Mr. Speaker, it is my pleasure to continue to speak on a motion that calls for an incremental increase and an improvement to our CPP. Despite the arguments we heard earlier from across the aisle, we know this is common sense, backed by sound economic arguments.
I want to make clear today what we are proposing. We are proposing to gradually phase in an increase in CPP and QPP benefits, not the shock and awe that my friends over the aisle would like us to believe. It is also a position that is supported by economists, bankers, actuaries and all kinds of people.
We think the GIS needs to lift low-income seniors out of poverty.
We absolutely believe the age of eligibility needs to go back to 65. It is my understanding that we are the only party to have that position, which is a good position. It does not mean people have to retire. Rather it means that if they can no longer work beyond age 65, they will have that social assurance.
We need to tighten up legislation to protect the pensions of workers when a company is facing bankruptcy, leaving the country, being sold or undergoing corporate restructuring.
I do not know about my colleagues across the way, but I deal with this last point constantly in my riding. It comes up over and over again when people are so worried about the future of their pensions.
We also hear a lot from the other side about how the NDP does not know what it is talking about when it comes to the economy. The NDP knows how the economy works. We have members of Parliament sitting on this side who have managed portfolios, who have dealt with money in the billions of dollars in other parts of their lives and who are experienced parliamentarians.
I am beginning to wonder about the economic argument or ability of my colleagues across the aisle. I will quote some statistics released today. The government across the way is not prone to listening to experts. Nor is it prone to listening to sound research or making decisions based on that research.
Today, Statistics Canada stated that the CPP grew at a rate of 13.7%. Do people have pension funds or retirement savings that they are handling on their own that can give them that kind of return? I would say categorically no. Right now when people put their money into the bank, they are lucky to get 1%.
During that same time period, individual registered savings plans grew by 8%. That is a difference of 5.7%.
We on this side of the House understand economies of scale. When we have larger amounts of money to invest, we benefit from those economies of scale. We understand that. We want to know what the barrier is that is preventing my colleagues who sit across the way from understanding those very simple numbers.
The Globe and Mail has also noted that when we look at a long-term trend, and we all like trends, especially ones that go in the right direction, we have a good news story. Our good news story is our Canada pension plan and its viability, which has been recognized worldwide by the OECD and others. The Canada Pension Plan Investment Board, not the NDP, has provided remarkable returns in virtually every year except the one year after the economic downturn of 2008. Over the last 10 years—
Mr. Speaker, I am pleased to have this opportunity to address the motion before us today.
The hon. members of the House may differ on solutions, but I am sure we agree that we need to look, continuously, for ways to improve Canada's retirement income system. That does not just mean only looking at the government income system, but for ways, in general, that Canadians can have a comfortable and dignified retirement.
Canada's seniors deserve our gratitude and support. Our government recognizes they have worked hard to build a better country for future generations. Let me assure the hon. members that Canada's retirement system is one that has served Canadians well. Indeed, we have one of the strongest in the world.
Canada's retirement income system has been recognized by expert groups, like the OECD, as a model that succeeds in reducing poverty among Canadian seniors and provided high levels of income replacement to retired Canadians.
Taken together, our system is based on a balanced mix of public and private responsibility, as well as compulsory and voluntary vehicles that provide a basic minimum benefit for Canadians, ensure a basic level of earnings replacement for working Canadians and offer additional opportunities for voluntary retirement saving.
Our system both supports and draws upon the strength of our sound financial sector.
In fact, Canada's financial sector remains strong. The World Economic Forum has ranked our banking system as the soundest in the world for the sixth year in a row. In addition, Canada is rightfully recognized for the responsible management of our economic and financial sectors. It is therefore not surprising that Canada continues to have the highest credit ratings, with continued upside forecasts, according to all the main rating agencies. Canada is the only G7 country with that status. We are coming to grips with the debt and we are on track to balance the budget in 2015.
While the NDP and the Liberals continue to put forward dangerous spending plans, our government is reducing expenses and making the tough economic decisions that will contribute to Canada's long-term prosperity and economic growth. Even more importantly, our pension scheme is also one of our economic objectives for jobs and growth.
The success of this model rests on three solid pillars. The first comprises of old age security and guaranteed income supplement program which provide a basic minimum income for seniors. The second pillar is the Canada pension plan and the Quebec pension plan. The third pillar provides tax-assisted private savings opportunities to help and encourage Canadians to accumulate additional savings for retirement.
A couple of weeks ago I received a letter from a constituent who had just turned 65. She was unhappy about the state of retirement. Her request was not that we increase pension fees and government pension plans. She knew she could not turn back the clock, but said that if she could, she would have governments encourage people to take care of more of their retirement through private opportunities and would encourage us to encourage young people today to do that.
In the rest of my time today, I would like to concentrate on the strengths of the CPP and illustrate why the NDP plan to expand the CPP is just not in the best interests of Canadian workers or employers.
Let me begin with a look at our current situation. The CPP is a mandatory public defined benefit pension plan and provides a basic level of earnings replacement for all Canadian workers. It provides a defined benefit in retirement based on an individual's career earnings as well as ancillary benefits like survivor benefits. They are financed by employer and employee contributions, the contribution rate being 9.9% of earnings shared equally between employees and employers.
Operating at arm's-length from government, the Canada Pension Plan Investment Board is responsible for prudently investing CPP contributions to serve the best interests of CPP contributors and beneficiaries.
