The House resumed from November 28 consideration of Bill C-26, An Act to amend the Canada Pension Plan, the Canada Pension Plan Investment Board Act and the Income Tax Act, as reported (without amendment) from the committee, and of the motions in Group No. 1.
Ms. Karina Gould (Parliamentary Secretary to the Minister of International Development, Lib.):
Mr. Speaker, I am particularly pleased to speak to the enhancement of the Canada pension plan because, once again, the government is providing the middle class with a concrete solution to help it get ahead.
It is important to recognize that retirement levels have dropped in Canada in recent decades. In 1977, 43% of Canadians had a defined benefit pension plan. In 2012, only 27% of Canadians, or just over one-quarter, had this same type of pension plan.
If we look only at the private sector, that number drops to 11%, or just over one in 10 people. There is also another reality that we have to face: too few young Canadians are saving for their retirement, for all sorts of reasons. One in four families approaching retirement age, or 1.1 million families, might not be saving enough money to maintain their current lifestyle when they retire.
What is even more worrisome is the number of families without a workplace pension plan. One-third may not save enough for retirement.
The government cannot let Canadians live with such uncertainty. That is why we are taking action in concert with the provinces and territories. We must collectively ensure that all Canadians can retire with dignity.
Therefore, the issue is what the government, the provinces, and the territories have decided to do. We started with the fundamentals. We increased the amount of the pension benefit. When the new CPP goes into effect, the amount at retirement will represent one-third of pensionable earnings. At present, it represents one-quarter.
Take, for example, a mother who earns $50,000 a year. When she retires, she will collect approximately $16,000 every year under the new plan, instead of $12,000. Then, the maximum level of pensionable earnings, that is the earnings used to calculate the final amount of the pension, will go up by 14% by 2025. This means that the maximum annual CPP benefit, which is currently $13,110, would go up to $20,000 in today's dollars. Under the enhanced CPP, the maximum benefit will go up by almost 50%.
Another interesting thing about the Canada pension plan is that it is funded entirely by workers' contributions. For most Canadians, the contribution rate will go up by just 1%. In addition, employee contributions to the enhanced portion of the CPP will be tax deductible, while other CPP contributions will remain eligible for a tax credit.
There is a mechanism to compensate low-income workers for CPP contributions. They may be eligible for an enhanced working income tax benefit. Their retirement income will be higher, but their family's budget will not be affected by higher contributions.
The new plan will be phased in over seven years from 2019 to 2025. The government is giving workers and businesses time to prepare for the changes. Canadian families know that they can count on us to safeguard their quality of life and their future responsibly.
I should point out that the enhancement complements other vehicles already available to Canadians that enable them to pay less tax: registered pension plans or RPPs; registered retirement savings plans or RRSPs; pooled registered pension plans; and tax-free savings accounts.
I want to emphasize that the changes we are proposing today are not about ensuring the long-term survival of the Canada pension plan. According to the Chief Actuary of Canada, the plan is already safe for the next 75 years. The purpose of these changes is to encourage Canadians, especially young people and future generations of Canadians, to save more for retirement.
In closing, I want to summarize the main advantages of the enhanced CPP.
Once the enhanced CPP is fully implemented, the maximum benefit will have increased by nearly 50%.
The CPP provides secure and predictable benefits, which means that Canadians can worry less about exhausting their savings or having their savings affected by the vagaries of the market.
CPP benefits are fully indexed to the cost of living, which reduces the risk of inflation gradually eroding the purchasing power of retirement savings.
The enhanced CPP is adapted to the job market, because it helps close the gap resulting from the lower coverage offered by employer pension plans. In addition, it is portable, so to speak, and follows workers from one province to another, which promotes labour force mobility.
The CPP has millions of contributors, which is a crucial factor, because makes it possible for the Canada Pension Plan Investment Board to take advantage of economies of scale in order to generate healthy returns.
Future generations of Canadians can rest assured. They can be assured that, when they retire, the Canada pension plan will still have enough money to pay benefits. This means that they can focus on what matters to them, such as spending time with their families or enjoying their pastimes. Above all else, there is one thing that illustrates the enhancements of the CPP: Canada is at its best when all the governments work together. Today, members have a historic opportunity to raise the bar for future generations of Canadians when they retire. That is why we must support this bill.
Mr. Ron Liepert (Calgary Signal Hill, CPC):
Madam Speaker, I guess this is our last opportunity make the comments we want to make on this particular bill.
It is obvious, in listening to the government, that it is totally stone deaf to any of the suggestions that might be coming forward. However, that does not mean to say we should not keep trying. There is always a glimmer of hope that someone over there might be listening.
This particular bill, more than any other bill the government has brought forward, emphasizes the difference between Liberals and Conservatives. We have heard time and again from speakers on this side of the House that Liberals believe it is their job to ensure that they take care of people; and how they take care of people is by sticking their hand in their pockets, taking out more taxes, and building up a fund. Among the majority of people I talk to, young people, their first comment about the Canada pension plan is that they have doubts it will even be there when they need it.
I try my best to assure them that the Canada pension plan does have an investment board that is investing their dollars, I believe, wisely. Certainly, though, there is a greater risk with this enhanced portion of the Canada pension plan, because finance officials told us at the finance committee meeting that the enhanced plan has something like a four times or five times higher risk than the current plan, because it is predicated on a certain return on investment. The current plan is primarily funded by employer and employee contributions.
We have to rely on a continued strong investment by the Canada Pension Plan Investment Board for this to be sustainable down the road. I am confident that board is the right investment tool, but we have all seen what has happened in the past, relative to the economic downturns. It needs to be acknowledged that this is a much higher risk plan than the current plan that exists today.
Getting back to the basic differential of Conservatives and Liberals, during the past 10 years a number of initiatives were taken by the Conservative Party when it was in government to help Canadians save for the future. However, they were to help Canadians not force Canadians. The Conservative government brought forward a proposal to double the amount of money that one could put into a tax-free savings account. What was one of the first initiatives of the new socialist Liberal government? It was to roll that back.
The government also talked about allowing Canadians to voluntarily contribute into a Canada pension plan enhancement. That, again, has been tossed by the wayside.
The other thing that the government is failing to realize—and in fact I would say it is being disingenuous to young people—is that we have a hard-working, young, entrepreneurial, millennial population in this country who understand they need to save. The government continues to kind of paint them all with the same brush, saying that somehow people are not saving.
Young people I know are investing in ways that can ensure that their future retirement funds will be there. They do not want the government taking money out of their pockets, and then the government, through the Canada Pension Plan Investment Board, running that high risk of investing their money.
The government is standing up, and I heard it again from the previous speaker, and saying that young people cannot be trusted to save for the future. I am quoting what I think I just heard from the previous speaker: the government cannot let Canadians live in uncertainty.
We live in uncertainty every day. Comments like that are disingenuous to Canadians, to young Canadians, and these members who make those statements, frankly, should be ashamed of themselves.
I want to get back to the basic difference between Conservative views of the way Canada operates and the Liberal view.
We have heard an awful lot about small business. That particular member who just spoke may very well have been talking to some different small businesses in the greater Toronto area, but the businesses that came before the finance committee from across this country—whether it was the Canadian Federation of Independent Business, whether it was Canadian taxpayers, whether it was chambers of commerce, or whether it was small businesses as we travelled across the country listening to their concerns—are very concerned about this extra cost that is being added to their bottom line. That is not even taking into account such things as the carbon tax, which is going to be coming into effect right around the same time.
