The House resumed from October 24 consideration of the motion that Bill C-26, an act to amend the Canada Pension Plan, the Canada Pension Plan Investment Board Act and the Income Tax Act, be read the second time and referred to a committee.
Mrs. Celina Caesar-Chavannes (Parliamentary Secretary to the Prime Minister, Lib.):
Mr. Speaker, I am very pleased to stand today to speak to Bill C-26, which aims to amend the Canada Pension Plan, the CPP Investment Board Act, and the Income Tax Act.
When I was campaigning last year, and in fact in many meetings and conversations I have had since then, I heard over and over again that people are worried about their financial future and specifically about whether they are saving enough to retire with security and dignity. That is why I am pleased to share my reasons for supporting Bill C-26, which aims to address those concerns in a responsible and meaningful way by expanding the CPP.
Earlier this year, Canada’s provincial finance ministers met with my colleague, the federal Minister of Finance, and agreed that more must be done to ensure all Canadians are able to retire with dignity. They recognized that an expansion of the CPP plays a major role in achieving this. It was a textbook example of the kind of consensus we can achieve when everyone comes to the table as partners in pursuit of better service to Canadians.
Many people in my riding of Whitby, and right across the country, are working harder and longer than ever. According to a 2012 study, almost two-thirds of Canadians are working more than 45 hours per week. That is a 50% increase from more than 20 years ago.
On top of that, advancements in technology mean that workers are on call 24/7. Even with all these extra hours and hard work, many are concerned that they will not have enough money for retirement.
Far too many Canadians are facing significant drops in their quality of living upon retirement. In fact, 1.1 million Canadian families are approaching retirement having not saved enough. That is why we have recognized the need to do more for workers, and we are taking action.
The Canada pension plan has been a source of financial security for Canadians for more than half a century. It provides Canadians with a predictable benefit, year after year. Unlike private investments or pension plans it is not subject to market volatility. It is also one of the more efficient ways for Canadians to save as its massive contribution base allows the CPP investment board to deliver strong net returns.
Despite all the benefits provided by the CPP, there has been a recognition in recent years that it is not doing enough to support Canadians in their retirement. Our government has heard these concerns and is moving to address them. Bill C-26 will significantly boost how much each Canadian will receive from the Canadian pension plan. Under the current system, retirees receive one-quarter of their earnings; after this much needed expansion, that will increase to one-third, up to a maximum annual benefit of nearly $20,000.
As a former small business owner, I know that the CPP plays an important role in ensuring that employees can save for their retirement. Employees work very hard for companies. It is very important to me that they be able to retire with dignity.
It was a priority of our government to move forward with the expansion in a responsible way, which is why we are phasing it in over several years. Starting in 2019, annual CPP contributions will begin to increase modestly over seven years. As an example, a worker earning just over $50,000 will contribute an additional $6 per month in 2019, and by 2025 that worker earning the same amount will be contributing about $40 per month.
The expansion of the CPP will benefit all workers; however, it is very important that workers on the lower end of the income spectrum are not unfairly burdened. Our government understands that while lower income workers want to save more for their retirement, they face tight budgets that will make the increased contributions difficult for them. This is why Bill C-26 also proposes to increase the working income tax benefit to offset increases in CPP contributions. The working income tax benefit will be increased to roughly match the level of CPP contributions. This will allow lower income workers to increase their retirement saving without creating unfair burdens on their tight budgets.
I also want to speak about how this legislation would benefit the next generation of workers. Young Canadians face a much different employment landscape than their parents or grandparents did, many of whom worked in the same job for the same company for decades and have access to private pension plans as part of their compensation, providing them with financial security upon retirement.
That is no longer the norm. It is now common for workers to change jobs, or even fields, a number of times throughout their careers, which can have significant effects on their pension contributions and payout.
Even more troubling is the overall decrease in companies providing registered pension plans to their employees. In those organizations offering pension benefits to their employees, we are seeing a significant shift away from defined benefit plans to defined contribution plans, which often provide less financial certainty upon retirement.
When we combine all of these factors with rising life expectancy, it is becoming more likely that Canadians, in particular young Canadians, will outlive their savings. The expansion of the CPP would mitigate that risk. In fact, young Canadians who are entering the workforce over the next few years will benefit the most from this change to the CPP. As such, this expansion is a tangible investment in the future security of our children and grandchildren.
While recognizing that this expansion would do the most for our younger workers who are just beginning to make investments in their CPP, we must acknowledge that too many current retirees are facing significant challenges in making ends meet. This is why our government is also taking steps to improve the quality of life for seniors today. In budget 2016, our government confirmed that it was boosting the guaranteed income supplement top-up to benefit single seniors with up to $947 annually. This will help lift low-income seniors out of poverty and improve the financial security of about 900,000 single seniors across Canada. This increase is directly targeted to assist those seniors who are most vulnerable.
In closing, I would like to thank my colleague, the Minister of Finance, and his provincial and territorial counterparts for their hard work on this important issue. This expansion is an important part of ensuring that all Canadians have a secure and dignified retirement. I am very proud to stand here and support Bill C-26.
Mr. Darrell Samson (Sackville—Preston—Chezzetcook, Lib.):
Madam Speaker, I am extremely happy to rise today to speak to Bill C-26, the legislation that deals with proposed changes to the CPP. I am also happy because this is another initiative that our government has brought forward after committing to it prior to the election, and one that we continue to work on.
I want to thank our Prime Minister and our Minister of Finance for not wavering on this issue. This is an important initiative that needed the support of the provinces and territories, which we were able to successfully get.
When we talk about CPP we think about our seniors, but this is also about our youth, because over time they will become seniors. Time goes by quickly. When our youth start in the workplace they do not have any of the benefits that our generation had. The private sector chooses not to invest in the Canada pension plan, so our young people do not really have a guarantee at the end.
We want our seniors to be able to retire with respect and dignity. We want them to be able to live the golden years they worked for all of their lives. However, it is going to be difficult for our youth to do the same, because when they become seniors, there will be no pension funds available for them.
There is also the question of those who are going to soon reach the “senior age”, if I may use that term. Information from the Department of Finance in 2012 indicated that about 24% of individuals who were soon to retire were not saving enough to make sure they could continue their existing standard of living while working. That is a challenge as well.
I should add that Canadians live longer, and everyone is happy with that. I sure am. However, with that comes the need for people to save more, which can be a challenge for some individuals. By proposing changes to the Canada pension plan, the government is putting some protections in place to allow future seniors to retire in a much better way.
I would like to briefly outline what is being put in place with the provinces' agreement. This process will begin in 2019 and end approximately seven years later. The investments will be modest at first, but will increase over the seven years. The money invested will increase benefits from 25% to 33%, which is huge. In 2025, a person who is now earning an average salary of $50,000 will have $4,000 more for their pension. That is a sizeable increase.
The other important aspect is that those who retire and have a lower income will be able to benefit from the gains without contributing more. By the end of this initiative, the pension amount will have increased by 50%.
This means that people who receive $13,100 today could receive up to $20,000, which is a dramatic increase. That is a good example of a government that is working closely with the provinces and territories to ensure that Canadians will benefit more fully.
It also shows our government is proactive. We are not sitting back and risking that times will be really tough and Canadians will not have something with which to retire. We are being proactive.
Let us look at other jurisdictions. Let us talk about the U.S., for example. The social welfare programs could be somewhat in danger. I am quoting from what I believe is called the American social security program that is projecting that the benefits Americans are receiving now when they are retiring will not be guaranteed to still be there in 2033. That could be devastating for Americans, today and in the future and for future generations. That is extremely dangerous.
There is no question that our government is taking a proactive approach to this, and I believe this is a shining example of working together with the provinces and the territories. I believe this is what I would call true federalism, where people, communities, and governments are coming together to put in place an initiative that would make life better for Canadians in the future.
This is not the only initiative that our government has put forward. When we were first elected, the first main initiative we put in place was the 7% tax reduction for Canadians. On top of that, we were the only ones who were willing to and who did put an increase on income tax for the wealthiest Canadians. That was a major initiative that our government put in place.
The second one, which we know—and as I travel across my riding, seniors and Canadians who will retire soon share that—is the fact that the age for OAS was returned to 65 years old. Canadians are extremely happy that they do not have to work those extra two years. That is another major initiative that our government brought forward.
There are all kinds of those. We can look at the budget. The 2016 budget focused on the child care benefit. That child care benefit program, while I was campaigning, was the most important thing.
We are saying Canada needs more people. We want immigrants, we want refugees, and we also want to have more kids, young families; so we need to support them, and we are supporting them with that major initiative of the child care benefit.