The CPPIB is one of world's largest pension funds. On December 31, 2012, its net assets were $172.6 billion. With prudent management of the fund for the benefit of current and future members, the CPPIB invests around the world. Indeed, its mandate is to invest in the best interests of contributors and beneficiaries.
That is why it is important for the CPPIB to be diversified in its exposure to risk. This includes greater diversification worldwide, ensuring that the revenue from overseas investments comes back to Canada.
Our government is committed to the healthy management and sustainability of the Canada pension plan and to strengthen it as much as possible. For example, at the moment, only Canadians can sit on the CPPIB's 12-member board of directors. At this stage in its development, the board of directors would benefit from the contribution of foreign talent.
That is why economic action plan 2013 announced that our government would consult with provinces on permitting a limited number of qualified persons who are not resident in Canada to serve on the board of directors of the CPPIB. Permitting a limited number of qualified non-residents to sit on the board of directors would enable the board to provide the most effective oversight of the CPPIB's activities in the context of a rapidly changing global economy.
This makes sense when considering how important it is that the CPP be diversified in terms of risk exposure and not be exclusively localized to the Canadian economy. This is especially prudent in our current expansion into trade throughout the world.
Let me now turn to the ongoing issue of expanding the CPP to ensure its future sustainability.
To begin, any expansion would require the support of two-thirds of the provinces representing two-thirds of the Canadian population, as well as the federal government. Two-thirds of the provinces plus two-thirds of the Canadian population and the federal government all have to agree on the expansion.
At the meetings of the federal, provincial, and territorial finance ministers in December 2010, 2011, and again in 2012, there was no such agreement on a potential expansion. We could talk about it and we could pass a motion on it, but we would not be able to do it anyway if we do not get that support.
Indeed, a number of provinces expressed concerns about the prospective economic impact of higher payroll taxes on workers and their employers at a time when the global economy remains uncertain. Our government shares the concerns of small businesses, employees, and certain provinces over increasing costs during a fragile global recovery.
The decision as to whether to expand the CPP must be made with Canada's economic situation and the best interests of Canadian workers and employers kept in mind. The motion that is being proposed by the hon. member for does not meet this threshold. Indeed, despite the fact that Canada's economic recovery remains fragile, the NDP continues to call for a radical plan to increase payroll tax, which would stunt our economic growth and kill up to 70,000 jobs. Clearly, now is not the time for such an expansion to the CPP. To be frank, this plan would be too risky.
However, if members do not believe me, we can listen to advice from those who would be directly affected by the CPP expansion.
Dan Kelly, president of the Canadian Federation of Independent Business, puts forth the following, which the NDP might find interesting:
CFIB's research found that earlier proposals to increase CPP/QPP premiums would kill between 700,000 and 1.2 million person years of employment. ... Small firms believe that the economy cannot manage a significant increase in payroll taxes.
It does not make sense to want to add to the tax burden of employers and employees. It seems clear that we need to do more to properly study the impact of a CPP expansion and determine if that would be appropriate, considering the repercussions this would have on families, businesses and communities.
I would remind the hon. member that the idea of a CPP expansion is not a new one. However, not everyone agrees on this idea.
Let me make it clear again that consensus is critical before moving forward with CPP expansion. While analysis is important, expansion at this time does not have agreement from the majority of provinces. Allow me to provide hon. members with what provinces from across the country are saying on the issue of increasing CPP contribution rates at this time.
Nova Scotia Premier Stephen McNeil has said:
We have some issues about what that will mean to small business owners in this province, and what is the impact on low-income Nova Scotians and Canadians.
Saskatchewan Premier Brad Wall noted that the CPP expansion would not be something they would support at this time, saying, “We're 'No for now'. ... Now's not the time for contribution changes or increases”.
There is more. The British Columbia finance department spokesperson, Jamie Edwardson, said: “B.C. believes pension reforms should not be undertaken before the economy has recovered from the impacts of the recent recession”.
Our government shares these concerns. We believe that before new spending initiatives are contemplated, the provincial, territorial, and federal governments should get their respective fiscal situations in order. Rather than supporting an initiative that does not have the necessary support to proceed, the NDP should support the PRPPs, something all provinces have committed to implement.
While the NDP has been focusing on expanding the CPP, it may not have noticed that an estimated 60% of Canadians do not have access to a workplace pension plan. This is precisely why Canada's finance ministers decided to prioritize the PRPP framework over other options, such as expanding the CPP. It was because it was considered the most effective and targeted way to address the lack of retirement savings among modest- and middle-income individuals, who make up the vast majority of the population of the country.
PRPPs will significantly help small and medium-sized businesses and their employees, who until now have not had access to a large-scale, low-cost private pension option. By pooling pension savings, these new plans will be low cost, as the administration costs will be spread over a large group of people.
Despite the consensus among provincial finance ministers, the NDP did not support these private retirement pension plans. Despite what it wants Canadians to believe, it clearly does not support actual measures that will strengthen Canada's retirement income system. Indeed, when given the chance to support PRPPs, New Democrats voted against our government's legislation, the very legislation that established the federal framework for PRPPs. Rather than support actual reform, they are content to advance proposals that pose risks to Canadians and to Canada's economic recovery.
As Laura Jones of the Canadian Federation of Independent Business points out:
A mandatory CPP increase...is a bad idea. An increase in the CPP tax takes more money out of employees' and employers' pockets. Where will the money come from? Employees may be tempted to lower contributions to their RRSPs, or reduce their mortgage payments. ... Worse still, small businesses report that a mandatory CPP increase would force many to lower wages and even reduce their workforce.