I know in the case of Alberta, we have a situation where the government is increasing the minimum wage to $15 by 2018. It is this piling-on effect that government does not seem to take into account for small business. It will readily admit that small business is the creator of jobs in this country. If the government were imposing a carbon tax, imposing higher taxes for Canada pension plan, and at the same time, honouring the commitment it made in the election campaign to reduce small business tax, then maybe we could think about supporting some of these initiatives. However, it reneged on the promise to cut the small business tax, and now, it is layering on tax increases.
I think the government will pay the price down the road because small businesses are not going to create the jobs. Again, it is government thinking by the Liberals that, somehow, government creates jobs. That will eventually do the government in.
I would like to summarize what we have been through over the past period of time.
We have had a finance minister who has brought in a budget that did not even come close to his leader's election campaign promise of a small deficit of $10 billion.
The Liberal election promise was also that within this mandate it would balance the budget. We have seen no signs of that.
In fact, my colleague who is the finance critic has asked the Minister of Finance at finance committee—I think it is up to 12 times now, including yesterday—when the budget will be balanced. The finance minister has no idea when the budget is going to be balanced. I think he is waiting for the next promise from the Prime Minster. There may be some help on the way. I wonder if we are not going to start to take some lessons from some foreign countries that were ruled by former dictators, because a lot of what I am seeing is the government starting to look like some of these foreign dictators, because we have not only these initiatives that are being pushed through relative to tax increases, but we also have a government that decides, if it cannot get its own way, to bring in closure. We have seen that again today. Is this the ninth or tenth time in a short sitting of the House of Commons that closure has been brought in?
We saw the Liberal members shutting down any debate at the finance committee. The NDP member for Hamilton Mountain attempted to get something on the table. He was unsuccessful because one of the members of the committee called for adjournment and, with the majority of the committee in favour, the committee adjourned. We had, I think, about 15 minutes to talk about this bill at committee stage. Now the government turns around and brings in closure.
I think the government has to take a strong, hard look at itself and ask what kind of government it is offering to Canadians. It keeps talking about looking after Canadians' future.
I think one of the things it should be looking after is the ability for all of us, as representatives of our constituents, to have the opportunity to make these comments in this assembly and try to ensure that, if something is not happening that we believe is in the best of interest of Canadians, we have the opportunity to express ourselves. The current government is taking it away from every one of the members in this assembly.
I will not support this legislation.
Mr. Randeep Sarai (Surrey Centre, Lib.):
Madam Speaker, the goal of a stronger Canada pension plan is truly a high priority that is shared by Canadians from coast to coast to coast, with 75% in favour of a stronger public pension plan. By making this priority a reality, we have the opportunity to demonstrate what Canadian federalism can accomplish when governments work together openly and constructively.
Helping Canadians achieve their goal of a safe, secure, and dignified retirement is a key part of the Government of Canada's plan to help the middle class and those working hard to join it. As part of this plan, the Government of Canada is committed to working with all provinces and territories to enhance the CPP to ensure that future generations of Canadians can count on a strong public pension plan in their retirement years. This is precisely what we are doing by enhancing the plan.
We know that middle-class Canadians are working harder then ever before, and many are worried that they will not have set aside enough money for their retirement. The Department of Finance has examined whether families nearing retirement are adequately prepared. About one in four Canadian families approaching retirement, or 1.1 million families, are at risk of not saving enough to maintain their current standard of living, and the risk is highest for middle-class and middle-income families. Families without workplace pension plans are at an even greater risk of under-saving for retirement. In fact, one-third of these families are at risk.
We are aware of the need to help Canadians save more. Saving more will mean that they are more confident about their future and about their ability to secure a dignified retirement.
There is a particular concern regarding younger Canadians who tend to have higher debt than in previous generations and who, in most cases, will live longer than in previous generations. They face the challenge of securing adequate retirement savings at a time when fewer expect to work in jobs that will include a workplace pension plan. Further, a prolonged period of low interest rates could mean that young workers will face lower returns on their retirement savings, which means that they may need to save even more than in the past.
I am proud to be able to say that we are delivering on our commitment to help Canadians save more for retirement. Working in close collaboration and towards a common purpose with governments across Canada, we reached a historic agreement that would give Canadians a more generous public pension to help them retire with dignity.
The challenge that governments faced in crafting an enhanced CPP was that the current plan was not accumulating benefits quickly enough to meet the future needs of Canadians in a world where workplace pension coverage continues to decline. The enhancement that the Canadian governments have agreed to does two things to address this.
First, it would boost the share of annual earnings received during retirement from one-quarter to one-third. For example, an individual making $50,000 a year in today's dollars over his or her working life would receive about $16,000 per year in retirement, instead of roughly $12,000 a year today.
Second, the enhancements would increase by 14%, which is the maximum income range covered by the CPP. This means that, once fully in place, the enhanced CPP would increase the maximum CPP retirement benefit by about 50%. In other words, the current maximum of $13,110 would, in today's dollar terms, increase by nearly $7,000 under the enhanced CPP, bringing the maximum benefit up to almost $20,000. The legislation also includes enrichments to CPP disability and survivor benefits.
For most Canadians, these increased benefits would come from just a 1% increase in their contribution rates. We are also making sure to give individuals and their employers plenty of time to adjust to the modest increase, making sure that it is small and gradual, and it would start in 2019.
Our plan is also fiscally sound. The chief actuary released a report in late October that confirmed that the contribution and benefit levels proposed under the CPP enhancement, agreed by Canada's governments on June 20, would be sustainable for the long term, ensuring that Canadian workers could count on an even stronger, secure CPP for years to come.
What does Bill C-26 mean for Canadians? First and foremost, enhancing the CPP means there will be more money from the CPP waiting for Canadians when they retire. This means they will be able to focus on the things that matter, like spending time with their families, rather than worrying about how to make ends meet. It will mean a reduction in the share of families at risk of not saving enough for retirement, as well as a reduction in the degree to which Canadians are under-saving.
The Department of Finance has estimated that by supporting and ensuring royal assent of Bill C-26, parliamentarians would have the opportunity to reduce the share of families at risk of not having adequate retirement savings by one-quarter, from 24% to 18%, when taking into account income from the three pillars of the retirement income system and savings from other financial and non-financial assets. Therefore, the enhanced CPP builds on the core existing CPP benefits. It does so in a smart, carefully targeted, and effective way that reflects the extensive research that governments brought to the table in crafting this enhancement for the benefit of working Canadians. Taken together, it is a comprehensive package that will increase CPP benefits while striking an appropriate balance between short-term economic considerations and long-term gain.
I would encourage hon. members to support the timely passage of Bill C-26 through the House to help the government increase the confidence of Canadians in their future.
Ms. Karine Trudel (Jonquière, NDP):
Mr. Speaker, I am very pleased to speak to Bill C-26 today. However, I find it unfortunate that our speaking time has been cut short. I became involved in politics to represent the constituents of Jonquière. I took on this role to uphold everyone's democratic rights. Whether we agree with the government or not, we are here to ask questions on behalf of Canadians in order to determine where our society is going.
First of all, I would like to thank my colleague from Hamilton Mountain for his excellent work on Bill C-26. He worked very hard, especially in committee, to raise the issues that I will discuss in my speech.
This bill would amend the Canada Pension Plan Act to incorporate the recent agreement reached between the provinces to enhance CPP benefits. While a better outcome was possible, since the full effect of the changes will not be felt for another 49 years, our young Canadians will benefit. Unless something changes along the way, when my young boys reach retirement age they will benefit from the changes we are debating in the House. I have to say that, as a mother, I find it a bit funny to say that. My boys will get older and benefit from this measure.
We must now see immediate action to help those seniors and Canadians on the cusp of retirement who will not benefit from these changes. The government must build on the momentum of this agreement and take steps to improve long-term retirement security for today's workers. It is all well and good to have changes that will come into effect in 49 years, but there is no denying that many seniors who are about to retire or who are now retired are grappling with financial insecurity. Unfortunately, they do not have enough income to live on, in other words to pay rent or eat properly. Still today in my riding, some seniors cannot afford a decent retirement home when the time comes to move into one.