The infrastructure investment will create jobs and create foreign investment. Those are initiatives that will be very positive.
I have to say in closing that I am extremely happy with this initiative. I know that the people in my riding will be extremely happy with this, and I also know that Canadians will be happy. This is the Canadian way of doing business, and it is how government should work, working together for the betterment of all Canadians.
Ms. Marilyn Gladu (Sarnia—Lambton, CPC):
Madam Speaker, it is my pleasure to rise today in this House to address Bill C-26, an act to amend the Canada Pension Plan, the Canada Pension Plan Investment Board Act, and the Income Tax Act.
When introducing legislation, it is important to consider what problem we are trying to solve. One might think, from the rhetoric spouted by the government, that we are in a retirement crisis, but I am fact and evidence based—as the government claims to be but is not—and I can say that, according to a study by McKinsey & Company, 83%, of Canadians are on track to maintain their current living standards in retirement.
Fred Vettese, the finance minister's co-author, says that Canadians are not facing a retirement crisis, nor is such a crisis likely to arise. Finance Canada says that, overall, Canada's retirement income system is performing well.
Canadian retirees achieve relatively high income in retirement and compare well to retirees in other organizations. With support from all three pillars of the retirement income system, the median Canadian senior earns 91% as much as median Canadians. Internationally, Canada has one of the best income rates for seniors.
Statistics Canada has stated that the number of seniors living on low income has dropped to 3.7%, among the lowest in the world. If our retirement system is doing so well, why is the government taking time and money away from other issues in an attempt to change it?
The Canada pension plan is internationally recognized as one of the strongest and most reliable retirement systems, yet here we are about to make detrimental changes.
What problem are we trying to solve? It must be the fact that 17% of Canadians are not on track to maintain their lifestyle when they retire. We therefore need to ask ourselves whether we really should impose a tax hike on all Canadians, including small businesses that are already struggling, in order to help that 17%. Is there a better approach? What impact will this increase in the CPP have on individuals and small businesses?
The Department of Finance Canada, the minister's own department, said that Bill C-26 would reduce employment in Canada and cost 1,040 jobs every year for the next 10 years. That will result in a drop in the GDP, a drop in corporate investments, a drop in Canadians' disposable income, and a 7% drop in private savings in the long term.
It will have a very negative impact on small business. The CEO of the Federation of Independent Businesses says that two-thirds of small firms say they will have to freeze or cut salaries, and over a third say they will have to reduce hours or jobs in response to a CPP-QPP tax hike.
The senior director at the Canadian Chamber of Commerce warns:
|| This comes at the worst possible time—an economy reeling from weak commodity prices and slower consumer spending will be lucky to eke out growth of 1.5% next year. It’s difficult to stimulate the economy while pulling money out of the pockets of Canadians.
Small business creates more than 80% of the jobs in Canada. These businesses are already struggling, especially in Ontario and in my riding, where sky-high electricity costs imposed by the Ontario Liberals and uncertainty about the federal carbon tax and increasing bureaucratic burden have driven many of these businesses to the brink, where this final CPP increase will cause them to exit.
These changes would force industries to leave Canada in favour of lower taxes and contributions south of the border. This would not grow our economy and would only put more strain on Canadian families.
What about Canadians who are self-employed? This would cost them about $2,200 more per year. What about those who are already struggling with incomes below $40,000 per year? The Liberal government has done nothing for them in tax relief. The carbon tax would increase the price of everyday purchases for this group, and the proposed CPP changes would take more money out of their pockets. This has to stop. Struggling families will only fall further into debt, and our economy will stagnate.
Who will benefit from this measure? No one will benefit for 40 years. Meanwhile, this government will have access to that tax revenue for 40 years and we are just supposed to trust that it will not spend that money on anything else. I apologize for being skeptical, but the Liberals have already added $40 billion to their spending spree this year and I do not believe that giving this government more money is a good idea.
Therefore, 40 years from now, let us talk about those people on the plan then.
This plan would increase the income replacement rate from 25% to 33%. That is 8%. The problem is that the basic economic rule of the time value of money tells us that at the current interest rate costs double every 20 years. In 40 years, costs would have quadrupled and yet this benefit would only increase 8%. This measure means people will be even poorer with the proposed CPP changes. These proposed changes will have a negative impact on this generation and will not help future generations.
Let us say we took the current maximum CPP rate and applied the consumer price index rate of inflation of 2.5%. In 40 years, the current value would need to be at minimum 100%, actually 240% greater, not 8% greater.
This proposed CPP change will not help small business. It will not help those who are self-employed. It will not help seniors. It will not help the young generation that will be needing retirement options in 40 years.
Simply put, the proposed changes will do nothing but provide the government with more money to spend. Canadians will not profit from these changes and in reality many will suffer. The immediate and long-term loss of jobs, business opportunities, and disposable incomes will only further shrink our economy and limit the futures of Canadians.
However, I am always one to come with solutions. Here are several possibilities.
I would like to suggest a further increase to the guaranteed income supplement to help seniors who are currently struggling. Sixty dollars a month is not very much compared to Kathleen Wynne's $130-a-month increase in electricity fees. If the government wants to help seniors who are trying to live on less than $40,000 a year, it could use the existing guaranteed income supplement, without incurring any additional administrative costs, and increase the amount given to seniors by at least 3% per year to keep up with inflation. It would be even better if the government increased the GIS by 10% once the carbon tax takes effect in 2018.
I believe access to significant TFSAs and voluntary CPP contributions will give Canadians control and flexibility to invest in their retirement when and how they feel comfortable.
Changes such as the ones presented in the bill will slow our economy. It is simple. The less money Canadians have, the less they are able to save. The TFSA should be increased and savings promoted, instead of taking more money from Canadians families.
The financial instability of these proposed changes will create a significant effect on all Canadians, especially those with lower incomes.
I have an idea for young people who need good retirement options in 40 years. How about creating well-paying jobs with good pension options?
I can create 3,000 well-paying jobs, with full pensions, for young people in my riding with $12 million of infrastructure money if the infrastructure minister is serious about creating jobs.
For small businesses, how about implementing the tax decrease to 9% that the government promised?
Any or all of these solutions would be better than what is proposed in Bill C-26.
As such, I will not support the bill, but I move:
|| That the motion be amended by deleting all the words after the word "That" and substituting the following:
||“the House decline to give second reading to Bill C-26, An Act to amend the Canada Pension Plan, the Canada Pension Plan Investment Board Act and the Income Tax Act, because it will: (a) take more money from hardworking Canadians; (b) put thousands of jobs at risk; and (c) do nothing to help seniors in need.”
Hon. Judy A. Sgro (Humber River—Black Creek, Lib.):
Madam Speaker, I am pleased to stand today to talk about Bill C-26. It has been a long time coming for this side of the House.
I have listened to my colleagues in the opposition and they clearly have an ideological slant, which is very different to how we think on this side of the House. Therefore, I am pleased to see that Bill C-26 has been presented.
At one point, I was the Liberal critic for seniors and pensions, and so we have had a lot of to and fro. I am glad to see that today's debate and discussion is being done in a respectful way. However, as the former critic, I think back to the dozens of times that I had asked the previous Conservative government to make changes to the CPP, and I am reminded of its constant foot-dragging and excuses for inaction.
The Conservatives' ideology is very different than that on this side of the House. They said that pension reform was something best left to the provinces. They also said that pension reform had no business on the floor of the House. I am very proud to say that we are going to prove them wrong again, as we did many years ago when we introduced CPP.
Seniors, like those living in my riding at 7/11 Arleta, helped to build our country. They deserve better than to be relegated to the shadows of the Conservative economic inaction plan. For nearly a decade, Canadian seniors were told that better was impossible, and that Canadians needed to tighten their belts and do more with less. This argument might have resonated with the core Conservative supporters, but missed the mark with seniors with a background in physical work, which was work that paid less but demanded more.
Seniors with low incomes, failing health, and challenging circumstances know too well the heartbreak of deciding between groceries and hydro, between rent and a grandchild's Christmas gift, or any number of other impossible choices demanded because of a pension that just did not keep pace with increasing costs. Today, because of this government and our commitment to do the right thing for seniors, that shameful history of taking seniors for granted will finally be behind us.
Today, for the first time in far too long, Canadian seniors, like Paterra Catania, whom I spoke to just yesterday on this issue, have a reason to smile and have hope. Real change is taking root within their homes and bank accounts but, most important, for the future of their children and their grandchildren.
