been affected by the substantial declines in equity markets.
In January, our government released a consultation document seeking views from Canadians on the legislative and regulatory framework for federally regulated private pension plans.
The asked me to lead these consultations. This gave me the opportunity to listen to Canadians across Canada, to hear their views on how we can strengthen the security of pension plan benefits as well as ensure that the framework is balanced and appropriate. The hearings were open to anybody who wanted to voice their concerns. I am also working with provincial and territorial governments as an important part of this consultation process.
This consultation process follows on the heels of comprehensive provincial pension reviews completed by Alberta, British Columbia and Ontario in late 2008, as well as Nova Scotia in January 2009.
In early March, the Office of the Superintendent of Financial Institutions, known as OSFI, released additional guidance on the use of smoothing and asset valuations for federally regulated plans. The government is assisting OSFI in providing flexibility to supplement the temporary solvency funding relief proposed in the November 2008 economic and fiscal statement. OSFI continues to monitor the funding situation of plans carefully and is taking steps wherever necessary to protect the rights and interests of plan beneficiaries.
In May, federal, provincial and territorial ministers of finance announced the result of the Canada pension plan's triennial review, which confirmed that Canada's retirement system remains sound at the current contribution rate of 9.9% and that it has been weathering the financial turbulence well.
The ministers also recommended a number of changes to CPP to better reflect the way Canadians work, live and retire. The changes would improve flexibility for older workers to combine work and pension, enhance CPP coverage as well as improve equity in the plan's flexible retirement provisions. If approved, the changes will be introduced in 2011 and phased in gradually.
The Canada pension plan remains one of the most successful pension plans in the world. Through the CPP, the government provides a secure, indexed lifelong benefit of up to $909 per month. We are not only maintaining the quality of life for seniors, but improving it during these difficult economic times.
At this same meeting of finance ministers, there was consensus for the federal government to work with our provincial and territorial counterparts to launch a research working group on pensions. This group will be examining the adequacy of retirement income of Canadians and is slated to report its findings back to the first finance ministers before the end of this year. More details will be forthcoming on this group in the near future, and I look forward very much to being part of this.
This government believes in preserving a strong pension system in this country. At the same time, Canada's economic action plan is stimulating the economy while protecting Canadians hit hardest by the global recession. Ensuring the retirement income security of Canadians is an important goal of the Government of Canada, but it also means leaving more money in the pockets of seniors. The economic action plan added over $300 million to the $1.6 billion in targeted tax relief that the government is already providing to seniors for the 2009 tax year.
We increased the age credit amount by $1,000 for 2009 and the subsequent taxation years. This increase will provide $325 million in tax savings to about 2.2 million low- and middle-income seniors in 2009 and 2010. With the $1,000 increase, the age credit amount for 2009 will be $6,408, translating into tax relief of up to $961 for an eligible senior. The $1,000 increase in the age credit amount starting in 2009 will reduce taxes for taxpaying seniors with incomes under the $75,000 mark.
In addition, the 25% reduction in required minimum withdrawals from registered retirement income funds, or RRIFs, announced in the 2008 economic and fiscal statement, provided $200 million in tax assistance to RRIF holders in 2008 by allowing retirees to keep more of their savings in their RRIFs.
The increase in the age credit amount builds on the significant tax relief provided since 2006 for seniors and pensioners, including doubling the amount of pension income credit from $1,000 to $2,000, a $1,000 increase in the age credit in 2006, the introduction of pension income splitting for 2007, and the increase in the age limit for maturing pensions and RRSPs from 69 to 71 in 2007. Together these measures provide about $1.9 billion annually in tax relief to seniors and pensioners.
In addition, the new tax free savings account provides a general purpose means for seniors to meet their ongoing savings needs on a tax-preferred basis. Of note, the income earned within a TFSA and withdrawals from the account will not affect eligibility for federal income-tested benefits or credits, such as the old age security or the guaranteed income supplement, or the goods and services tax credit.
Seniors also benefit from general personal tax cuts, such as reducing the lowest personal income tax rate from 16% to 15%, increases to basic personal amounts and rate thresholds, and the two-point reduction in the GST.