Retirement insecurity is reaching a crisis level in Canada, as many Canadians do not have adequate savings to maintain their lifestyle upon retirement. A large part of this problem is fuelled by the erosion of workplace pension plans. Six in ten working Canadians have no private pension plan.
The NDP supports the bill, even though we feel that it does not quite meet Canadians' expectations regarding CPP reform. New Democrats, along with many in the labour movement and groups working for the rights of seniors and retirees, have long advocated that benefits be increased from replacing 25% of a worker's pre-retirement income to 50% of pre-retirement income. However, this legislation has offered up a very modest increase, from 25% to 33% of pre-retirement income.
Although we do like to see an increase, we feel that the amount is wholly inadequate, especially in terms of ensuring that our seniors do not have to live in poverty and can retire with the dignity and quality of life they deserve.
While many would be happy to finally see some changes to the plan and some increases in benefits, there are many who will be very unhappy. Those are the people who will see very little or no benefit from the changes presented in this bill. The government needs to leverage the energy generated by this agreement and do what it takes to improve long-term retirement security for today's workers. It must respond to Quebec's concerns about the impact of this enhancement on low-income workers.
The problem for today's seniors is that these pillars are falling behind in terms of enabling seniors to maintain an adequate standard of living. Dramatic increases in the costs of things like electricity and housing are causing great strain on seniors' fixed incomes.
Failing to take action now will have a great social cost, forcing many seniors into poverty. The number of seniors forced to use food banks will rise dramatically.
We talk about young moms a lot in the House. I want to talk about my best friend, Nathalie. Since I was elected, we have not spent as much time together as we used to because of my new responsibilities, but my friend Nathalie has been on my mind since Bill C-26 was introduced. She is a young mom who, together with her husband, decided to raise her children, to be there for them and to stay home with them, but also to work on her own personal growth by doing other things, such as volunteering with her local farm women's group.
I really admire this young woman because she is caring for her children and making a good life for them. She and her husband made some tough choices. She stays home, which means less income for the family, but the two of them feel it is very important to provide a good quality of life to their two young daughters.
However, I am disappointed by a major flaw in the bill. I fail to understand why the government simply will not help mothers like my friend Nathalie by immediately making the necessary changes. It would be so easy for us to do and it would help these mothers when they retire. Why do we penalize young mothers who decide, together with their spouse, to stay home to raise their children? We are talking about our future generation.
It is great that child care services are available to women like me who have a career. That is wonderful. However, it is not right to penalize women who stay at home to help their children become the adults of tomorrow because a bill fails to meet their needs. That is unacceptable. We must immediately rectify this as part of the new improvements.
It is easy to change a bill. We would just have to change a subclause, two or three lines maybe. Why is the government so bent on penalizing young women? I cannot stand by that.
The Canada pension plan is being improved and will benefit future generations, as I said, including my children, but not for another 49 years. I talked about our seniors earlier and I am quite concerned about what will happen to them now.
My parents are retired. They worked their entire lives to make a decent living in order to be able to pay for their house and groceries and to help me with my children. In fact, my parents look after my children when I am here in the House and am working on behalf of all Canadians. I am proud to be here for them and to do this work every day. However, when I meet with people from my riding of Jonquière and see the inequalities among them, I start asking myself serious questions. We have to find ways to take action now.
The NDP is recommending further increases to the GIS and the OAS, a national pharmacare program, and programs to enhance home care and palliative care.
We have much more work to do to ensure that workers can retire with adequate incomes and access to the services they need to have a good quality of life. The NDP will continue to work with our labour allies and others to improve the lives of Canadian seniors and retirees.
I will end my speech there. I hope that the government will listen, especially to women, like my friend Nathalie, and our seniors. I am thinking of Ms. Tremblay who devoted her entire life to looking after her granddaughter, a person with reduced mobility who needed very special care. We must consider these people because they, too, will need us in retirement. It is our responsibility and our duty as parliamentarians. It is also the government's duty.
Mr. Chandra Arya (Nepean, Lib.):
Mr. Speaker, it is a great honour and privilege to speak to Bill C-26, which I agree is one of the most important bills of this government, not just for the people of my generation but also for the next generation.
There are 11 million working Canadians without a workplace pension plan. As well, if we talk to people in the food banks today, they will report that a lot of working families are availing the help of the food banks.
When we combine the fact that 11 million working Canadians are without a workplace pension plan and a lot of working families are going to food banks for help, we know that when these families retire, they will retire in poverty.
We already have a lot of issues with the growing number of seniors. Just to give one example, in eastern Ontario, 2.5% of the patients account for close to 35% of the total hospital expenses. In this 2.5% of patients, close to 50% of them are seniors. The issues related to seniors are already costing us a lot. We have to take adequate steps so the seniors of the future years are well covered.
This bill, an act to amend Canada pension plan, the Canada Pension Plan Investment Board Act, and the Income Tax Act, as I mentioned earlier, is the most important thing. Let us summarize what the bill would do.
The bill proposes to amend the Canada pension plan to increase the amount of the retirement pension as well as survivors and disability pensions and the post-retirement benefit, subject to the amount of additional contributions made and the number of years for which those contributions are made; increase the maximum level of pensionable earnings by 14% as of 2025; provide for the making of additional contributions beginning in 2019; provide for the creation of additional Canada pension plan accounts and the accounting of funds in relation to it; and, finally, include the additional contributions and increased benefits in the financial review provisions of the act, and authorize the Governor in Council to make regulations in relation to those provisions.
I know this on its own cannot operate and deliver the results, so there are other related acts that need to be amended. Therefore, part 2 of the bill seeks amendments to the Income Tax Act to increase the working income tax benefit and to provide a deduction for additional employee contributions.
The first part of the act also proposes to amend addition Canada Pension Plan Investment Board Act to provide for the transfer of funds between the Investment Board and the additional Canada pension plan account, and to provide for the interpretation of financial statements in relation to amounts managed by the Investment Board in relation to the additional contributions and increased benefits.
As I mentioned earlier, middle-class Canadians are working harder than ever, but many are worried they will not have enough money for their retirement. A lot of working Canadians have no workplace pension plan. Each year, fewer and fewer Canadians have workplace pension plans on which to fall back. For this reason, we made a commitment to Canadians to strengthen the Canada pension plan to help them achieve their goal of a strong, secure and stable retirement.
Earlier this year, Canada's Minister of Finance released a historic agreement to make meaningful changes to the CPP, an example of federalism at its best.
The more than one quarter of Canadian families nearing retirement, about 1.1 million families, who are facing a drop in their standard of living will be able to retire in dignity as a result of this enhancement. This deal will boost how much Canadians will get from their pensions, from one quarter of their earnings now to nearly one third, which in my opinion is quite significant and is a necessary change we need to address.
To make sure these changes are affordable, we will phase them in slowly over seven years, from 2019 to 2025, so the impact is small and gradual. Every Canadian deserves a secure and dignified retirement after a lifetime of hard work. Through this announcement, we have taken a powerful step to help make that happen.
There are certain facilities that are available to plan for retirement. One is the RRSP account, which is available to every Canadian. We note that there is a huge gap. A lot of Canadians are eligible to make contributions to those accounts but are unable to make contributions because of the cost of living.
One of the ideas a friend from the opposite side of the House pointed to is financial literacy. While I agree that financial literacy is an important component in achieving this result, we also need reasonable, tangible ways and means to make this possible.
To conclude, I repeat, there are 11 million working Canadians without a workplace pension plan. A lot of food banks are seeing working Canadians. Keeping that in mind, I think we should all support Bill C-26.