That is the ultimate problem, not just with this suggestion but with a lot of the economic suggestions from the NDP. It fails to take into account that all money has to come from somewhere. We would like to promise everyone a loaf of bread, but if the bakers are standing in line for their free loaf, we might have some empty shelves.
At the end of the day, we have to find a way to pay for all these things, and right now we believe that the more money in Canadians' pockets, the better. More money in employees' pockets and more money in employers' pockets ultimately will not just help the economy today, but will help the economy in the future, including our future retirement.
Clearly, Canadian families cannot afford a drastic expansion of CPP, which would cost them even more. They cannot afford that, nor can small business owners, who could be faced with increased payroll taxes.
As a prudent and responsible government, we share the concerns of small business owners and employees who simply cannot afford such a proposal.
Our government has gone to great lengths to ensure that Canada is in an enviable fiscal position. However, as we have said repeatedly, we are not out of the woods yet. Global demand has softened, and the prices of many Canadian exports, particularly resources, are down. Furthermore, the sovereign debt crisis in the euro area continues to weigh on consumer and business confidence, and south of the border, a slow recovery poses a significant threat to the Canadian economy.
While gains in jobs are being made, they are modest, and there are still too many Canadians who are unemployed. That is why our government will remain squarely focused on job creation and economic growth. That will remain our priority.
We all want a stronger retirement system. However, we must not make changes that could have detrimental effects on our fragile economy today and thereby a devastating impact on today's retirement system and the retirement system of the future. There is no retirement plan if there is no job.
Our economic action plan is working. The unemployment level is at the lowest level since December 2008, and just last week it was announced that 21,600 net new jobs were created in the month of November. That is well over a million new jobs since the lowest level of the recession in December 2008. How are we doing this? It is by keeping taxes low and implementing positive job creating measures.
An expansion of the CPP would increase payroll taxes, reduce wages, and kill jobs. In a recent survey by the Canadian Federation of Independent Business, 65% of businesses said that they would freeze or cut salaries if CPP were increased, 48% said they would reduce investments in their businesses, and 42% said they would decrease the number of employees. These are important and concerning numbers.
Even for places in my own riding, a modest increase in CPP would result in more money being taken out of the pockets of employees and would force employers to cut jobs, hours, and wages.
Instead, our government has a prudent and responsible plan. We will not proceed without thinking about the possible serious economic impact of such an expansion.
We will continue to try to identify all the factors that could help us better understand the possibilities and risks associated with the CPP expansion. The will discuss this with his provincial and territorial counterparts at next weeks' meeting.
This is a complex issue that will have real consequences for Canadians. We need to fully understand the economic framework in which such an expansion would take place.
The Canada pension plan is sustainable as it is at its current contribution rate, and while the NDP continues proposing its radical economic schemes, our focus must and will continue to be sustainability and long-term manageability of Canadians' retirement system, including jobs today.
Simply put, with the economic recovery still fragile, we do not believe that now is the time to increase costs on workers and employers. To do so would benefit no one.
Mr. Speaker, I rise today to speak in support of my colleague's motion to increase the Canada and Quebec pension plans for all Canadians.
Canada is facing a retirement security crisis. Today's seniors just do not have the money they need to retire. Nearly one-third of Canadians will face a drop of 20% or more in their living standards by retirement. Also, nearly one-third of our workforce, as many as 5.8 million Canadians, are facing a steep decline in their standard of living upon retirement. As per usual, with the changes by the current Conservative government, young Canadians are left with a more dire situation to deal with. As The Globe and Mail recently reported:
A CIBC Economics report warned this year that middle-income Canadians are not saving enough for retirement. The report said the situation “will be at its worst decades from now,” when people born in the 1970s and 1980s retire and face a drop of 20 per cent or more in living standards.
Without an increase to CPP, Canada is facing a retirement security crisis. For seniors living in poverty, transfer payments make up over 90% of their incomes. This is not sustainable. Canadians make contributions to the CPP throughout their working lives, and they expect it to count once they reach retirement age. We can do better.
I must also mention that I will be sharing my time with the member for .
Unfortunately, the reality is that Canada cannot afford to not invest in improving the lives of our seniors. As the Conservatives hand out billions of dollars to well-connected insiders and buy fighter jets that our forces say will not meet their military needs, they are ignoring the very real challenges Canada's aging population is facing.
CPP is stable. Many experts are now advocating a phased-in increase in the Canada pension plan and the Quebec pension plan, the CPP and the QPP, as the most practical and effective way to help ensure the retirement security of Canadians. As the government's own data show, a modest increase in CPP premiums could finance a substantial increase in benefits.
The simple truth is this: a great many Canadians are not saving enough for retirement today. The provincial governments, the Canadian Labour Congress, and various financial experts have all been calling on the federal government to move forward with plans to increase the CPP.
What other experts would the Conservatives like people to ignore? The chief executive officer of the CIBC, Gerald McCaughey, has been speaking out about the need to improve our public pensions. The Conservatives would rather people ignore what they have said, that enhancing the CPP would help boost savings and that increases to the CPP are “a way for Canadians to make the big investments and get better returns with relatively low cost”.
The Conservatives must be thinking, “What do those socialists at the bank know about managing the economy anyway?” Everybody is a socialist except them.
The Canadian Association of Retired Persons has been campaigning for increases to CPP for at least the last three years. In its own words, it has said:
It has been three years since the finance ministers acknowledged that Canadians were not savings enough for retirement and that the existing vehicles were inadequate. Most important, they acknowledged that government had a role to play. Think tanks and pension experts have had enough time to line up behind CARP’s call to enhance the CPP. There is no reason to delay this any longer.