In the last election, the Liberals promised to protect income splitting for seniors, which we did; to restore the old age security and GIS eligibility age to 65, which we did; to increase the annual GIS payments; and to enhance the CPP, which is exactly what we are doing now.
We have protected the income splitting, restored the age to 65; allocated $670 million per year to double up the GIS for the lowest-income seniors; and now we have Bill C-26, which will be to enhance the Canada pension plan. These are not small changes, but this is real help for real people in the future.
In just one year, this government has started to reverse years of contempt and neglect at the hands of the Stephen Harper government and his ideologically-driven Conservatives. Of course, it is important to note that to amend the CPP, the following was required, which we were told was next to impossible for the last five years: agreement from two-thirds of the provinces representing 50% of the population, which is a good achievement for our folks on this side of the House; a fully costed strategy; and an agreement from the federal government, which was something the previous government refused to give for eight years.
Set another way, this change was certainly not easy, but it is amazing what can be done when good people come together with a common goal rather than making excuses for inaction. Change can be hard, but change is necessary.
This brings me back to Bill C-26.
Today, middle-class Canadians are working harder than ever before. Many are worried that they will not have the savings they need to live with dignity during their retirement years. Many people were unaware of just how difficult it was if one had not saved enough money when reaching that age of 65. To make matters worse, each year fewer and fewer Canadians have workplace pensions to fall back on.
The Conservative wait-and-see strategy failed to do anything except make matters worse. It is going to take time to fully reverse the damage done by the years of neglect, but we will start by putting more money into the hands of those who need it most. Bill C-26 would increase the amount of the retirement pension, as well as the survivor's and disability pensions, and the post-retirement benefit. Once fully implemented, Bill C-26 would boost how much seniors would get from their pensions and would help by giving low- and middle-income seniors choice and flexibility in their daily lives.
To make sure these changes are affordable, we will phase them in over seven years. We are not going to bring them in overnight. We will phase them in very gradually from 2019 to 2025, so that the impact on employers is gradual and manageable, and they know that it is coming. Every Canadian deserves a secure and dignified retirement after a lifetime of hard work. Through this enhancement, we have taken a powerful step to help make that happen.
Last year, the Liberals made a commitment to Canadians to strengthen the CPP in order to help them achieve their goal of a strong, secure, and stable retirement. Bill C-26 is an important step along that path. It would increase the maximum level of pensionable earnings by 14% in 2025, provide for the making of additional contributions by 2019, and allow for the creation of the additional Canada pension plan account and the accounting of funds in relation to it. This would be a vehicle for many people who want and have the ability to put an extra few dollars away. They will be able to do that now, knowing that the money is going into a fund that is well run and will be there for them to ensure their retirement.
Many of these measures were part of a detailed pension reform white paper that I prepared in 2010, with the help of many industry experts. As we celebrate this victory today, I would like to thank people like Jean-Pierre Laporte, James Pierlot, Bernard Dussault, and many others who worked on the white paper that made possible the change that we are looking at in Bill C-26 today.
We may have toiled in darkness for many years, but now there is a government that is not afraid of change. Liberal administrations of the past clearly understood the need to protect seniors and help prepare people for those senior years. Whether we are referencing the Old Age Pensions Act, delivered by the Mackenzie King government; the Old Age Security Act, delivered by Louis St. Laurent; or the Canada pension plan and guaranteed income supplement, both delivered by the Lester Pearson government; Liberal governments have a collective legacy of valuing the long-term pension security of Canadians.
Bill C-26 is the next chapter in that story and I am glad to support the legislation on behalf of the people in the communities of Humber River—Black Creek.
Mr. Brian Masse (Windsor West, NDP):
Madam Speaker, I am pleased to rise on Bill C-26. The Canada pension plan is an iconic part of Canadian life. I am pleased that we are doing something about it. It is important to put a number of contexts in place with regard to why this is important for our seniors, our young people, and the people who are paying into it right now.
With the changes being made, the reality is that by 2025 the pension increase will only be made available to 8% of people, and it will take 49 years for this to come into full effect. In fact, it is those who are 16 years old now who will see the benefits of this.
There is no doubt that we will be supporting this because it is a start. We need to start somewhere.
The government now has an agreement with the provinces. I would also like to thank all of the Canadians who participated in moving on this issue. That is important because one political party is trying to tear down all of the efforts that the rest of the country has put into this. The fact is that whether we like this agreement or not and whether we agree with all of it or not, the provinces have agreed. They have decided that this is something they will do and want to do.
Quebec has its own system, and it will continue to maintain that. However, it has also indicated that it would have some measures that complement and work together with this, in the spirit it has shown in the past with respect to a pension system.
I have seen all of the good work done by the Canadian Labour Congress, Unifor, and also the retirees from various unions across this country. When I say that, I am talking about not only the current workers but also the retirees and their families. I have been at the meetings, which are open to the public and to the media, and there have been lots of contributions made by people who are not part of those organizations. Others come in off the street and talk about seniors' issues and pensions. Many of those people will not benefit from this. Although they will pay into this system and not benefit from it, they believe in it because it is part of a Canadian way of living that they support. They do not have any reservations or the tendency to say, “What's in it for me?” Rather, what they are looking at is their grandchildren and other people who do not have the same benefit.
What is interesting is that the unions are one of the best protected groups in terms of private pensions, and they realize the benefit of this negotiated agreement.
It is interesting to note that, similar to our Canada pension plan, this is a deferred wage, which is what a pension is. It is security and a deferred wage. Therefore, when employers and employees sit down and negotiate remuneration for services, some will take less today to have more tomorrow as part of their benefit. What more tomorrow might mean to them is the sense of security that they would have, whether that relates to mental health, to having a security blanket, to a way of planning things, or to having a certain lifestyle in Canada or many parts of the world, but Canada used to be one of the best places for that.
From an economic standpoint, I would argue that this is one of the best places to invest. Those who have talked about how it will basically crush business, will defer jobs, and all of those different things have not been listening to all of the testimony at the industry committee when we looked at manufacturing and other industries. The business industry has argued different things, such as SR and ED tax credits, and a number of different programs and services. Most recently some businesses want tax holidays, but they do not bring up the Canada pension plan. All of these witnesses have not brought up the Canada pension plan.
What people really need to understand is that I still have members in my community who will not apply for employment insurance because they are too proud. They feel that they do not want to receive that help or that it is reserved for someone else. However, they forget that it is the individual and the company who pay into employment insurance and that it is their money.
Over the years Liberal and Conservative governments have taken $54 billion from Canadians. Canadians need to apply to get the EI benefit if they qualify. It is their money.
It is similar to this issue with respect to the Canada pension plan and pensions in general. If we manage public pension plans properly, they will be there for everyone in the country and allow people to stay off welfare and other types of social assistance paid for by Canadian taxpayers. If people fall through the cracks without having a proper pension, then taxpayers have to pick up the costs. The money will come from taxpayers one way or another.
This is an incredible opportunity. As I mentioned, what businesses want in terms of subsidies, or what some people would define as corporate welfare, are corporate tax cuts, which we could control. However, businesses will not necessarily invest in Canada when they get these benefits, for a variety of reasons.
Let us take taxed holidays for example. A lot of American states have tax holidays, open cash settlements, infrastructure development, and reduced corporate taxes just to win jobs. I wonder if members remember the debates that consumed us here in this place for nearly two decades about lowering corporate tax rates, that by doing so many jobs would be created. To create jobs, we would just have to lower the corporate tax rate. Those jobs did not come. The manufacturing industry and other types of value-added industries have been crushed in this country because of that ideology. The carrot and stick approach with respect to corporate tax rate reductions has not worked. It has not provided any benefits. In fact, we saw private pensions shrink during that time. As a result of those private pensions shrinking, we have now had to resort to stronger public pensions.
One of the factors that would retain young people who are looking for employment in this country, especially when we are considering the brain drain and other things, is a stable retirement program. The Canada pension plan is that program. They will pay into the plan for the rest of their working lives in Canada and get a guaranteed benefit at the end of the day. That is predictable.
Companies tell us they are dealing with a whole series of things that will change, the most recent being the issue of labelling and health. It was on the news last night what industry has to do in putting more labels on things. Companies want a predictable outcome similar to many Canadian youth are looking for right now as their future. Predictability will keep people and companies here.
It was interesting to hear a Liberal member say that we need to “make Canada great again”. I do not know how Trump made it into this chamber, but he has.
It is important to look at the amendment the Conservative Party has put forward. I understand why amendments are put forward. This amendment is against pensions and is peculiar. What we are talking about at the end of the day is having agreement between the federal government and the provinces, and that is what we have here. Different political parties at the provincial level have now said they can do this. Whether a Conservative government, the Saskatchewan Party, a Liberal government, or an NDP government, they have all said they can do this for all of Canada. The federal government is going to be a part of making it happen.