Ms. Elizabeth May (Saanich—Gulf Islands, GP):
Mr. Speaker, it is an honour to rise today to speak to Bill C-26, a bill to enhance the Canada pension plan.
I want to start by lamenting, as I did this morning, time allocation, which is bringing this debate to a premature end. I think this is one of those times, particularly with the degree of controversy about the drop-out provisions in the bill and how they will unequally impact women in this country, when we really should have more time for debate and more time to ensure that we have all the facts.
I want to take a moment to say that if there is anything sadder than watching Liberals fall short of their promises, it is the Conservatives jumping on them for doing about one-tenth of what the Conservatives did when they had power. The use of time allocation was constant in the 41st Parliament.
Some hon. members: Oh, oh!
Ms. Elizabeth May: Mr. Speaker, I know that many who are currently heckling me were not here in the 41st Parliament, but I can assure them that we had no time to turn around before there was yet another time allocation motion. The Conservatives broke through all historical records. However, this does not excuse the Liberals for doing the same thing.
I would urge members on both sides of the House to consider what we really want in terms of parliamentary decorum and in terms of being able to address bills and get them through the House in an expeditious way while also ensuring that we do not trample on the rights of each of us here as members of Parliament to do the work we were elected to do, which is to study the legislation, provide suggestions, work together, and produce what the people of Canada want. They want parliamentarians who see the big picture and are prepared to put their heads together to come up with better legislation by taking the time that is needed.
Time allocation is in no one's interest here. I very much regret that the current government has brought it in now, for the ninth time. Again, for those who live in glass houses, I will remind them that it was 100 times that time allocation was brought in during the 41st Parliament.
I urge the Liberals in this place to consider what the threshold is against which they strive to achieve their goals. I would urge them not to think that their goal is to be better on any issue—the environment, climate, the treatment of veterans, criminal justice, Bill C-51, parliamentary decorum, the use of time allocation—than what Prime Minister Harper did. I want to set a really ambitious goal for them: Do better than what Prime Minister Mulroney did.
Obviously, I did not agree with everything done by the Progressive Conservative majority back in the 1980s, but I think if members go back and look at the use of time allocation, the number of whipped votes, and the treatment of issues and use that as a benchmark, they will find that they have to set their sights a good deal higher than trying to do better than the prime minister in the 41st Parliament.
Turning to the specifics of Bill C-26, I wish it did include—
Some hon. members: Oh, oh!
Ms. Elizabeth May: I am sorry, Mr. Speaker, but I am having trouble speaking through the noise.
I wish that Bill C-26 dealt with another pension issue. There is an omission, and I hope that the Minister of Finance will get back to it in the spring budget. It is an egregious situation that affects a minority of pensioners for sure, but they are the very people we should do the most to honour. These are people receiving pensions who, through the Superannuation Act, are deprived of spousal benefits if they are veterans, retired service persons, retired RCMP members, and other retired categories of public servants and have remarried over the age of 60. They are deprived of spousal benefits on their death.
This is a terrible injustice to a lot of constituents in my community of Saanich—Gulf Islands. I know that a lot of other members of Parliament are aware of this. It is due to the most anachronistic of all pension rules. It goes back to the Boer War. It was called the “gold-digger” clause.
I do not mind saying that I am 62. I do not feel that I am so far along with one foot in the grave that the gold-digger clause makes sense. The gold-digger clause in the Boer War was that if a soldier came back from the Boer War and remarried over the age of 60, the only possible reason anyone would have married one of these soldiers would have been to get their hands on their benefits when they passed away.
Times have changed. Very healthy, vigorous adults who have a lot of life left get married over the age of 60. I have one such serviceman in my riding who received the highest medals of honour, including the Legion of Honour from the French government, for his service in the Second World War. He is now over 90, and every day I see him, he reminds me to please do something about this terrible injustice. He does not want to leave his wife destitute. Therefore, I flag that again for the Minister of Finance.
Overall, the Green Party supports the bill. We support the fact that it is expanding the most reliable and consistent way in which we can ensure that seniors in Canada have adequate savings for retirement. The Canada pension plan is the most reliable and the most sustainable of what is available.
RRSPs, for example, are a good program. I know many of us will pay into it, but the registered retirement savings plan appeals primarily to those Canadians who already have discretionary income to put into an RRSP. That taxable benefit to higher wage earners costs the tax system quite a lot of money. If we look at it as a public policy question, we see it is not clear that the RRSPs make sense.
The Canada pension plan makes abundant sense, and we know right now that two-thirds of Canadians no longer have any workplace pension. Workplace pensions are disappearing. More and more Canadians have inadequate savings for retirement, so the workplace pension plans are shrinking at the same time as we have what is sometimes called the grey tsunami. We know we have a demographic with many more people about to enter retirement.
By the way, I commend the government for returning the retirement age to 65; that is commendable. However, we do need to enhance CPP benefits. There is no question that overall the bill is going in the right direction. We know that right now the median value of retirement assets for Canadians between age 55 and 64, with no accrued employer pension benefit, is under $4,000. We know we need to augment the CPP. Only one in five Canadians have adequately saved for their retirement.
It is all well and good for some members of this place to say that Canadians should plan ahead and it is their responsibility to figure out how to save for their retirement. This is a very small cost of a public program, with the cost split between the employer and the employee, to make sure that people have adequate savings for retirement. The reason people do not put aside money for retirement is generally that they lack disposable income because the other costs of daily life eclipse their ability to set aside money for retirement.
I urge my friends on the other side of the House to embrace expansion of CPP. I agree with the analysis of the Canadian Association of Retired Persons. It does really good work on public policy and commends the bill as well.
That brings me to the point where I wish we had time in this place and I wish the Minister of Finance and the Minister of Families, Children and Social Development could have provided, at committee, by accepting amendments, a fix to what looked initially like an oversight, and that is the dropout provisions for disability and child rearing to ensure gender parity. Both ministers have said that they can fix this problem by renegotiating terms with the provinces. I wish they had fixed it while they had the chance at committee. They still have the opportunity to fix it, if they are willing to accept amendments when we get through this process. However, at this point there has been no sign of a willingness to accept amendments, and we are left hoping for public pressure to continue what both ministers say they are willing to do by changing the terminology in the negotiated agreements with the provinces.
It is very hard to understand how this oversight has not been fixed already. The conclusion that my friends in the NDP have reached appears an inescapable conclusion. On the evidence we have before us, it appears that the bill will disadvantage women for no apparent reason other than an oversight. I did have a brief moment to discuss this with the Minister of Finance earlier this morning, and his position is that to do what the NDP asks now would result in a transfer of wealth from poorer women to wealthier women because of the way the calculation works. Unfortunately, I do not have the full facts on this. I had a 30-second conversation with the Minister of Finance, which is what happens when there is time allocation and inadequate time for debate.
I am left with the dreadful conclusion that, with the chance to bring in a really strong bill that would have no negatives attached to it, which is what Bill C-26 was when I first read it, it needs to be fixed. The NDP spotted this problem. I commend the NDP for spotting it. With that, I will close.
Mr. Harold Albrecht (Kitchener—Conestoga, CPC):
Mr. Speaker, today and over the past few days, we have heard the same as we have heard in previous debates on this legislation. The fundamental difference is that ideologies in the chamber become more and more evident every day.
Differences in opinion are good and, in fact, are foundational to our Westminster style of Parliament. However, what we are seeing from the Liberal Party and the New Democratic Party is a trend that is deeply troubling. Whether it is the Liberals in government or as individually elected members of Parliament, they still think that they know better than their constituents and all ordinary Canadians. Conservatives believe that Canadians know what is best for them. For the Liberals and NDP to imply that they know better than ordinary Canadians is an insult. Canadians are in the best position to make their financial decisions, and those include decisions related to their retirement.