Even the PBO, the Parliamentary Budget Officer, has said that CPP is stable. Instead of listening to their own data, the Conservatives would rather use the CPP to instill fear in the hearts of Canadians. On one day, the Conservatives say that the Canadian economy is strong, but today the Conservatives are telling Canadians that the economy is so weak that there is no way we could increase the CPP.
The New Democrats, along with the provinces, are calling for a gradual phasing in of increased benefits in an affordable, sustainable manner. The increases to the CPP and QPP in 1997 have been shown to have not hampered growth in our economy. The Conservatives would like Canadians to believe that if they are re-elected in 2015, then, and only then, will they start fixing what is broken. To be honest, 2015 could just be too late. The problems may be too big to fix. There is a crisis in retirement security we need to tackle today, but we must do so in a responsible manner.
How dire is the retirement security crisis in Canada? Canadians used to be able to count on a workplace pension plan in retirement. Now, more than ever before, seniors are left to depend more on their private savings, especially in comparison with other OECD countries.
A recent OECD survey on pensions shows that the number of seniors, especially women, who live in poverty has been rising in Canada under the Conservatives, even as it is dropping in 20 other OECD countries.
Depending on the poverty measure used, the before-tax income for elderly couples ranges from $14,700 to $22,000. For unattached seniors, the average before-tax income ranges from $11,550 to $16,900.
In my community of , just over 12% of our population is over the age of 65. That number will only increase. The average income in my community is $28,328. This really does not paint a rosy picture of the retirement security of the people living in my community. Many families in my riding who came to Canada to invest in their futures soon may find that their investment will come up short.
I am sure we all know of at least one senior who is working past the age of retirement. I want to share a personal story, if I may.
My mother has been working in a warehouse for many years, for over 25 years. She is around the age of retirement now, but she has to keep working. Without a full-time job, my mother would not be able to pay for medication that she and my father need. I am so proud of my mother for being the breadwinner and for taking care of our family, but she should not have to put off her retirement for fear of retiring into poverty. This should not be a decision that any senior needs to make. Life should not be this way for our seniors in Canada. That includes my mother.
In fact, it is senior women who are really feeling the crunch today. No matter what measurement or indicator we use, women make up the clear majority of poor seniors, at 70%. We know that senior women who live alone rely on the government for 62% of their income. While men are more likely to have private pensions, government pension plans are the major source of income for women over the age of 75.
What about the rest of Canadians? What about Canada's future, our youth? With youth unemployment at record highs today, many young people do not have the luxury of thinking about retirement. They are too busy worrying about paying the bills today to think about their retirement many decades away.
As I touched upon earlier, nearly a third of our workforce is facing a steep decline in their standard of living upon retirement. In the case of our young Canadians, that number would be even steeper. We need to make changes now so that we can deal with the changes of Canada's aging population before it is just too late.
With all this support from grassroots activists and from our banks, with increasing demand, with all the facts in front of us, and with the possibility of such a harsh reality for our young people, why do the Conservatives not want to increase CPP and QPP? I just do not get it.
It was just last year that the agreed to move forward on increasing CPP and QPP benefits. Our finance minister never wants to disappoint us, but he seems to do that quite frequently. The finance minister even promised to meet with the provinces and territories over the summer to discuss how to move ahead. Shockingly enough, that meeting never happened.
In 2005, the campaigned on fully preserving old age security, the guaranteed income supplement, and the Canada pension plan. I think we can all admit that the current situation is a far cry from the campaign promise in 2005.
Why should Canadians trust the Conservatives with their retirement savings, when we know that we really cannot trust them on anything else?
We know that by 2030, Conservative cuts to old age security would slash $11 billion in retirement income from seniors by raising the retirement age from 65 to 67.
I will end there and will leave the rest for questions and comments.
Mr. Speaker, I feel I must rise to quickly address in good faith the points made by my colleague from . The first point is that I was working straight from Hansard
on the statement by the Liberal finance critic, which says:
We don't agree with a mandatory CPP increase at this time because of what still remains stubbornly high unemployment....
If that quotation is wrong compared to what he said even more recently, then I withdraw it.
The second point is that the quotation from the platform talks about an eventual goal, and our concern was that the hon. member was making it look like the motion was talking about doubling now, not just phasing in.
Those are the two points I wanted to make in response. I think maybe the general point my hon. friend made in response to my question, that we may not be so far apart, is something we could work on. I am beginning to learn from the interventions from our colleagues across the way that there may be at least some room for discussion in the sense that at least one member has backed off and said, “Of course, we are not against raising the CPP, just not now”.
Let us all talk in our speeches about the question of whether we can afford to start now, and why the need is such that we need to start now.
The motion, just so no one is under any misapprehension, says:
That the House call on the government to commit to supporting an immediate phase-in of increases to basic public pension benefits under the Canada and Quebec Pension Plans at the upcoming meeting of federal, provincial and territorial finance ministers.
That meeting is this month at Meech Lake.
It is key to put this in the context of a package that the NDP has been proposing: first, gradually phasing in an increase in CPP/QPP benefits, by way of initiating; second, increasing the GIS to lift low-income seniors out of poverty; third, returning to the age of eligibility of 65 from the government's plan to take it to 67; and fourth, tightening up legislation to protect workers' pensions, for the few workers in our economy who now have pensions, when a company is facing bankruptcy, leaving the country, being sold or undergoing corporate restructuring.