Destroying all of that and putting it back to where so many files are would be a major step back, like destroying relationships with the provinces, most recently with respect to health. It would be a major step back for all of the people who have fought for this in not only my community of Windsor and Essex County but the whole of Canada, which has done so much to make sure we have some movement on pensions.
For that reason New Democrats will be supporting this legislation. We will continue to work to make sure that seniors who are living in poverty and have to make terrible choices and who fall through the cracks will have the support of a government that cares about them. Hopefully this band-aid fix will become a full solution one day.
Mr. Joël Godin (Portneuf—Jacques-Cartier, CPC):
Mr. Speaker, I have no idea why people are saying some of the things they are saying in the House this morning. Who said the Conservatives want to destroy the CPP? Nobody. I have no idea what has gotten into them.
I rise today, October 25, 2016, to urge my colleagues opposite to reconsider Bill C-26 on the Canada pension plan.
First of all, this government has many other priority files it should be dealing with before taxing employers and employees even more. I am not sure that employees and employers can trust this government when it comes to economics. That is what we have seen during its first year in office. It is disastrous. The government promised a $10-billion deficit, but it is $30 billion in the March 2016 budget. Now here it is October 2016, and experts are talking about a deficit in the $34 billion to $40 billion range. That is huge. That is the budget for the Liberal government's first year in office. Its fiscal year started on April 1, 2016.
When we Conservatives were in power, we did our homework, and we gave the country a budget surplus in October.
The Liberals began managing and taking full control of the budget on April 1, 2016, and already in October experts are saying that the deficit could reach as high as $40 billion. What a disaster. On top of that, the Liberals are asking Canadians to trust them and accept an additional tax in the form of increased CPP premiums. People do not trust this government.
We governed like a real government. I must point out that our prime minister was all business. He was an economist. He knew how to count. Our country is being governed by a former drama teacher. I have nothing against drama teachers. My son is a young high school student and is in two plays. Teachers do important work. We need to recognize the work that these people do, as they support our teenagers in discovering and developing their talents. I applaud them. Besides, I think our current Prime Minister would be better on the stage than on the floor of the House of Commons.
I have some difficulty in believing that this government is capable of properly managing a CPP premium increase. We can already see all the damage it has caused in just one year. I will refrain from listing all of it here today, because it would be a long list. It has been only one year; imagine all four years.
Let us come back to our seniors, who are such a treasure. We must recognize all the efforts they made to build our beautiful country. Enough with the melodramatics and saying that Canada is not a good country to live in. That is not true. When I meet with people at seniors clubs and retirement centres in the beautiful riding of Portneuf—Jacques-Cartier, which I am proud and honoured to represent, I always thank seniors. I say thank you because we would not be where we are today without them. I thank them for leaving us with the way of life we have today, one which we as parliamentarians work on improving day after day.
When next I see them I will be embarrassed to tell them that the current government introduced a bill under which, 40 years from now, future retirees might be able to have a better retirement and that this measure will be implemented during the next election, in 2019.
We spend time with seniors. I am sure that the 338 members of the House visit old age homes, senior centres, and retirement homes.
People will tell us that it is ridiculous and that they will never see a penny of that money. Seniors are smart. They will surely add that the Liberals are going to waste that money. They will say that they cannot trust the Liberals. Others will add that they do not want to give the Liberals the money that they worked hard all their lives to earn.
We know that the population is aging. We took the necessary steps to help people prepare for a comfortable and dignified retirement. We made it so workers can earn more tax-free income through TFSAs, or tax-free savings accounts for the members opposite who are not familiar with it. However, as soon as the Liberals took office, they quickly reduced the maximum amount that could be contributed to a TFSA. What was the hurry? How did that affect society? All of the brokerage firms experienced a slowdown.
I do not claim to be an economist, but I would still like to give a little lesson on economics. Financial institutions use people's savings to give out loans or make investments, which creates jobs and drives the economy. When the economy is doing well, it creates collective wealth. That helps governments balance their budgets, as we did in 2014-15. It is not hard to understand. As I said, I am not an economist, but this is a basic principle. Experience has proven it to be true.
What a great vision. The Liberals are blinded by camera flashes. We believe in Canadians. We believe that people are capable of saving and that they can afford a comfortable retirement. Before the party of the sponsorship scandal took office, the former Conservative government believed in Canadians and in the regions. We believe that all individuals should keep as much of their hard-earned money as possible so that they can make their own decisions as to how to spend it.
Who knows better than us what is best for us? Who believes in the individual? The former Conservative government, not the Liberals opposite. We believe that Canadians should be able to manage their own money. The current government wants to put more money in its coffers in order to waste more and spoil its friends. The Liberals say they are helping Canadian families even though this new law is going to take up to $2,200 out of their pockets every year. That does not make sense and there is no plan.
We cannot trust the children of the sponsorship scandal, and I am speaking of the Liberal government. I cannot trust them, and they themselves have shown me that. Our government tightly managed our beautiful country's retirement system, had a vision for it, and made it prosper.
As my time is running out, I will jump to the conclusion of my speech. This is a quote that shows this government's lack of coherence, the false debate being used to distract our hard-working Canadians, and that it is treating them like idiots: “Whatever the reason might be to expand the CPP, it is not to eliminate poverty. The poverty rate among seniors is now as close to zero as we can get.”
Who said that? Fred Vettese, chief actuary at Morneau Shepell. That firm belonged to the current minister, who worked with Mr. Vettese. Along with a gentleman by the name of Bill Morneau, he co-authored “The Real Retirement”, which was published in the Financial Post on June 5, 2016.
I urge the government to go back to the drawing board and put in place measures that will make today's seniors believe in this government. I personally do not believe in it.
Mr. Erin Weir (Regina—Lewvan, NDP):
Mr. Speaker, a strong pension system is a cornerstone of a decent society. Adequate pensions provide retirement security to those who build our country. Pensions reduce the extent to which seniors must draw upon other social welfare programs. When retirees spend pension income in their local communities, it provides an important and relatively stable source of consumer demand. Therefore, pensions are critical to our economy and to our broader society. That is why most other advanced countries have established robust universal public pension systems to cover all workers.
Even the United States set up a public social security system that is more generous than the current Canada pension plan. Here is Canada, I believe we made an historic error. We set up a public pension system only as a complement to workplace pensions. The CPP replaces only about a quarter of employment earnings, on the assumption that employees have another pension from their employers. That assumption has been severely tested in recent years, and I would suggest that the Canadian approach to pensions is actually very similar to the American approach to health care.
This reliance on the workplace for benefits has many pitfalls. Workers can lose benefits if they change jobs or if their employer goes bankrupt. The aggregate costs of administering separate plans in each workplace, or separate accounts for each employee, are far higher than administering a universal plan that covers all Canadian employees. In any case, we are at a point where only about one-tenth of private sector employees have a defined benefit pension plan in the workplace.
Of course, we can and must do more to safeguard workplace plans where they exist. One idea would be to enact a national pension benefits guarantee fund, as exists in the United States and at the provincial level in Ontario. This is something the Government of Canada could try to initiate for the whole country that would serve as a backstop to workplace pension plans.
However, the fundamental solution is to enhance the Canada pension plan to provide more defined benefit coverage for all Canadian employees, regardless of where they work. The CPP is universal, efficient, portable between employers, and indexed to inflation.
We in the NDP, and our allies in the trade union movement, have advocated doubling CPP benefits over time to replace half of employment income. The government's plan to eventually expand the CPP to replace one-third of employment income does not go far enough, but it is a significant step in the right direction. I am proud of the role New Democrats have played in the House to push the government to follow through on its promise to improve the CPP.
The federal-provincial agreement reached on the CPP is so reasonable that even Saskatchewan's right-wing premier, Brad Wall, signed on to it. To provide a bit of context, in the months before the deal, Premier Wall had been the shrillest opponent of expanding the CPP. When commodity prices were high, it was not the right time to enhance the CPP, according to Mr. Wall. When commodity prices were low, he again said that it was not the right time to expand the CPP. Indeed, in response to falling oil prices, Premier Wall's priority was to argue against improved CPP benefits rather than in favour of improved employment insurance benefits for laid-off resource workers.
There is quite a contrast with our neighbouring province in this regard. In Alberta, Premier Notley made a very strong case for extended employment insurance benefits. As a result, that benefit extension was provided to all Albertans. In Alberta, we had effective advocacy by the provincial government for better EI benefits.