We saw this difference in perspective most clearly recently when the Liberals clawed back the tax-free savings account contribution limit. The TFSA is a phenomenal vehicle for personal savings. For retirement, it could be used to make a lump-sum mortgage payment, maybe do an urgent home repair, or maybe even finally take that long-awaited vacation, but the important detail is that it is completely tax free.
We have all heard the saying that Liberals have never seen a tax they do not like and the NDP has never seen one it does not want to hike, but if the government thinks it can increase payroll taxes on Canadians because it has decided to blow through its election promise of a supposedly small deficit, which has now grown to over $30 billion, it can expect strong opposition from the Conservative Party and many other Canadians.
The Liberal government has spent much of its time patting itself on the back for its openness and transparency, but let me share what Canadians actually believe about the CPP and what this legislation would change. Liberals have been slow to correct these misconceptions. So much for transparency.
Forty per cent of Canadians actually think the government pays into their portion of CPP, and nearly three-quarters of Canadians do not realize that current retirees would not benefit from the proposed expansion. In fact, nearly one-quarter of current retirees wrongly believe that they will see larger CPP benefits as a result of the proposed expansion. Most Canadians are not aware that it would take up to 40 years of increased premiums in order for workers to see the full impact of these increases to their CPP benefits. I would like to know what efforts the government is making in addressing these misunderstandings. Will it be open and transparent and point out upfront that it will take 40 years for the additional CPP benefits to be realized?
As a former small business owner, I know the real effects that these CPP premium increases would have on small and medium-sized businesses in Canada. In committee two weeks ago, Ms. Monique Moreau, director of national affairs for the Canadian Federation of Independent Business, shared a compelling statement as it relates to the impact on small businesses.
Representing more than 109,000 small and medium-sized businesses, the CFIB is worried about the negative impacts on these businesses. She shared that its monthly poll on small business confidence dropped in September and October, now sitting at 57.7%, as opposed to the 70% where they would like to see it. She said:
|| Small business owners don't have money hiding under the mattress waiting for government tax hikes. If CPP/QPP is increased, even if it results in higher future benefits, two-thirds of business owners indicated they would feel pressure to freeze or cut salaries, while nearly half would be forced to reduce investments in their businesses. This impact comes at a time when the government is trying to encourage innovation, investment in business, and job creation in small firms.
The results of these changes in CPP premiums might not be as visible in business operations with just a few employees, but if we start to look at businesses with 15 or maybe 20 employees, the costs that these changes would impose could be crippling, causing layoffs, wage freezes, or even closure of businesses.
Ms. Moreau went on to say:
|| ...if employed Canadians had extra money to save for retirement, they would first invest in RRSPs and TFSAs over other savings vehicles such as the CPP/QPP. Small business employers also favour such saving vehicles if they have the opportunity to contribute toward the retirement savings of their employees.
|| If the government is trying to help Canadians save more for retirement, only 18% of Canadians are choosing mandatory CPP increases. There is a variety of other options available, including reducing taxes, creating new incentives for savings, and allowing employees to voluntarily contribute to their own CPP/QPP. Putting pressure on financial institutions to lower their management fees for retirement savings vehicles is also an important consideration.
It is clear that not only are Canadians for the most part unaware of the changes the government would make to CPP, but those who are aware are misunderstanding the impact of these changes. For those who do understand, the large majority seem to drastically oppose these changes in favour of other measures.
Aaron Wudrick, federal director of the Canadian Taxpayers Federation, also shared his concerns at committee, noting, as I have, that it is a classic case of government believing that it, rather than Canadians, knows what is best for Canadians. Aaron touched on a very important point in his opening remarks. He said:
|| It is also important to stress here that, when we are discussing income security for seniors, income support is often conflated with income replacement. CPP, of course, is a program where the yield you receive depends on what you pay in. Enhancing it, therefore, does nothing for people who are not paying very much into it in the first place. It does not give people extra money. It simply shifts the money from the current day into the future.
This is very troubling. We know that household incomes are stagnant and that in many sectors wages are frozen or shrinking. What Canadians do not need is another tax that shrinks their take-home pay. This would have effects on spending and investing habits, and would ultimately hurt our already fragile economy.
Furthermore, it is true that since CPP is geared to income these changes would not help lower-income Canadians. A paper released by the C.D. Howe Institute shows that the Liberals' plan for CPP would not benefit low-income workers. They would see their premiums go up but their net increase in retirement benefits would remain low since higher CPP payments would be offset by clawbacks in GIS benefits. These changes would also not help Canadians who are facing rising unemployment. In fact, it seems like the changes being made today would make life harder for those who are trying to enter their field of work. The Department of Finance analysis shows that the Liberal government's plan to increase CPP would hurt job creation and the economy as a whole. Quoting directly from its information, these changes would reduce employment by 0.04% to 0.07%. That is 1,050 fewer jobs every year, which means, over a 10-year period, 10,000 Canadian jobs that would not be created, as a result of this CPP increase. This is from the Department of Finance.
Do the Liberals really believe that the changes they propose, which would have no benefits today or in the near future and would have minimal benefits for Canadians retiring 40 years from now, are really worth the job losses today and decreased investments for jobs for tomorrow?
In closing, it is worth noting once again that the Liberal Government of Canada does not know what is best for Canadians and that the Liberal government should provide Canadians with all of the choices they deserve in making their own retirement decisions. The government needs to immediately return the annual contribution limit to the tax-free savings account and promote its use through advertising and educational programs. This is a fantastic savings mechanism that does not lock in people's savings that might be needed in case of an emergency, unlike CPP contributions, which they cannot access as needed.
For the benefit of the survival and success of small and medium-sized businesses, I urge my colleagues to reject Bill C-26.
Mr. Tom Kmiec (Calgary Shepard, CPC):
Mr. Speaker, I am glad to join this debate since this is actually the last time we will be able to have this debate on Bill C-26 in this House.
I want to start with something I used in the last session, a Yiddish proverb. “With money in your pocket, you are wise, and you are handsome, and you sing well too.” I am sure the Minister of Finance has a great singing voice. However, this proverb speaks to how money is best left in the pockets of Canadians, of the people who actually earned it through hard work, having a job, either working for themselves or fulfilling someone else's need.
What the government has done today by shutting down debate after a mere eight days does a great disservice both to the discussions so far on this bill and the interventions other members have made. This debate on the Canada pension plan is important. It is with respect to a proposed law that will amend that which will impact Canadians for many generations. Therefore, having 20 days, 25 days, or 30 more days of debate is absolutely worth having on something that will have an impact on future generations 40 years down the line.
I also think it is shameful that the Minister of Finance called this debate a stalemate so far. It is a commentary by a minister of the Crown on the work that we do on behalf of our constituents here to loyally oppose the government's agenda, to bring new ideas, and to raise points for future consideration and possibly for amendments that the government could bring to its own bill, either at committee or second reading, wherever it chooses to do that. Therefore, debate in this House is not a stalemate; it is an enriching process of what I will call crowdsourcing of new ideas. We are the crowd sent here by our constituents to speak to ideas and to offer them up to the government. Therefore, it is not a stalemate, and I very much think the government should realize we are not here as an audience, we are not here to spectate while it passes legislation. Her Majesty the Queen has given us the constitutional authority to loyally oppose, and that is what we will continue to do. Therefore, I very much look forward to the Minister of Finance not using such terminology.