It is in that context that we are talking about the need for a gradual phase-in of an increase. It is also important to know that the provinces and the territories see this as a pressing matter. It is not coming out of the blue. This is, at some level, about collaborative federalism.
A year ago, in December of 2012, the said he was prepared to move forward, but now we have the government denying that. The provincial, territorial and federal finance ministers will meet next week with the beginnings of a plan already on the table from the provincial and territorial governments that this government now seems intent on sidestepping. That is really the question. Will the government be working with the provinces and the territories to get a start on what we are calling a phase-in?
It is not just the provinces. For example, those who do seem to know their economics, the CEO of CIBC, the former chief actuary of the CPP, have indicated that this is not only a good idea, but fully feasible. The Globe and Mail editorial yesterday talked about expanding the CPP:
It should be done, and it should be done soon.... It sounds like a tax increase. It’s not. It’s a savings plan. And it’s the best one we’ve got.
I am not saying that every time The Globe and Mail writes an editorial, it is right but it happens to be right on this one.
When they agree with us.
Mr. Craig Scott: Yes, when they agree with us.
Let me do my colleagues across the way the honour of dealing with two critical attacks being made by the Conservative government on this position: first, the idea that this is somehow a new payroll tax; and second, that this is a risky plan that would kill jobs.
First is the claim that this is a new payroll tax. The truth is, as the Canada Research Chair on Public Finance at Simon Fraser University, Professor Jon Kesselman, has told us, and keep in mind he is one of the country's experts on payroll taxes, this is a misrepresentation. He says that the CPP is a savings plan not a payroll tax on employers, even.
It is a retirement investment plan jointly funded by employee and employer. We cannot forget the broad purpose, that it not only increases the retirement security of individuals but also the collective economic security of the entire society. This is key.
The second critique or attack is that this is a risky plan that would kill jobs and we have been hearing more about this in the last two days from the . I worry that this is very misleading to Canadians from the government. Experts have been clear that previous increases to CPP contributions did not hinder the economy and did not cause job loss.
What we are getting from the government is a wild figure being cited about job losses by the and no evidence to support it, even when asked to substantiate it here in the House. I do look forward to hearing whether or not there is something to back up that claim.
Let me return to the question of economics. We also have CIBC economist, Benjamin Tal, telling us that the CPP is important because it would boost savings:
The CPP is a good one.... The CPP has the scale to make big investments and get better returns with relatively low cost.
That sums up in so many ways the benefits of going the CPP route, including through a mandatory approach, by increasing premiums gradually to sufficient levels. It is very important to contrast that to the plan that the government has been wanting to push, implementing the pooled registered pension plans, which are not much more than glossier versions of the RRSPs that we have now. They are subject to often very high administrative and service fees charged by banks and other institutions.
The difference between the cost-effectiveness of the CPP and RRSPs is quite astounding. I think even recent figures coming down suggest that the performance of the CPP over the last measurable cycle was well in excess of the RRSPs that Canadians are encouraged to put their money in privately.
Let me now turn to the question of need that I mentioned at the outset. We are living in an era of increasingly precarious work. Here I salute my colleague from who has been putting this at the forefront of a lot of his work in Toronto.
The fact is that more and more the work world is one where almost nothing can be counted on and this includes fewer workplace pensions. Indeed, 11 million Canadians are without any workplace pension. At the rate we are going, 60% of current youth will retire with a drop, and for many of them a significant drop, in their standard of living.
The precariousness of financial security at retirement also comes from life circumstances that mean some people have different periods in the workforce, which so often have nothing to do or anything to do with their own fault or with lack of merit. It is just the way things have turned out.
I had a note from a couple in my riding, Bill and Jean. They included this in a letter that was about something else because they felt this was so important. They said we need to increase the financial security of retirees and that CPP should look after retirees since we do see seniors not having enough CPP eligibility while they are in the workforce. Therefore, CPP should boost coverage somewhat.
It is important to note that the whole question of period of time and lateness into the workforce is something especially experienced by women in our society. I will not go into detail because everyone here understands that. It is made even worse by something that was brought to my attention by a constituent at my recent holiday party. We spoke for a good 5 to 10 minutes on this. She talked to me about ageism in the work world and how, increasingly, it is difficult to find jobs when people lose their jobs in their late forties or early fifties. That has knock-on effects for their ability to collect CPP.
It is true that the reality of the needs that are pushing us and other commentators to the gradual phase-in of increasing CPP has to lie at the bottom of this. We have to understand what the average citizen is experiencing, the stress in their lives and work lives. They know the challenges they are facing and that they need some kind of help from the Parliament of Canada.
Mr. Speaker, before I begin, I would like to express heartfelt condolences from the Shory family and from the constituents of Calgary Northeast to the family and friends of Nelson Mandela and the nation of South Africa. Mandela's long walk to freedom left a lasting legacy for his people, leading to them to peace, not retribution.
Mandela once said:
When a man has done what he considers to be his duty to his people and his country, he can rest in peace.
Indeed, he can rest in peace now.
Today, I appreciate the opportunity to respond to the hon. member's motion for debate on expanding the Canada pension plan. Let me be clear. Our Conservative government is focused on what matters to Canadians: growing the economy and helping to create jobs.