In Saskatchewan, we had a right-wing premier going on a crusade against expanding the CPP. He completely ignored the issue of employment insurance. As a result, the government left half of Saskatchewan out of extended EI benefits and, even after having added the region of south Saskatchewan, it is still excluding Regina.
Workers in my city are paying the price for a lack of effective advocacy from our Premier. However, even though Premier Wall was so hell-bent on opposing an expansion of the CPP, even he came around to sign on to this important federal-provincial agreement.
It is really quite striking that premiers of all stripes, including a very right-wing premier, as I mentioned, have signed on to this reasonable compromise, and yet in this House, the federal Conservatives are opposing improvements to the Canada pension plan. I really think it speaks to just how out of touch the Conservatives are with the reality of working Canadians, that they alone are standing up and opposing any kind of enhancement of the CPP.
While I would certainly argue that this bill is an important step in the right direction, obviously it is not sufficient. Obviously, much more needs to be done to help current retirees and to help lower-income working people. We want to see the government do a lot more to improve the guaranteed income supplement for seniors.
I would note that, in the proposed bill, the enhanced portion of the CPP is actually a separate line on income tax. Might there be a way of exempting the additional benefits from the GIS clawback? That is just one idea that could perhaps help lower-income seniors.
Another idea would be to expand the working income tax benefit as a way of compensating lower-income employees for any cost of increased contributions. The government has said it is going to do this, but we absolutely need the details. We need to see something concrete for working Canadians.
On balance, I think this is a good bill. The NDP is going to support it. However, definitely the government can and should do more.
I would like to briefly respond to some of the points made in the last speech by my hon. colleague from Portneuf—Jacques-Cartier. He suggested that, instead of expanding the CPP, we should just increase the contribution limit for tax-free savings accounts. However, voluntary savings are not working. Canadians are not even filling up the TFSA contribution room they already have. That is why it is important to expand the CPP. Just further increasing the contribution limit to the TFSA would not help all the Canadians who are not meeting the current limit. It would just help the very affluent who have the extra money to put into that account.
In support of private savings, the member for Portneuf—Jacques-Cartier also made the point that those savings would be reinvested in the economy. However, the same is true of funds contributed to the Canada pension plan. Those funds would also be reinvested. While certainly savings and investment are important, that is by no means an argument against expanding the CPP.
As I pointed out in questions and comments, this money does not go into government coffers. Unlike the EI fund, the CPP truly is a separate fund with its own administration that does not appear as part of the government's budget.
In summary, this proposal is an important way of ensuring retirement security for all Canadian employees.
Mrs. Cathy McLeod (Kamloops—Thompson—Cariboo, CPC):
Mr. Speaker, I am pleased to stand to speak to Bill C-26, an act to amend the Canada Pension Plan, the Canada Pension Plan Investment Board Act, and the Income Tax Act.
What does this really mean, in layman's terms? It means that there would be a phased-in, mandatory, hike to the CPP premiums for both employer and employee. This hike would be as high as $2,200 per employee.
It is clear from this legislation that the government is not only trying to solve a problem that does not exist, in terms of our system, but does not trust Canadians to make decisions about how they best spend their own money. I think, actually, this bill should really be called the “Wynne bailout bill” or “Liberal election tit for tat” because we know that the Ontario government got itself into a really difficult position with some commitments in terms of what it was going to do with the retirement fund, and indeed, the federal Liberals had to come to its rescue.
I am going to give a few examples about the negative impact of this legislation but, first, I will talk about something that is important and that has been a bit lacking in the conversation we have had today. The tools they are going to use are our Canada pension plan and our Canada Pension Plan Investment Board.
Most Canadians are very aware of this pillar of our retirement program, but very few have much of an understanding of the underlying dynamics. Certainly when I was a young adult in the workforce, I knew there was something called CPP that was coming off my paycheque. However, the big rumour at the time when I was initially contributing was that this CPP was going to run out of money so I really had to worry about saving my own money anyway.
That clearly has not happened, but I think we are making assumptions about this plan, and I think we need to pay some attention to this plan and what it is all about.
I do want to draw members' attention to an October 17 article by Andrew Coyne. He raised some really important issues that have, again, as I noted, not been raised in this debate. I am going to spend a minute or two talking about the issues he raised, by quote or paraphrase, because I think they are absolutely critical and they represent concerns I have had over the last couple of years.
The first is that “CPP is supposed to be cheaper than private plans on account of its larger scale”.
Most Canadians have no idea, but costs at the investment board have increased, times 22, over the past decade. They have gone from $118 million to more than $2.6 billion. That is an absolutely enormous increase that has happened over just a short time frame.
At roughly 1% of assets, and that is not counting the distribution costs, the CPP is now significantly more expensive than most private exchange funds. I think the Liberals should be truly alarmed about that. This is something they need to get a handle on.
He goes on to say:
|| ...the CPP doesn’t “help” you to save, it forces you to. If you’re already saving as much as you’d like to, it’s unclear why the government’s judgement should be substituted for yours; or if you’re already saving as much as you can afford to, forcing you to save more hardly makes you better off.
|| And so far as forced savings are justified, it’s never been clear why they must also be invested through the CPPIB....
The CPP II, as we will call it, is to be fully funded, and there are systemic risks that are associated with the portfolio as a whole. This fund has greatly increased these risks in the last years: 40% are now in private equity, illiquid assets like roads and bridges that are not traded on the public market.
Again, we have a pretty significant increase in the costs of managing this fund, and we have a very significant change in the risk portfolio.
There is nothing wrong with this if, one, all Canadians know what they are getting into; two, they can tolerate the extra risk; three, they have properly priced and accounted for it; and four, the returns are worth it.
The CPP, in Mr. Coyne's opinion, met none of these tests and for the 19 million contributors—perhaps they are like me when I was a young adult—it comes off our paycheques and we really do not know what is happening with the funds.
The first thing the Liberals have failed to do is look at what is happening and what they need to do about it. We should not blindly move forward in giving a greater monopoly to the CPPIB without some careful review regarding the rapidly escalating costs and risks. What we are creating is a bit of a monopoly in terms of forced government savings.
In addition to the concerns I have just raised, and I think I shared some important information, I would like to give a couple of examples of how this forced savings program would have some negative impacts. A lot of my colleagues have shared a number of examples, but I would like to talk about a few more.
Someone I know quite well has a technology firm that is doing exceptionally well, but it was a real struggle when he was getting this firm up and going. When he was first starting, there were times when he was concerned about making payroll. Like many entrepreneurs, he was putting a lot of energy in, but it took a while to see a return on his investment. It is a small company with a few employees.
We already know that the current government has chosen to raise the small business tax, so even if he was lucky enough to make a little bit of money, that was going to go up. That is money, typically, that would have been reinvested in the business.
Now he would also have, with 10 employees, an additional cost, and it could be $10,000. That $10,000 could be reinvested in the company to make it bigger and help it become successful. With that $10,000, perhaps the employees and the employer might have preferred to have some stock options. The employees could believe in the company, and in terms of their benefits packages, might think they would have more advantage with some other structure for receiving remuneration. Clearly, for that new business that is striving to make it, this is a measure that is going to create some real challenges.
I have some relatives, a young couple, who have been saving for their first home. They both graduated from university and are saving for their first home. They live just outside of Toronto. They had the down payment and were all ready to go, then all of a sudden, the mortgage rules changed. Now that the mortgage rules have changed, they do not qualify for the amount they need to purchase this home. Not only has the government changed the amount they are going to have to raise for a down payment, it is making it more difficult for them to save. They were putting a couple of thousand dollars a year away to pay off their student loans and buy their first home, but all of a sudden, they are going to have to divert some of the money they have chosen to do something else with into the CPP, the mandatory payments.
I could go on and on with examples of where this legislation is going to create a challenge.
In conclusion, I think the government is fixing a problem that does not exist. We have heard clearly that it does not exist. It is forcing Canadians to do something that perhaps is not their priority. We have entrepreneurs who could take that $1,000 a month, who are investors, who might have something else they could do with that $1,000, whether it is their own investment portfolios or investing in their businesses.
The Liberals are going to negatively affect the economy, and they have not fully assessed, in any comprehensive way in recent years, the escalating cost and the risk. I think the Liberals of today are very different from the Liberals of before. When CPP was first introduced, and we have heard this in the debate already, Judy LaMarsh, in 1964, stated:
|| It (CPP) is not intended to provide all the retirement income which many Canadians wish to have. This is a matter of individual choice and, in the government’s view, should properly be left to personal savings and private pension plans.