I also want to point out that it was an internal finance document from his own department that said that this bill, the expansion of the CPP, will be a drag on the economy until 2030, and that it will suppress employment growth until 2035. I come from a province where we have a jobs crisis. The Speaker knows this. I had asked for an emergency debate last week on this because 122,000 energy workers are out of work. However, there are very many people who are under-employed, people who have been furloughed. Normally, they have a job, but they are just not being paid, and they are not being captured by the unemployment figures. When people are not working and not earning an income they are not paying into CPP, so it really does not matter. None of this will help any of the people if they do not have a job in Alberta right now because we have a jobs crisis.
There is also an open question that remains unanswered on the administration costs of layering on this new CPP program on top of the old CPP. It is not clear how much that will cost in the long term, over the next 40 years, and how much its management and administration will eat up the savings of Canadians.
Jack Mintz is a very well-respected tax specialist, a former professor, and a former head of the School of Public Policy at the University of Calgary. He wrote a piece entitled, “What the TFSA limit increase really means for future governments”. Although that was on TFSAs, he had a lot of great points on savings, and the behaviour and psychology behind saving as well. He brought up the fact that what many future governments will be looking at is a tax rate with a low-interest environment and 100% on inflation-adjusted returns. What we will find is that the tax rate will have a huge impact on the savings themselves, how we save, and what is deducted off our savings, so there is an open question there on people's incomes, how they save, and what they will see on their tax returns. They will get nothing from the CPP on it there.
He went on to say that a one-size-fits-all rule is of little help and that for a lot of Canadians, the need for a comfortable retirement depends entirely on individual circumstances and preferences. That is an important consideration too. Not everyone retires in the same way or with the same model. Not everyone chooses to simply stop working entirely. There are a great many people who choose at 65, 70, 75, or even earlier if they take early retirement, to work part time, and to maybe volunteer in their community or at their faith-based institution, at a church or at a temple. They may also choose to change career paths later and choose the concept of retirement around 65 years of age to choose a new career they would like to pursue. Therefore, not everyone chooses to simply stop working.
A point I have brought up in previous debate here, and a question I asked one of the members of the Liberal government caucus, is this concept of savings substitution. There is a study by the Fraser Institute that shows that forcing Canadians to save more, using the government's concept of “more”, would lead to a decrease in private voluntary savings with little or no increase in overall savings.
Savings substitution is a real danger to both the government's plan, but in general also to our economy and to people's independence from government.
People should be allowed to choose how they retire. They should also be allowed to choose how they save and what type of investment vehicle they want to use. A lot of people have chosen to save in real estate, and real estate has provided the best returns over the last two generations to those who have chosen to go down that path.
One of the very first things my wife and I did was to purchase a condo, because we knew that would get us onto the property ladder. It allows people to save. They put aside money because they are trying to pay off mortgage interest and trying to put money away toward the principal. It is a mechanism that allows them to choose saving, but to choose it in the way they want to do it.
When the previous Conservative government introduced TFSAs, then doubled the maximum amount people could put away, it was a way of showing Canadians they could choose another model to save on their own, one that is tax free. We should stop taxing the savings of Canadians and forcing them to put more toward this layered CPP on top of another CPP. The administration fees for this are another form of taxation. We send money to Ottawa, to the government departments for some work to be done. That is a form of taxation. That is what our taxes go toward.
Building equity in housing has consistently been the best thing for saving, for youth especially. By buying a property they are getting onto that saving ladder.
I would be remiss if I did not mention the rate of return. The annual rate of return, reported by the CPP Investment Board, is actually quite low, and the younger one is, the worse off one is. For those who nominally put money into the CPP because they were forced to do so back in the 1960s and 1970s, they will get the best rate of return. I look at the pages in this chamber. They will have the worst rate of return. My generation and their generation will be worse off because the rate of return is so low, sometimes falling below 2%. That is because of record low interest rates, which are really driving this low rate of return. Also, administration fees cannot help but be higher.
No one cries for a job that is never created. No one cries for an investment return that never happens. What we always talk about here is the give and take, this job here or that job there, the taxation of incomes on one side and how government chooses to spend it, versus the individual who chooses to spend it in a certain way.
What the government is doing with the CPP increase is substituting for the person's choice on how they will save. That substitution will have worse results at the end of the day, especially for the next generation, because the rate of return will be so low. If someone chooses to invest in a property or in investments where they could earn a higher rate of return than the government is able to achieve, why can a Canadian not make that choice? Sure, the government will say it is one size fits all, that we are guaranteed a return. The higher the risk the higher the return. Canadians can choose to take a higher risk. With risk, of course, can come disappointment. They could lose their investment. Their retirement may not be as certain as they thought it would be, and they may have to adjust their goals and plans. That is why everyone should be doing financial planning for themselves. We should be encouraging people to not be dependent on the government.
The Fraser Institute noted this as one of the five myths of the Canada pension plan. Myth number 4 was “The CPP produces excellent returns for individual contributors”. They are thin margins.
There are a great many seniors who are better off today than they were pre-2006. They are better off thanks to the previous Conservative government's work to try to ensure they had a solid retirement. Lots of reports have shown this. Statistics Canada has said that the share of Canadian seniors living on low income has dropped from 29% in the 1970s to 3.7% today, which is among the lowest in the world.
The Human Resources Institute of Alberta is responsible for HR professionals in the province. It has said that consistently, across the board, only about half of all organizations offer employment pension plans and group RSPs with employer-matching plans. That means half of all employees in the province of Alberta may lose the opportunity to continue investing in their employee pension plan or group RSP, because they do not have the money to invest in it and see that matching funding by their employer. They simply will not take advantage of it.
I oppose the bill, and I encourage all members to oppose it as well.
Mr. Tom Kmiec:
Mr. Speaker, the member is always well-informed when asking questions and in his interventions in the House.
In a previous life, I was a policy adviser. Pensions was one of the files I worked on for the then Alberta minister of finance, the hon. Ted Morton. It was one of the files I really liked working on, as well as the securities file.
At the time, I remember those conversations around the table, during federal-provincial-territorial meetings of the ministers, staff, and civil servants who were there. It was not a given back then that the best thing to do was to introduce another big government solution to saving.
I have brought up the point of savings substitution repeatedly, and I have asked it of many Liberal government caucus members. What do they think will happen? There have been studies done by the Fraser Institute that show, directly, that there will be a huge impact on private savings. What will happen is that all of the money a person was going to save privately through whatever vehicle they chose, either property, real estate, the stock market, or an employer pension plan, will be reduced or eliminated and substituted by the government plan.
What I think the government wants to do, though, is in the long term to try to use that money for perhaps an infrastructure bank, to somehow invest it on Canadians' behalf, and probably with very questionable rates of return. The rate of return is really where the savings come from. I just do not think the government is able to do a better job than Canadians at investing their own money.
Mr. Dave Van Kesteren (Chatham-Kent—Leamington, CPC):
Mr. Speaker, thank you for this opportunity. It is a great honour to speak to initiatives that are very close to a lot of our hearts. I know it is close to mine. We are talking about the proposed changes in Bill C-26.
I think it should be noted again that these changes will not take full effect until 40 years have passed and will take money out of the paycheques of hardworking Canadians and put thousands of jobs at risk.
It needs to be re-stated that these changes will not provide relief to our seniors. If we want to give relief to our seniors we could start with the high cost of electricity in the province of Ontario and the failed policies that have resulted in those things. Those are the real issues that are causing poverty among our seniors today.
We are going in a little different direction. I have not heard this said yet, so I will talk about someone else the bill will hurt. We know it will hurt employers. Employers are the ones that do the hiring. They are the ones who make those higher CPP payments. It will hurt employees, because they will not longer be employed. They will not get those job opportunities. The one group of people who will really hurt the worst is the poor. I have not heard that discussed by the opposite side, and surprisingly by the other party on the left.