Since 2006, we have taken responsible actions to ensure that Canada's economy is well positioned for long-term prosperity. We are on the right track. Thanks to the economic action plan, we have created over one million net new jobs since the end of the recession, nearly 90% of which are full-time positions and more than 80% are in the private sector. This is the best job creation record in the G7 by far. What is more, Statistics Canada recently announced that 21,600 net new jobs were added in November, with the unemployment rate remaining at 6.9%. This is a record of which my constituents of Calgary Northeast and all Canadians can be proud.
However, we know that Canada is not immune to the challenges beyond its borders. The global economy remains fragile, especially in the U.S. and Europe, both among our largest trading partners. Indeed, the sovereign debt crisis in Europe continues to weigh on the confidence of consumers and businesses. Closer to home, a slow recovery in the U.S., as well as uncertainty surrounding the sustainability of its finances, poses the greatest risk to the Canadian economy.
In light of these factors, not surprisingly, the International Monetary Fund recently revised its outlook downward for the real GDP growth in both advanced and emerging economies. In fact, the IMF now projects that growth in advanced economies will average just 1.2% in 2013, down from its previous projection of 1.4%.
With significant risks still remaining in the global economy, Canada must remain well positioned to withstand any shocks arising from beyond its borders. However, for some reason, it is in this challenging economic environment that the NDP unilaterally demands that we expand the Canada pension plan.
While CPP reforms continue to be examined by ourselves and the provinces, we share the concerns of small businesses and their workers of increasing costs in a fragile global recovery. I would like to offer the House some examples of what people think about expanding the CPP at this time.
First, here is what the Canadian Federation of Independent Business had to say:
Small firms believe that the economy cannot manage a significant increase in payroll taxes...Thousands of workers could find themselves with reduced hours or out of a job as a result of employers having to react to higher payroll costs
Similarly, the Canadian Restaurant and Foodservices Association had the following concern:
The restaurant industry is one of the country’s largest employers and the number one place where Canadians get their first-job experience. Increasing CPP premiums puts these opportunities at risk.
There is still more. Writing for Canadian Business magazine, here is what Larry MacDonald had to say:
There doesn't seem to be a real need for it...A jump in CPP premiums makes it more expensive for businesses to maintain a workforce and could lead to job losses.
I could go on and on. There is just so much opposition to this short-sighted NDP proposal to potentially double the CPP.
Why does the NDP want to increase payroll taxes on small businesses? Does the NDP not recognize the vital role that small businesses play in Canada's economy? Does the NDP not recognize that they are essential in creating jobs and economic growth?
Fortunately, our Conservative government understands that small businesses are the cornerstone of Canada's economy. Indeed, that is why since 2006 our government has lowered the small business tax bill by over $28,000. We have achieved this through such measures as reducing the small business tax rate from 12% to 11%, increasing the amount of income eligible to lower the small business tax rate from $300,000 to $500,000 and introducing the job-creating small business hiring tax credit. It is measures like these that have left Canada's entrepreneurs with more money to grow their businesses and create more jobs.
Indeed, we are taking further action to support Canada's job creators.
Through economic action plan 2013, we are extending and expanding the hiring credit for small businesses, which will benefit an estimated 560,000 employers and provide close to $225 million in tax relief in 2013. We are also freezing employment insurance premiums to provide predictability and stability for small businesses. This action will keep $660 million in the pockets of job creators in 2014 alone to be spent on hiring more employees, improving wages and growing their businesses. This is how a responsible government supports job creation. Unlike the opposition, we will not attack job creators with massive tax hikes.
Unfortunately, while we are supporting this vital sector of our economy, the NDP is putting forward proposals that will hurt small businesses. As if a $20 billion carbon tax was not enough, now the NDP is demanding that our government double the CPP, which is a proposal that would kill up to 70,000 Canadians jobs. Once more, the NDP plan would force contributions raised on average by over $1,600 per year. A family with two workers could be forced to pay as much as $2,600 every year. Where does the NDP want the family to find this money? I know that it does not grow on trees. Families may be forced to cut on rent payments, heating or grocery bills.
The NDP is out of touch with the concerns of Canadian families and it has not listened to the concerns of the provinces either.
The NDP claims that a CPP expansion has the support of the provinces. As hon. members should be aware, any expansion of the Canada pension plan would require the support of two-thirds of provinces representing two-thirds of the Canadian population. Had the member done his research, he would have learned that a number of provinces have clearly expressed concerns about the economic impact of higher payroll dedications on workers and their employers at a time when the global economy remains uncertain.
Saskatchewan Premier Brad Wall has already said that now is not the time for contribution changes or increases.
Nova Scotia Premier Stephen McNeil has said, “some issues about what that will mean to small business owners in this province, and what is the impact on low-income Nova Scotians and Canadians”.
New Brunswick Finance Minister Blaine Higgs stated, “We don't think it's the right time to put on additional costs to business owners and employees”.
Talking for British Columbia, the finance department has said, “B.C. believes pension reforms should not be undertaken before the economy has recovered from the impacts of the recent recession”.
We share these concerns. Why do we share these basic concerns? Because the basic truth that the opposition does not understand is that for many Canadians there is no good retirement plan if they have no job.
That is not to say that the opposition motion is completely without merit. It is actually quite useful in offering us a prime example of how not to go about improving retirement security for Canadians.
The NDP wants to derail our economic recovery, and it wants to raise payroll taxes. It could not care less about the concerns raised by the provinces and small businesses.
In addition, it ignores the fact that Canada's retirement system is already recognized as among the strongest in the world, thanks in large portion to the action plan taken by this Conservative government. Indeed, this is a record of which we are justifiably proud.