The Liberals need to really reflect on the path they are going down, and we should all have very significant concerns.
Mr. Jim Eglinski (Yellowhead, CPC):
Mr. Speaker, I am pleased to rise in the House today to speak to Bill C-26 and the Liberals' plan to expand the Canada pension plan.
This expansion would take more money from Canadians' paycheques, place more hardship on small businesses, and do very little for vulnerable citizens. Vulnerable seniors would gain little or nothing from the expanded CPP, as many have not contributed to the CPP and therefore are not eligible to receive CPP entitlements.
I quote from the Fraser Institute, through their colleagues, Charles Lammam and Hugh MacIntyre, who stated:
| Instead of expending political energy on debating CPP expansion in the misguided belief that many middle- and upper-income Canadians are not saving enough for retirement, the focus of public debate should be on how best to help financially vulnerable seniors.
For low-income seniors who have contributed, an increase in CPP income could trigger a reduction in other government transfers, meaning little or no net increase in retirement income. If this plan goes ahead, the CPP premium rate will start rising in 2019, and the maximum level of pensionable earnings will go up from $54,900 this year to $82,720 in 2025.
According to a study by the Fraser Institute, this expansion will take money from Canadians, with little benefit in return.
Simon Gaudreault, chief economist at the Canadian Federation of Independent Business, stated that the agreement will have serious negative impacts on workers and the Canadian economy and that the announced changes, including increased contributions, may put Canadian wages, hours, and jobs in jeopardy.
Forcing Canadians to make higher contributions to the CPP will take more money from their paycheques. This means that they will have fewer dollars to invest outside the formal pension system and in private voluntary savings, such as RRSPs and TFSAs. This would result in little to no increase in total savings.
In addition to making it more difficult for Canadians to contribute to their TFSAs, the Liberal government has slashed contribution limits back to $5,500. Our government raised them, because it was such a popular program, from youth to seniors.
Our Conservative Party was proud to introduce the tax-free savings account that encouraged Canadians to be responsible in saving, and many Canadians have come to rely on these savings accounts when planning for their future. Tax-free savings accounts have provided Canadian families and seniors with a secure and flexible savings option that protects their money from being eroded by taxes.
The Liberals cut the limits for these savings accounts, and now they are taking even more money from the pockets of Canadians, making it difficult for them to use these accounts. The changes being made by the Liberals, in my view, will make life less affordable for Canadians who are trying to save for their vulnerable years.
Canadians should be able to manage their own money. With the out-of-control spending we have seen from the Liberals over this past year, they cannot trust the Liberal government with their pensions.
Vulnerable seniors will gain little or nothing from an expanded CPP. For low-income seniors who have made contributions, an increase in CPP income could trigger a reduction in other government transfers, such as the guaranteed income supplement. This would mean little or no net increase in their retirement income.
Our Conservative Party believes in reasonable, evidence-based policies that help Canadians retire with dignity, which is why the previous government expanded the guaranteed income supplement. The Liberals clearly agreed with this approach, since they increased the GIS by 10% in the first budget.
The Canada pension plan expansion may not effectively target those middle-income earners who are at the greatest risk of pension problems.
Employers and employees may decide to shrink their workplace pensions over their earning range when the CPP is newly expanded so the workers are not over covered.
An increase in payroll contributions after 2019 may result in a downward pressure on wages or employment. This would force Canadians to contribute more to the Canada pension plan, and would reduce their private voluntary savings. Canadians should choose how much they save and spend based on their income and preferred lifestyle.
The CPP tax hike will take money from the paycheques of hard-working Canadians, put hundreds of thousands of jobs at risk, and do nothing to help the seniors who need it today.
In 2013, the total household net worth of Canadians was $7.7 billion, split almost equally between pension assets, namely CPP/QPP, RRSPs, employer pensions, real estate equity, and other financial and non-financial assets.
A similar CPP hike scenario studied by the Canadian Federation of Independent Business in 2015 said that it would eliminate 110,000 jobs and permanently lower wages by nearly 1%.
Dan Kelly, the president and CEO of the Canadian Federation of Independent Business stated, “Two thirds of small firms say they will have to freeze or cut salaries and over a third say they will have to reduce hours or jobs in their business in response to a CPP/QPP hike”.
For the above reasons, I will not be supporting this bill.
Throughout my riding of Yellowhead in Alberta there are many unemployed people and many who are still working. Those who are working are the younger generation, many of whom who would look at the Canada pension plan and not trust that there would be funds there when they retired.
When we talk to financial planners throughout my area, we find that many young people, those who are just starting in the workforce and those who are already there, are putting money away for their retirement. They understand what it means to preplan their own destiny. Our government brought in the tax-free savings account specifically for those people who wanted to plan for their own future and use the money they could invest today, knowing that when they took that money out or when they retired, they would not be paying tax.
The difference between the Canada pension plan and the tax-free savings account is that people can put as much money as they wish forward. At the same time, our government gave them the option to make voluntary contributions to the Canada pension plan, which is what I believe should be in place today, rather than having to make greater mandatory contributions.
Mrs. Karen Vecchio (Elgin—Middlesex—London, CPC):
Mr. Speaker, this week the Minister of Finance tabled Bill C-26, An Act to amend the Canada Pension Plan, the Canada Pension Plan Investment Board Act and the Income Tax Act.
I had the opportunity to listen to the minister's speech, and the question and answer portion. I listened to him try to explain to us in the House, as well as to the viewers, how this bill was good for Canadians. I had the chance to ask the first question to the minister during that period, and although he is a great speaker, I did not get the answer I requested.
To start, I am going to pose this question once again, but in a different way and hope that through the following hours of debate that there is finally an answer. I shared with the minister two quotes from the Canadian Federation of Independent Business CEO, Dan Kelly:
|| It is tremendously disappointing to see that finance ministers are putting Canadian wages, hours and jobs in jeopardy and willfully moving to make an already shaky economy even worse. Despite all the talk, it appears that jobs and the economy are not particularly high priorities for the governments that have signed off on this deal.
Another quote from Dan Kelly stated:
|| Two thirds of small firms say they will have to freeze or cut salaries and over a third say they will have to reduce hours or jobs in their business in response to a CPP/QPP hike.
These two statements are very troubling, especially with the statistics from 2013 indicating that there are 1,116,423 small businesses in Canada. That makes up 98% of all employer businesses in Canada. This same information shows that 86% of Canadian exporters were small businesses in 2009, that accounted for $68 billion in exports or approximately 25% of Canada's total export value.
Locally, I have received data from my riding of Elgin—Middlesex—London, done by CFIB. When polled on the support for CPP increases, 12% of all Canadians in Elgin—Middlesex—London supported this increase. That is 12%. That means 88% of the people polled did not agree with the CPP tax increases.
With these important figures, I will continue to discuss the concerns with increases to CPP and the impact on small businesses. Rather than continuing with all the stats and figures, I want to share with the House my own personal experience as a small business owner.
Many of us come to the House with different skill sets and different assets, which is very important. One of the assets that I have was being a small business owner. I had the opportunity to run a small business with seven employees. That was run by my former husband and I. When we took this business over in 1998, we purchased it as a franchise. The gentleman was moving out of the franchise business.
At that time, we had received the books showing how well the business was doing, so we were very excited about the first day on the job. However, our first day accomplished $81 in sales. My former spouse and I had paid two staff throughout the entire day. We were open from 7:00 a.m. to 11:00 p.m., and we paid two staffers throughout the day for their shifts.
At the end of the day, our cash received for the items we sold was $81. Obviously the issue here was we needed to look at how to run a proper business. How could we do this? We had many obstacles in front of us, but one of the first things we needed to do was reduce our costs. By doing so, we had to look at what were some of the costs that a business could reduce without impacting what is being sold.
I was in a small coffee shop. We were a coffee house where there was entertainment five nights a week. We served an area where there was a TD Bank and many other local businesses. We were a very common stopping ground for people on their way to work and leaving work.
One of the first things we did was business promotions. That was able to bring in some sales, but at the same time we had extraordinary expenses. I was in a location where our actual cost for rent was $3,800 per month in the downtown core of London. I was dealing not only with an extravagant expense when it came to the rent, but we also had high hydro costs. For anyone who lives in Ontario, believe it or not, it is actually even worse than it was in 1998. We were spending at least $400 and $500 per month on those costs.
We also had other costs that we had to look at, whether it was municipal taxes or different things that we had to go and propose to council, so we could put seating outside. There were many things we had to deal with that had red tape.