What about the poor? The poor are the ones who need jobs. We talk so much about how we need to help the poor today, but if we want to help a poor man or a poor woman, give them a job. This particular legislation puts a death knell to that.
We have a good organization in my riding of Chatham-Kent—Leamington, the Chatham-Kent Workforce Planning Board. We had a meeting with them. They are involved in job creation and are doing their part. We heard some encouraging statistics, because the rate of unemployment is dropping in Chatham-Kent—Leamington.
In a former life I had a business. I was a car dealer. I got to work for who I think is probably the smartest guy I have ever met in the car business. He is an actuary. He was a graduate of the University of Toronto. He used to tell me that it is all in the numbers and that I should check the numbers. Subsequently, I have kind of been a number miner.
When I looked at the Chatham-Kent workforce statistics, they showed first of all that we had the large employers and the small and medium-sized businesses. There were some really discouraging statistics. First, we have only two employers who employ over 500 people in the riding of Chatham-Kent—Leamington. The other group is shrinking too.
However, we all know who does the hiring. It is small business. There was a group of businesses with zero to 100 employees. Which group was the largest? Let me just clarify this so members can understand my question. Of that group of businesses that employ from zero to 100 people, which segment was the largest hiring group? I have asked this question of a number of people and we get some varying answers. Some went as low as three employees. Do members know what it is? It is the segment with zero employees.
I was shocked when I saw those numbers, but I am not that shocked when I see legislation like this, because an employer will hire someone when he does a good job. If an individual is a finishing carpenter and the demand is such that the business is getting more work and it makes sense to hire another employee, then they have a whole lot more managing to do, but they will pay that employee what he is worth.
Oftentimes, those people who are at the entry level do not have that value yet. Members can check the statistics for themselves. It is shocking to see that more and more people are doing it on their own. They are not going out and hiring. Who does that affect? It affects the poor, the disenfranchised, the ones we often call the generational poor. It is generational poverty.
My wife and I love parades. When we go down King Street and get into the east end in our home town of Chatham, we get the marginalized people. These people oftentimes do not have the privileges we have. Life is a bit tougher. A lot of them do not have jobs or have not had jobs for a long time. It is those people who will be affected. It is those people who will not be hired. The sad thing is that this continues on generationally.
If the cost of hiring an employee was such that it made sense for that carpenter, plumber, electrician, or whoever to hire, they would. The economy is growing, but the problem is that we put these restrictions on people and we do not realize who it is hurting.
We hear so much in the House about the middle class. I am part of the middle class too. However, we should be talking about the poor. The poor do not necessarily vote for me. However, we should be talking about those people. They are the people who have no voice. Those are the people who look for jobs and cannot find them, or just give up. If we talked about those people, if we have a heart for the people who do not necessarily have a chance, I think we would be talking about something else when it comes to CPP.
I have an idea. Let us have a universal pension plan. I have talked about this with a number of people. We have universal health care. Imagine talking to our neighbours or other people in our home towns who need knee replacements. However, because they do not have a universal pension plan, it will be two years until they can get their knee fixed. However, for us, it would be two weeks. We do the same thing in our pensions. If we really wanted to make change and affect the economy, we should talk about a universal pension plan.
Years ago I had the privilege of working on the finance committee and I got to know a man by the name of Bill Tufts. He is involved in an organization called Fair Pensions for All. Bill and I talked about what would happen if we took all the CPP, OAS, GIS contributions and all of the government's contributions to pension plans, threw it in a big pot, and divided it among all the people who were retired. Every woman and man in our country would get $24,000 when they retired. There is a real solution. If we really wanted to help the poor, if we really wanted to make some changes, there is a universal pension plan right there.
I know that might be a pipe dream, but I am concerned that this legislation would further exacerbate the hiring abilities of employers today. Although that is tough and although it is going to make it rough on employers, it is especially going to make it rough on the poor.
I fear that for the coming generation, more and more it will be impossible for us to hire those who need the jobs, those who will move from their poor status to a higher status, to the middle class, the one we all talk about so much in the House.
I hope members on the other side, because ultimately this will go vote, will consider the damage this will do to our economy, the damage it will do to that group, and ask their government to make the changes and not let the bill before us pass.
Mr. Marco Mendicino (Eglinton—Lawrence, Lib.):
Mr. Speaker, it is an honour and a privilege to rise to speak in support of Bill C-26, an act to amend the Canada Pension Plan, the Canada Pension Plan Investment Board Act and the Income Tax Act.
Let me outline the purpose of the bill.
It would, among other things, increase the amount of the retirement pension, as well as the survivor's and disability pensions and the post-retirement benefit, subject to the amount of additional contributions made and the number of years over which those contributions were made. It would increase the maximum level of pensionable earnings by 14% as of 2025. It would provide for the making of additional contributions, beginning in 2019. It would provide for the creation of the additional Canada pension plan account and the accounting of funds in relation to it. It would include the additional contributions and increased benefits in the financial review provisions of the act and authorize the Governor in Council to make regulations in relation to those provisions.
For the benefit of the House, let me provide a number of reasons why the government has put Bill C-26 forward.
We are concerned about the long-term retirement security for those Canadians who have worked hard all of their lives and expect, rightfully, that they will enjoy security in their retirement years.
The fact is that middle-class Canadians are working harder than ever, but many are worried that they will not have put away enough money for their retirement. Fewer and fewer Canadians have workplace pensions based on defined benefits or defined contribution plans to fall back on. To help those Canadians achieve their goal of a safe, secure, and dignified retirement, in the face of these challenges, the Government of Canada is committed to working with the provinces to strengthen the CPP.
Co-operative efforts as joint stewards of the program led to Canada's Minister of Finance reaching a historic agreement, in principle, on June 20 to enhance the CPP. All of my colleagues on this side of the House were very proud of that accomplishment.
What would this agreement mean in principle for Canadians?
Once it is fully in place, the CPP enhancement will increase the maximum CPP retirement by about 50%. Right now, the current maximum is just a little over $13,000, which is not enough by most living standards across the country. In today's dollar terms, the enhanced CPP would represent an increase of nearly $7,000 to a maximum benefit of nearly $20,000. Enhanced benefits will accumulate gradually as individuals pay into the enhanced CPP.
Young Canadians, and this is a group about which I know all members of the House are concerned, just entering the workforce would see the largest increase in benefits.
To fund these enhanced benefits, annual CPP contributions would increase modestly over seven years, starting in 2019. For example, an individual with earnings of about $54,000 or $55,000 would contribute about an additional $6 a month in 2019, an amount that should be manageable for most hard-working Canadians. By the end of the seven year phase-in period, contributions for that same individual earning that same income amount would be about an additional $43 per month.
To ensure that eligible low-income workers are not financially burdened as a result of the extra contributions, the Government of Canada would enhance the working income tax benefit, an existing benefit that is designed to keep people in the workforce and encourage others to join it.
Enhancing the CPP will significantly reduce the share of families at risk of not saving enough for retirement and a degree of under-saving.
The CPP will always be there for Canadians because it helps to fill the gap for those who do not have a workplace pension plan, and it is portable across jobs and provinces.
Canada's retirement income system provides a balance of mixed public pensions and voluntary savings opportunities to enable Canadians to save for their retirement. The retirement income system is based on three pillars.
The first is the old age security program, which was altered under the last administration in an attempt to extend the age of eligibility to receive the full benefit and appreciation of that plan to age 67. Again, I am very proud to say that among the first measures this government took was to rescind that extension and restore the old age security program eligibility age to 65, something that was met with great support in my riding and, I dare say, right across this country.
The CPP and Quebec pension plan is the second pillar. They provide a basic level of earnings replacement for workers. They are financed by contributions from workers, employers, and self-employed individuals.