Promoting the retirement income security of Canadians is an important goal of the Government of Canada. We will continue to ensure that our policies, programs and services meet the evolving needs of Canada's senior population.
We recognize the contributions seniors have made and continue to make to our nation. That is why we have taken measures to ensure the old age security program and the guaranteed income supplement continue to meet the needs of seniors. The GIS is an important resource for low-income seniors. It helps to ensure that every pensioner has enough income from all sources, including the OAS, to maintain and improve the standard of living of Canada's seniors.
OAS is one of the most critical programs in our social safety net. It is important for all Canadians, those who are seniors now and Canadians who will be seniors in the future. It is the responsibility of the government to manage these programs so they will continue to exist in the future.
I know that the hon. member, like every member in the House, cares deeply about seniors and seniors issues, especially the challenges faced by seniors living in low-income situations. Providing additional assistance to older workers and to seniors wishing to re-enter the workforce is a worthy goal, especially given the labour shortages that exist in so many sectors where seniors are likely to take a part-time job.
We also understand that older workers and vulnerable communities face their own challenges in finding employment. This is why Canada's economic action plan provided an additional $90 million over three years to extend the targeted initiative for older workers until March 2012. The government has expanded the scope of the program to include vulnerable cities with populations of less than 250,000, making assistance available to more older workers in a larger number of cities, particularly those heavily dependent upon a single sector or a single employer.
These changes will expand the number of eligible communities and ensure that older workers across the country have the support they need to adapt to a changing economy. Canadians are concerned about the long-term viability of their pension plans. We are listening to their views on how we can strengthen the security of pension plan benefits and ensure that the framework is balanced and appropriate.
In April, the G20 agreed with principles on executive compensation set out by the Financial Stability Board. Based on these recommendations, the asked all government-owned companies, including the Canada Pension Plan Investment Board, to review their compensation packages. They are to report back as to whether they are meeting the forum's principles and to confirm steps that they will take, if necessary, to become compliant.
I am sure the hon. member is aware that public companies in Canada are already subject to detailed executive compensation disclosure requirements prescribed by provincial securities law. Let me assure the hon. member that both private and public companies are well aware of the current public views with respect to excessive compensation. For example, the Canada Pension Plan Investment Board did not award any bonuses for the individual performance component of the short-term bonus for 2008-09, and base salaries are to remain unchanged for 2009-10.
Under the Canada Pension Plan Investment Board's multiple-year approach, the negative performance of 2008-09 affected bonuses for this year and will negatively affect performance pay for the next three years. No bonuses are paid to directors on the Canada Pension Plan Investment Board.
I would like to point out for my hon. colleague that the poverty rate among seniors has declined dramatically over the past 25 years and the average income for seniors in that time has increased. In fact, Canada already has one of the lowest levels of poverty among seniors of any country in the industrialized world.
Our record shows that our government is committed to the financial well-being of Canadian seniors, especially those with low income. In the past two and half years, we have done more for seniors than any government before us. We have made it easier for seniors to apply for Canada pension and OAS benefits. We have reduced combined income tax by allowing senior couples to split their pension income. We have reduced the GST twice, which is often the only tax that low-income seniors pay. We have created the National Seniors Council to advise the government on matters related to seniors' well-being and quality of life.
We have committed resources to combat elder abuse, through public awareness and education, as well as upgrading community buildings and equipment used by seniors. We have also contributed yearly funding to the new horizons for seniors program to encourage seniors to contribute to their communities. Since taking office, our government has acted decisively on its commitment to protect the security of Canadian seniors.
This government cares deeply about the many contributions that today's seniors have made and continue to make to our society. These seniors raised families. They helped us build our national economy, and they made vital contributions to our health, safety, education and culture. Furthermore, many Canadian seniors are veterans who risked their lives to preserve our freedom.
For these reasons and many more, our government will continue to do its utmost to ensure that Canadian seniors are treated with dignity. We will ensure that they receive the full respect they deserve. We are helping seniors and will continue to help them.
We are absolutely on the right track. The World Bank president, Robert Zoellick, during his recent visit to Canada, reaffirmed this view, saying that, by global standards, Canada is in an enviable position. He said:
|I think a lot of people would like to change places with Canada.