The number one thing I did was to reduce costs. It was a really horrible choice to reduce the number of staff. To make that business work, I needed to make sure we had inventory. I needed to make sure there were coffee beans and milk, that the lights were on, and that we paid the rent. That was what was important to me, because without those things, I could not run a business. The first expense I could change was to decrease my staff by two employees. It was a very difficult decision for us to make because it involved the lives of two students going to Western University. We had to take away 15 hours of work per person just to make ends meet.
Over time, we did do better. Nonetheless, anyone who is a small business owner will recognize that we are not just there counting the receipts at the end of the day, but are paying the bills. In my case, I recognized that I could buy a pound of pre-cooked bacon for $7.50, or I could pre-cook that bacon myself in my own kitchen for $3.50. Every single thing mattered, especially when the first day of business brought in $81.
The first thing I had to do was to reduce my staff. Seven days a week, for a year and a half years, I would go in and work. Take into consideration that at the time I had a child who was three months old, as well as a 19-month old, and a child who had just reached the age of 4 and had just started junior kindergarten. This is about a family run business. It is not about rich small business owners. This is about a family that was running a business: a mom, a dad, and three children. I would go in there and scrub the toilets and do all of those things so that we had the business.
By the end of this, we did end up doing very well, and after about 18 months, it was either a matter of our mental wellness and selling the business, or continuing to work every day. We decided to sell that business.
However, one of the biggest things we had to do to keep our costs low was to reduce wages. With wages, we have to look at what payroll means. It is not just the CPP contributions that the government is talking about. Those premiums are matched not only by employers but also by the employees themselves. We have employment insurance premiums. We have WSIB, and I am sure there are very similar programs across the country. Therefore, as a small business owner we are not just dealing with paying the taxes that are removed from someone's pay. We are also doing matching contributions.
There are many things to consider, but I think that is the one thing on which we have to sit back and get into the shoes of a small business owner.
Making business decisions can be very difficult. I fear with this change to the CPP that the government is asking small businesses to make that same decision I had to make in order to have a successful business. To reduce costs, we had to reduce expenses. An easy way of reducing expenses is the hardest job, and that is by cutting staff. It is cutting human resources, and we need to talk about that.
On Friday, I asked the member for Foothills about the challenges in his region, where over 200,000 jobs have been lost in Alberta. In my region I saw a similar thing happen between 2008 and 2010, when we went through the global economic downturn. I asked him in particular if the CPP tax hikes would hurt new businesses. Obviously, the answer is yes.
Changing direction, we also have to make sure that Canadians are aware of what this program is. In the CFIB's Ipsos poll, it was noted that 40% of Canadians think the government contributes to the CPP. We have to make sure that people realize that is not the case. It is the employees and the employers who contribute. It is not about the government here.
We cannot confuse Canadians when we are talking about CPP and are throwing in the point that the GIS has been increased. All we are doing is taking the three pillars of retirement and confusing the average Canadian who has not had an opportunity to sit down and study it.
Retirement is about three pillars. It is about the CPP contributions of the employee and the employer. It is about the social programs, such as old age security and the guaranteed income supplement, and it is about personal savings. This government has reduced personal savings with its changes to the tax-free savings accounts. However, the bottom line is that more money cannot be taken out of Canadians' pockets.
I want to finish with a quote that I am sure the government has heard many times:
|| Whatever the reason might be to expand the CPP, it is not to eliminate poverty. The poverty rate among seniors is now as close to zero as we can get. Yes, a little over five per cent of seniors today still have income below the poverty line...
That was Fred Vettese, chief actuary of Morneau Shepell and co-author of the finance minister's book, The Real Retirement. This segment was taken from The Financial Post, June 5, 2016.
I would really ask that we look at these things and recognize that CPP is not about poverty reduction. These proposed CPP increases would hurt, especially when we are going to be seeing things like a precarious carbon tax and the cancellation of the small business tax reduction by the current government.
Mr. Matthew Dubé (Beloeil—Chambly, NDP)
Mr. Speaker, I am very pleased to speak today to Bill C-26, which would reform the Canada pension plan.
First of all, I would like to mention that as Quebec MPs we fall under another plan, the Quebec pension plan. Although the Quebec government did not support this agreement because it has its own plan, it nevertheless committed to making similar changes to its plan, and so much the better.
However, debate on this bill provides an opportunity to speak to the set of measures and the situation not only of current retirees, but also of those who will soon retire or even those who will retire in the distant future. Ultimately, one of our main roles as legislators, although this is often forgotten, is to think about and plan for the long term.
Retirement is a real problem today. The cost of living is going up, and people are finding it more and more difficult to save for retirement, whether that time is a long way off, in the very near future, or already a reality for them. One reason for that is that fewer and fewer companies are offering private pension plans. Even when they do, such plans are no guarantee of a secure retirement.
Consider all of the companies that have gone bankrupt and the impact that has had on employee pension plans. We saw some dramatic examples of that during the 2008 crisis. Unfortunately, the present economic situation suggests that nothing can shield us from that kind of thing happening again.
It is also important to note that, despite what I have been hearing from certain Conservative members, poverty among seniors actually is a serious problem that we need to tackle, using tools such as the Canada pension plan, old age security, and the guaranteed income supplement.
The Liberal government promised to improve the guaranteed income supplement and lord knows that is a long awaited measure. The government promised to index the GIS to the cost of living, but that has yet to happen. This is very important because as I said, when we retire the cost of living goes up, but our income remains stagnant and that is a big problem.
Two weeks ago, on October 4, I attended the seniors' forum in Chambly. It was their 10th anniversary. This yearly forum is an opportunity for community organizations serving seniors in the greater Chambly area, representatives from both MPs offices, as well as representatives from the various seniors clubs in the region, to talk about services provided to seniors. It is a good opportunity for us to meet with seniors and talk to the various organizations that serve them in order to get a better understanding of their reality.
I do not claim to know what seniors are going through in my colleagues' ridings. However, some seniors have to live in low-income apartments and some are struggling. Women who live alone have to deal with the financial burden of paying for groceries and housing. These are very difficult situations and if as legislators we do not take our responsibility seriously and ensure that seniors have a stable income and improve the financial tools available to them, then we are shirking our responsibilities and that affects all of us.
Fortunately, we can tip our hats to the government for pushing back the age of eligibility for old age security from 67 to 65. We can commend the Liberals on that because that senseless move did nothing for workers. In fact, it punished workers who work in mines or other jobs that require a great deal of manual labour. One way or another, we want to ensure that they can retire sooner rather than later.
We are reminded that the parliamentary budget officer's reports indicated at the time that the old age security system was entirely sustainable, and we could keep the retirement age at 65.
Contrary to what a number of members from all parties have said, the issue of retirement is not only about our seniors, although they are the ones who will suffer the immediate consequences. However, it also concerns young people my age, even though retirement may seem a long way off. It is particularly meaningful considering our currently reality, and I am referring to the rise of precarious work. Precarious jobs affect everyone. Young people are particularly affected by this issue, but not only young people.
It is very interesting that we are having this debate on the need to provide a secure retirement to the next generation one week after the Minister of Finance said that young people just need to accept precarious jobs and basically chill out, to paraphrase.
The fact remains that it is absolutely unacceptable to ask young people to be content with just summer jobs.
Of course, retirement is far away for young people. However, the fact remains that if we do nothing today and if we do not start taking this reality seriously, there is going to be quite a problem in the future.
The Canada pension plan is not the only solution because, ultimately, if young people work on contract or have precarious jobs, it is only one of the tools in the toolbox that is supposed to ensure their financial and retirement security. For that reason, we are calling on the government to work harder on dealing with these problems. In fact, at this time, the government seems to accept that this will be the reality in the next few years and that that is just too bad. Well, we do not accept it. The situation is unacceptable. The government should do more about it, and these kinds of comments by a finance minister will not help the situation.
With regard to the guaranteed income supplement, for example, we could do other things to make life easier for people who need it. After all, as taxpayers, they contributed to it. These people should receive the GIS automatically. That would make things easier for many seniors who have told us that there are always complicated forms to be filled out in order to receive the benefits to which they are entitled.
I would like to come back to other measures that affect more than just retirement. We need to look at all of the measures in place for people who need them. I heard a Liberal member say that every measure is important. However, I am thinking about someone who came to my riding office recently. I will not mention any names out of respect for privacy, but they know who they are.
A few years ago, my colleague from New Westminster—Burnaby gave my constituents an excellent presentation on the various measures that exist, such as tax credits for people with disabilities. A retired senior couple attended that presentation. They had a child who was benefiting from some of the measures for people with disabilities. Small changes were made that may have gone unnoticed, that were not mentioned in question period, and that are not considered matters of national importance. However, because of these small, subtle changes made in the budget, this couple's child no longer benefits from these tax measures. Who is paying the price now? A retired senior couple who is taking care of their child who used to benefit from those measures.