Our Conservative government has delivered positive results and offered innovative new options to Canadians working and planning for retirement as well as those who are already in retirement. Our actions have resulted in a very low rate of poverty among seniors.
I would like to take some time to highlight the three pillars of Canada's retirement income system and show the opposition how this system is helping Canadian seniors.
The first pillar, comprising old age security and the guaranteed income supplement program, provide a basic minimum income for seniors, which is funded out of the federal government's revenues. Indeed, the old age security and the guaranteed income supplement are important toward reducing poverty and ensuring basic income support in retirement. That is why our government implemented a new guaranteed income supplement top-up benefit for Canada's most vulnerable seniors. As a result of our changes, more than 680,000 low-income seniors are now receiving additional annual benefits of up to $620 for a single senior and $865 for couples.
Currently the federal government provides approximately $40 billion in OAS/GIS benefits per year to more than 5.2 million Canadians. Given the sheer size of this program and its importance to our retirement system, we recently took steps to ensure that OAS remains on a sustainable path over the long term. We did so because the OAS program was designed for a different time. In the 1970s, there were seven workers for every one person over the age 65; in 20 years, there will be only two. In 1970, life expectancy was age 69 for men and 76 for women; today, it is 79 for men and 83 for women. At the same time, Canada's birth rate is falling.
Canadians are living longer and healthier lives, which, of course, is a good thing. Our changes would ensure OAS is put on a sustainable path so it is there when the next generation of Canadians need it. That is responsible economic leadership.
The Canada pension plan is the second pillar in Canada's retirement income system. It is one where we have already made improvements. Working with the provinces, we modernized the Canada pension plan to make it more flexible for those transitioning out of the workforce, to better reflect the way Canadians currently live, work and retire.
The CPP and Quebec pension plan currently provide approximately $45 billion per year in benefits to about 6.6 million individuals, financed by contributions from workers and employers. I am happy to inform this House that the most recent actuarial report on the CPP by the Chief Actuary, tabled in Parliament on December 3, confirmed that the plan is sustainable at the current contribution rate of 9.9% of pensionable earnings for at least the next 75 years. In other words, the CPP is in good shape and has a great future.
I would like to turn now to the third and final pillar of Canada's retirement income system. The government has provided various tax-assisted private savings opportunities to help Canadians save for their retirement. These include registered pension plans and registered retirement savings plans.
Contributions to RPPs and RRSPs are deductible from income for tax purposes, and investment income earned in these plans is not subject to income tax. The federal tax cost associated with RPP and RRSP savings is significant and currently estimated at approximately $24 billion per year.
Given their importance, we have enhanced the incentives for private savings in a number of ways. In 2009, for example, we consulted Canadians from coast to coast to coast and introduced a number of changes to the framework for federally regulated registered pension plans.
These improvements require the plan sponsors to fund any deficiency that exists at the date the pension plan is terminated. They also provide sponsors of the defined benefit pension plans with more funding flexibility, making them less sensitive to market volatility.
In budget 2008, our government introduced the tax-free savings account, which became available in 2009. The TFSAs are flexible, general purpose, tax-assisted savings accounts that may be used for any purpose, including retirement savings. The TFSA provides greater savings incentives for low and modest income individuals, since neither TFSA investment income nor withdrawals affect eligibility for federal income tested benefits and credits, such as OAS and GIS benefits.
Initially allowing Canadians to save tax free on up to $5,000 each year, our government recently increased the amount by $500. As a result of this action, since 2013 Canadians have been able to benefit from an overall annual tax-free savings contribution limit of $5,500 from TFSAs.
That is not all. Our government has also taken concrete actions to help address what has been identified as a gap on the voluntary side of Canada's retirement income system. While participation in retirement savings vehicles like RPPs and RRSPs is reasonably high for middle and high income earners, some Canadians may not be taking full advantage of these personal retirement savings opportunities. In particular, research has shown that some modest and middle income households may not be saving enough for retirement.
Indeed, more than an estimated 60% of Canadians do not have access to a workplace pension plan. Our government does not believe this is right. This is precisely why we have introduced pooled registered pension plans, or PRPPs. PRPPs will significantly help small and medium-sized businesses and their employees, who until now have not had access to a large-scale, low-cost private pension option. PRPPs will be low cost. By pooling pension savings, the cost of administering these pension funds will be spread over a larger group of people. As a result, plan members will benefit from lower investment management costs.
I would like to remind my NDP friends that unlike CPP expansion, there was federal, provincial and territorial consensus to proceed with PRPPs. Despite this consensus, the NDP felt they did not want to work toward strengthening Canada's retirement income system and they voted against our government's legislation. This legislation ultimately established the federal framework for PRPPs.
In conclusion, our government will continue to work co-operatively with the provinces to explore potential reforms to CPP. That being said, we will not support any course of action that endangers Canadian jobs, including the NDP's risky and ill-advised proposal to double the CPP contributions. We know that the best retirement plan for tomorrow is a job today. The NDP may claim that that it is serous about job creation and economic growth, but it continues to push forward radical policies that Canadians cannot afford.
Indeed, when it comes managing the economy, Canadians can rest assured that our Conservative government will support initiatives that stimulate job creation and economic growth, not measures that will kill jobs and hurt our economy.
Unfortunately, today's motion from the hon. member for shows that the same cannot be said for the NDP.
Mr. Speaker, I am very pleased to participate in the debate today. I will be sharing my time with the member for .
I would like to thank my NDP colleague from for submitting this motion and his tremendous work on the issue of pensions, which affect so many Canadians. For the benefit of those participating in the debate and for Canadians watching the debate, I will read the motion so that it is clear what we are discussing.