The third pillar is a voluntary tax-assisted private savings opportunity. Some examples include registered pension plans; pooled registered pension plans; registered retirement savings plans, commonly known as RRSPs; and tax-free savings accounts. Individuals and their employers may contribute to these savings vehicles on a voluntary basis.
In addition to saving through the retirement income system, Canadians may also choose to draw upon other financial and non-financial assets for retirement income. These include, for example, financial assets held outside of tax-assisted registered plans, housing equity, and small business equity.
Let me say a few more words about the current Canada pension plan. The CPP is a contributory public pension plan that provides a basic level of earnings replacement. With these revisions, as I have said before, we would see modest increases gradually over the course of a number of years at a pace that most hard-working Canadians would be able to absorb.
Let me say a few more words about why it is that we are enhancing the CPP. As we have looked closely at the situation of Canadians as they approach their retirement, we understand that middle-class Canadians are working harder and harder. The Department of Finance has examined whether families nearing retirement are adequately prepared for retirement, based on household income and wealth data from the 2012 Survey of Financial Security. Families are considered to be at risk of under-saving for retirement if their projected after-tax income at retirement does not replace at least 60% of their pre-retirement after-tax family income.
Although Canada's retirement income system has served many Canadians well, the Department of Finance has estimated that almost 24% of families nearing retirement age are at risk of not having adequate income in retirement to maintain their standard of living. This suggests that roughly 1.1 million families approaching retirement age will not have enough money to maintain their standard of living when they retire; hence the enhancements.
I will just take my last few moments to indicate to the House that recently the Minister of Finance had the occasion to come to my riding of Eglinton—Lawrence to meet with my constituents to speak personally about this historic achievement. What was most distinguishing about this visit was that we visited with constituents who are on either side of the age continuum. We visited first with seniors to speak about enhancements to the old age security program and to the GIS program. Then we went to visit with high school students at Lawrence Park Collegiate Institute.
It is truly for them where the focus of this program lies, which is the future, to provide retirement security not only for present day seniors but also for hard-working young Canadians, and I am proud to say that by passing Bill C-26 we will have accomplished that goal. I urge all of my colleagues to support it.
Mr. Charlie Angus (Timmins—James Bay, NDP):
Mr. Speaker, I am very proud to participate in this debate as the representative of Timmins—James Bay. This discussion on improving the retirement system is very important for our country. Canada is obviously facing a crisis with regard to financial insecurity in retirement because many Canadians have not saved enough to maintain their lifestyle in retirement.
The NDP is prepared to work with the government to enhance the plan, but I am troubled by the government's decision to limit debate because there are clearly a number of problems with this bill. I am particularly concerned about the fact that young women and people with disabilities will be excluded from the enhancements in this bill. This could have a major impact, particularly for women who depend on the drop-out provision to be able to raise their children and who currently receive much lower CPP benefits on average.
I remember that in 1977, prime minister Pierre Elliott Trudeau promised that young women would be included in the CPP reform of the day. However, the new Prime Minister forgot that promise. This is not how a feminist government should behave. The NDP will work to change this situation and stand up for the interests of young workers, particularly young female workers.
My grandfather, Charlie Angus, never had a pension. He died on the shop floor of the Hollinger mine. He was 68 years old. In those days, people worked until they died. My grandmother lived upstairs in our little house. There were three generations of us living in that small house. I remember her saying, when she received her Canada pension cheque every month, “The NDP fought for me to get this”.
At that time, of course, the Canada pension was limited. Seniors tended to live with their families. At that time we had a growing, robust private pension plan that was starting to really change the quality of life for Canadians. My father was 42 years old when he finally joined the middle class. He saved all of his money so that when he died my mother, who was a secretary, would be able to live a good quality of life. She is able to live a good quality of life because of their savings and their pensions.
Our younger generation does not have that same stability. Younger workers tell me about the triumvirate of insecurity that is facing them now. They are coming out of school $60,000 and $70,000 in debt without the possibility of paying it off even at today's interest rate. They talk to me about housing, especially in urban areas, and the incredibly high prices they have to pay while trying to pay off their student debt. Then of course, there is the rising precarious nature of work, with more and more people working on contract.
My Conservative colleagues are always talking about letting people choose how they want to save their money. They talk about RRSPs and everything else. That is great if people have money. Conservatives look after their friends, so they tend not to understand what it is like. If contract workers put a bit of money aside and then find themselves in between jobs, they have to eat into those savings. A good friend of mine says people in Toronto are one bike accident away from poverty because they are living in the perpetual cycle of contract work.
As a nation we have to find a way to start changing this situation. I am certainly pleased to see that the government is willing to address the fact that CPP has not kept up and that the vast majority of people are not even getting the maximum contributions. Even if they did get the maximum contributions, it is not enough to live on.
I am concerned about the exclusion of the dropout provisions in this legislation, which would leave out, in particular, young women and people with disabilities. In 1977, then prime minister Trudeau, the elder, when his government was reforming CPP, talked about the importance of making sure to protect the interests of women who stepped outside the workforce to raise children. Young women are already enormously at disadvantage in work. Men tend to get promoted, because it is known that women will take time out in childbearing years.
It affects her overall income. We need to protect their pension contributions, especially as more and more women, at that age, are living alone. They need that support. We are seeing that 30% of women are now living in poverty. It is increasing year by year. Yet, only 4.5% of women are able even to get the maximum CPP payment, and only 18% of men get it.
This is a system that should work, but is clearly not working. What does that mean? I see people in my riding affected by this. I recently spoke to a man who is 68 years old and is going back to work underground in a hard rock mine because he does not have enough for him and his wife to live on.
We need to look at dealing with this. I am concerned that the government has chosen to ignore the issue of the dropout provisions. This is something we can fix in the House. I am very disturbed that the government has shut down debate on this.
To hear the finance minister tell us he is somehow at a stalemate in the House is shocking. It shows a dismissive arrogance. I suppose that maybe at a certain point, members of Parliament are going to have to pay $1,500 and go to the CEO of Shaw or Rogers or some other company to meet with the finance minister one on one to share our concerns.
It is during debate in the House that ordinary people get to talk to the finance minister. For him to say there is a stalemate on this issue is absurd. New Democrats, particularly my wonderful colleague, the member for Hamilton Mountain, have brought forward ideas on how we can fix this. Leaving young women behind is not a feminist action by a Prime Minister who claims to be a feminist.
We see a government that believes it can run on slogans, selfies, and Hallmark card political aphorisms, but within the House we have to be able to find ways to work together to address problems. This is not about a weakness in the government. For any government that brings forward legislation, there will be problems. The role of the House of Commons is to suggest how we can fix these.
Fixing these dropout provisions for people with disabilities and young mothers is a way of making this a more progressive response. Is it enough? No, it is certainly not enough. The pension crisis and the pension insecurity in this country is a very serious issue. We have to start dealing with issues at the ground level of student debt. We have to deal with issues of social housing. We have to deal with issues of the clawbacks to the guaranteed income supplement for senior citizens. We have to talk about the number of people who cannot pay for their dental work.
However, that is an ongoing conversation we can have. What we need to talk about right now is the CPP, which is clearly insufficient to meet the needs of 2016 and the next generation of workers. We also need to say that, yes, this does something right, but it is also doing something very wrong.
It is penalizing young women who will be stepping out of the workforce to have children. When the government does that, it will be putting in place a systemic injustice for young mothers who, when they grow to retirement age in coming years, will have suffered more in terms of their earnings. If we look at it now, we can see the trajectory with 30% of women retiring in poverty today. We should be trying to diminish that level of poverty, not augmenting it when it is a clear problem that can be fixed.
I am worried about my colleagues on the other side getting very dismissive about debate, getting a little arrogant—