We are going to support Bill C-26 because we know that the Canada pension plan is very important in helping retirees live with dignity and allowing older and younger workers to have the retirement that they deserve when they reach that stage in life. However, I would like to remind the government that, if it really takes Canadians' financial security seriously, then it needs to review all of the measures, even the small tax measures that do not seem to have an impact. They do have an impact. They affect people's lives. It is very important to look at all of the measures. The government should not content itself with passing a bill like this one and then say that it is finished and that it solved those people's problems. It is much more complicated than that. It is important that the government take this responsibility seriously.
I now invite questions from my colleagues.
Mrs. Cheryl Gallant (Renfrew—Nipissing—Pembroke, CPC):
Mr. Speaker, I rise on behalf of the people in my riding of Renfrew—Nipissing—Pembroke to participate in this important debate regarding Bill C-26, an act to increase taxes by charging a job-killing payroll tax on working Canadians. The bill would amend the CPP, Canada Pension Plan Investment Board, and the Income Tax Act to implement a job tax.
In politics, as in business, timing is everything. I want to be clear to all Canadians following this debate that I believe we all agree that any specific action that assists in allowing individuals to retire in dignity is good public policy. However, Canadians need more than platitudes from the party in power to know if what is being proposed is in their best financial interests and in the best interests of our country.
Changing elements of this country's social safety net is not something that should be done on an ideological or partisan basis. Conservatives are individuals who take the position that individual choice is preferable. Choosing one's retirement is no exception to our rule of freedom to choose. Individuals from the left take the position that Big Brother, big government, should make all the decisions, which, in this case, is choosing one's retirement. Somewhere there has to be a compromise, which is the current Canadian system of retirement savings.
Canada is a mix of the old age pension, the supplement, which tops up the OAS in the absence of any other income with an eligibility requirement, as well as a variety of tax-assisted savings plans, such as registered retirement savings plans, tax-free savings accounts, and public and private pensions. Anytime some group, individual, or political party seeks to upset the balance of our society, they must be vigorously challenged.
The main purpose of the pension system is to assist households to achieve a balance of assets and liabilities over its most productive time period to prepare for the time when the household's ability to accumulate revenue declines. This is achieved by transferring resources from working life to post-retirement when income dries up. This is referred to as smoothing consumption over life. What pension plans should not be is a pool of capital for government to take from to fund schemes of dubious or ideological value.
The reason I oppose this plan to expand the CPP at this time is varied. However, it is the Ontario experience that represents the biggest reason why Canadians should be very skeptical of any scheme to tax more dollars out of their and their employers' pockets, particularly under the cover of saving for retirement.
Pension plans exist for the benefit of the pensioners, not for governments in search of cheap and easy capital pools. I send this warning as a direct consequence of comments made by the President of the Treasury Board who has suggested the Liberals see Canadian pension plans as a convenient source of money to finance their party's schemes. I quote from a national newspaper:
||...pension funds often invest in infrastructure such as toll roads, airports or other revenue-generating projects. They are seen as less risky and more predictable than financial markets. ...there is no problem with this as long as the fund has the ability to operate wholly independent of the government, and is able to make decisions based solely on their potential to generate a maximum return for the pensioners it serves. But there’s real reason to doubt this would be the case in the Liberal scheme.
Right now, the Canada pension plan is fairly well managed. The same could have been said before the Toronto Liberal Party decided to take what used to be a well-managed provincial crown corporation and run it into the ground. I am referring to Ontario Hydro, or Hydro One as it is now called in my province. I make reference to Ontario, because I believe all Canadians should be made aware of the absolute public policy disaster that occurred in Ontario and what happens when ideology is substituted for common sense, particularly when large sums of taxpayer dollars are involved.
First of all, Canadians need to know why the Ontario debacle is relevant to today's discussion about the job-killing tax of Bill C-26.
The failure of Hydro One can thank what is referred to derisively by Ontario ratepayers as the Green Energy and Green Economy Act. This ideologically driven Toronto Liberal policy has, as one of its principle architects, Gerald Butts. Mr. Butts moved, at great taxpayer expense, it has been revealed, from Toronto to the most senior position in the Prime Minister's Office in Ottawa, along with dozens of other ex-Toronto Liberal staffers at great public expense also.
Lynn Morrison, who is Ontario's Integrity Commissioner, observed that, and I quote from the summer edition of the Canadian Parliamentary Review:
|| During her investigations into Ontario’s gas plants, she found political staff had ignored long-established procedures and put party interests ahead of public interest.
These staff now surround the Prime Minister in Ottawa.
Under previous Conservative governments, Hydro One, Ontario Hydro, operated at arm's-length from government, much like CPP today. Gerald Butts and his friends changed all that. Through cabinet directives, appointees to the agencies that were supposed to be regulating the electricity monopoly, Ontario Hydro, they forced Hydro One to raise the price of electricity to the highest cost in North America.
This policy to increase the price of electricity has led to energy poverty in Ontario. Tens of thousands of people struggle to pay their electricity bills. For many, it is a choice between heat or eat.
High electricity prices have caused the loss of tens of thousands of jobs in what was once a thriving manufacturing sector in Ontario. This was all done under the cover of climate change, with the smear that if individuals did not support industrial wind turbines in their background, they were a climate change denier, the same sort of left-wing smear that if people do not support this new job tax, they are against a comfortable retirement.
They called the industrial wind turbines so-called green infrastructure and proceeded to hand out fat, juicy contracts to Liberal Party supporters, starting with the then Liberal Party president for $478 million.
To Toronto Liberals like Gerald Butts, wind turbines are green ideology. The fact that some of their Liberal buddies could cash in just made them push harder. Even though the non-partisan provincial auditor identified a $37 billion black hole, which is getting bigger and bigger, there was no accountability. Unfortunately, Ontarians only found out about the misspent funds after the money was gone.
Canadians must ask themselves if they want to gamble their retirement the way the Toronto Liberal Party people gambled electricity prices and lost? Ontario is now the most indebted subnational government in the world.
Let us summarize where this bad legislation will take Canadians.
The CPP job tax hike will take money from the paycheques of hard-working Canadians, put hundreds of thousands of jobs at risk, and do nothing to help seniors who need it.
The Liberals are refusing to tell Canadians exactly how much it will cost, but we know many workers and their families in my riding of Renfrew—Nipissing—Pembroke will be paying thousands more dollars every year out of their pockets.
This also means that it will be harder for new graduates to pay off their student loans or for young people to buy their first home. It will be harder for families to save for vacations or their kids' post-secondary education. It will be harder for companies to create jobs and give workers raises.
Canadians who follow the proceedings in the House of Commons during question period have become very aware of a Prime Minister who is wholly distracted whenever he is asked a direct question on a matter of substance, an unfortunate practice that is mimicked by his chief minister of special access fundraising, who follows the same talking points set out by their handler in the Prime Minister's office.
We are seeing a pattern here, similar to the nightmarish regime at the legislature in Toronto where most of that political Liberal staff fled from after destroying the Ontario economy with their huge carbon tax/global adjustment fee charge on electricity bills, eliminating hundreds of thousands of jobs in the manufacturing sector in the process.
What Canadians have begun to realize is that there is a wide separation between the public utterances of the Liberal Party and what is actually happening in Ottawa. This is called style over substance, which samples of the opinions of voters indicate they understand and recognize how the Liberal Party operates in Ottawa today.
It is important to put on the public record that the before the Minister of Finance and he was in private business, he was saying the opposite about Canadian savings to what he is now telling Canadians about why Canada needs a new job tax. Read the book.
I wonder how the Minister of Finance felt about charging for special access before he started collecting contributions. Let us look at the rise in taxes.
The Liberals will hike the CPP job tax from 9.9% to 11.9%, starting in 2019. As a result, the CPP job tax is up to $2,200 per worker. This CPP job tax in some cases will be split between the employer and employee. For the entrepreneurial self-employed, they will be required to pay 100% of the CPP job tax increase.
Under the guise of helping Canadians save for retirement, in fact the Liberals are pushing through a not so cleverly disguised tax increase on employers and employees.
What this does for employees is take money out of their pockets. What this does to employers is similar except worse. By taking capital away from an employer, the employer has few options.
The first option is to try to raise prices to pay the higher job tax and risk going out business when forced to match the lower wages, safety and environmental standards of a country like China, a country the Liberals are keen to sign a free trade pact with. Option two is to eliminate jobs in the business.