The motion reads as follows:
That the House call on the government to commit to supporting an immediate phase-in of increases to basic public pension benefits under the Canada and Quebec Pension Plans at the upcoming meeting of federal, provincial and territorial finance ministers.
The meeting is to take place this month at Meech Lake.
The motion does not specify exactly what form these increases would take or the rate of increase, but it does say that the ministers should take the opportunity to address this issue without delay at the meeting at Meech Lake.
That is because, as many are now recognizing, Canada is facing a retirement security crisis. Nearly a third of Canadians face a drop of more than 20% in their standard of living by the time they face retirement. I see this frequently in my riding of Parkdale—High Park. Constituents come to my office and say they had no idea how financially strapped they would be when they retired.
They kind of expected there would be enough through the Canada and Quebec pension plans to support them in their retirement years, and let us be very clear that the Canada and Quebec funds are absolutely rock-solid and that this program is the most solid pension base that Canadians could ever want. It is indexed to inflation and it is portable no matter where a person worked. No matter where one goes in the country, people have access to the same benefits. It is a rock-solid investment that Canadians can be confident in for many decades to come. The major problem is that the benefits that it currently pays out are not sufficient to guarantee retirement security for Canadians.
The reason so many Canadians are facing a steep decline in their retirement income is that the vast majority of Canadians do not have a private pension plan, a company pension plan, an employer pension plan, or RRSPs. Canadians who had RRSPs and who became unemployed would often have to take the money out of their RRSPs, and they did not have other investments. The reality is that most Canadians rely on the Canada and Quebec pension plans, but the problem is that it does not replace enough of people's pre-retirement income. That is why so many agree that there is a retirement security crisis looming in this country.
Last year the agreed with this assessment, and he agreed to move forward to increase CPP and QPP benefits. However, now he does not seem to even want to meet with the provincial finance ministers. He has been ducking and diving on this issue, so New Democrats want to encourage him to address it.
We know that our colleagues in the Liberal Party have proposed a voluntary plan; we believe that what Canadians need is a mandatory plan that will guarantee their retirement income, and that is what we are proposing.
What we are proposing is completely affordable. Let me share with my colleagues some costing that my colleague from has done.
There are a variety of ways to increase the CPP. One is the plan proposed by the Canadian Labour Congress, which would lead to a doubling of benefits. That would cost about $4 a week, the cost of a couple of cups of coffee a week. That would be the cost to double the retirement benefits for Canadians.
However, there are other proposals that are out there. P.E.I. has a proposal that would cost less than $2 a week. What would that mean for Canadians? It would provide additional pension benefits for Canadians of $3,000 each year. That sounds like a pretty darn good deal. I do not think there is any investment that Canadians could find that would give them that kind of return with the security and surety of the Canada pension plan.
It is not just New Democrats who are saying this makes sense. As we have heard, there was an editorial today in The Globe and Mail, not exactly a radical leftist newspaper, I am told. Let me quote from it. With regard to expanding CPP, it says:
It should be done, and it should be done soon. Conservatives of the large and small-c variety have long been uncomfortable with a bigger national pension plan. It sounds like a tax increase. It's not. It's a savings plan. And it's the best one we've got.
I wholeheartedly agree.
Let us look at some others. We have an expert on payroll taxes, Rhys Kesselman, the Canada Research Chair on Public Finance at the School of Public Policy at Simon Fraser University. Here is what he has to say:
Since the proposed CPP premium hikes would provide workers correspondingly higher benefits in retirement, they are not like an ordinary payroll tax increase. Rather, they are like an individual's payment for improved insurance coverage.
That is what it is, retirement insurance.
He went on to say:
This premium-benefit linkage means that CPP premiums lack the disincentive effects of most taxes.
In other words, it is not a negative but a positive.
He also said:
Concern over the effects of CPP premium hikes is unwarranted and should not be allowed to block this important policy reform any longer.
We wholeheartedly agree.
Let us hear what the OECD pension team has to say about Canada's pension plan. Edward Whitehouse, leader of the OECD pension team, said:
The analysis suggests that Canada does not face major challenges of financial sustainability with its public pension schemes. ... Long-term projections show that a public retirement-income provision is financially sustainable.
That is what we said earlier: our public pension plan is sound.
He went on to say:
Population ageing will naturally increase public pension spending, but the rate of growth is lower and the starting point better than many OECD countries. Moreover, the earnings-related public schemes (CPP/QPP) have built up substantial reserves to meet these future liabilities.
He is convinced that we have the capacity with our current plan.
Another Globe and Mail article also said:
On the other hand, Canada is different because, unlike most other countries, our public pension commitments are not a substantial threat to our public finances. The Canada Pension Plan is in long-run balance. Old Age Security takes only 2.41 per cent of GDP. Very few OECD countries have lower levels of public pension spending as a share of GDP than Canada.
To take the extreme example, Italy spends more than 14% of GDP on public pensions, up 10% from only a few years ago; we are at 2.41% of GDP.
We have the support for this initiative. As I said, The Globe and Mail, tax experts, and the Canadian Association of Retired Persons just want us to get on with this. Even the CIBC economics report said that the CPP is a good plan, saying, “The CPP has the scale to make big investments and get better returns with relatively low cost.”
Canadians rely on the Canada and Quebec pension plans. We have to make them better and stronger so that they cover more of people's post-retirement income. We can do it.
Let us get together in the House and address this crisis now. Let us make it happen.