Alistair spoke in the House of Commons about the Canada Pension Plan
October 25th, 2016 - 4:30pm
Mr. Speaker, I am very pleased to have this opportunity to speak to Bill C-26, which is the government's effort to expand and enhance the Canada pension plan. As many in the House know, the expansion of the CPP has long been a policy objective of the NDP. From the campaigns of both the Liberals and the NDP, I do not think Canadians are under any sort of surprise that this policy eventually would be brought up in the 42nd Parliament.
As we all know, Canada's retirement system is based on three pillars: a combined Canada pension plan and the old age security from the government side; workplace pensions that used to be provided by many workplaces but are increasingly uncommon; and the RRSP and private savings of Canadians.
Unfortunately, two of these pillars are now in not very good shape and it is a moral imperative that we act to do now what we can, looking into the future, to prop up the third one, namely the Canada pension plan and the combined old age security and GIS.
I listened both yesterday and today to arguments from the Conservatives about giving Canadians more choice and putting money back into the pockets of people. I could not agree more with those two. With this measure, we are giving seniors a choice. I believe that in the future, with more money in their pockets, they will have more choice.
I also understand the arguments the Conservatives have made about the cost of living increases going on in Canada. I do not believe that this is a cost of living increase. It is not a payroll tax. It is a very simplistic argument and it misleads the conversations that we ought to be having about our retirement future. This is an investment in our future. I know of no other tax that Canadians pay where they will actually get dividends at a later point. These are deferred wages that they will be drawing from in their retirement years.
I have also heard of the absolute calamity that Canada has experienced now that the tax-free savings account has been dropped from $10,000 to $5,000 a year. The costs to the treasury would have been enormous in later years if the $10,000 limit had been allowed. I wonder how this connects with the increased reliance on the guaranteed income supplement that the Conservatives are always proposing as a measure to help Canada's seniors. I agree that the GIS plays a very important role, but the goal of this place is to get to a point where the guaranteed income supplement is not as necessary. Despite what the Conservatives say, the measure of the TFSA only helps a small segment of the population.
I have also heard the arguments about increasing personal responsibility.
That is a terrible argument to put forward to someone who is living paycheque to paycheque and giving up on their own retirement future to help put their kids through college, to make a housing payment, to put food on the table. To tell someone that they are not personally responsible because they are not saving enough is just a terrible argument to make to people in these tough economic times. We are all hard-wired to help our kids. It is something I would do in a heartbeat and without a second thought.
When times are tough, especially when we have minimum wages that do not even come close to what the living wage is, it becomes near impossible to save for retirement. The facts from Statistics Canada back this up.
We also know that defined benefit pension plans, like the Canada pension plan, are one of the most effective tools in combatting income inequality and retirement insecurity.
I want to contrast that with the defined contribution plans of which some in the House are in favour. There has been a push from the right to consider that Canada engage in more defined contribution plans, but we can see examples from around the world of the problems with these plans.
I refer hon. members to the case of Australia. Australia has had its superannuation plans. They are defined contributions. They were instituted in the mid-1990s. Around that time, nearly 80% of workers were covered by these plans. We look 20 years later and nearly 50% of Australian seniors now live in poverty. The country is the fourth highest spender on government assistance. Sixty-five per cent of seniors have no money left in their defined contribution funds by the time they reach age 75. That is completely inadequate.
Another recent study compared the pension income of British citizens with defined contribution plans to Dutch citizens with defined benefit plans. It found that the cost was 1.5% more in fees per year to run the defined contribution plan. Over time, these fees add up. In fact, a British citizen who made the same contributions and earned the same investment returns ended up receiving a pension payment that was 50% lower than his Dutch counterpart. This makes it more crucial for the government to push for defined benefit plans that do not suffer from those same problems. The CPP is the best retirement vehicle we have to ensure that happens.
The proposed changes in the bill are welcome, but they are unfortunately inadequate for what is needed now. I want to give that caveat to the government side. It is a good plan for those who are very young now and would have the full benefits in many years, again looking to our future.
However, the plan needs to go hand in hand with solutions for those retirees or soon-to-be retirees right now.
Seniors have been struggling and this plan would do nothing for them currently. There has been unacceptable erosion in workplace pensions over the last decades. Six in ten Canadians have no workplace pension. We have even sold the idea that RRSPs and TFSAs are great options to replace workplace pensions. I think everyone here can see from the evidence that has not worked. These voluntary options have shown their inability to address the issue of lacking real pensions and a weak Canada pension plan.
Among those aged 55 to 64 without access to a company pension, about half have less than half of what they would need to pay their bills. A staggering 32% have less than $1,000 in retirement savings. That is one-third of the population.
This is a crisis that needs concrete solutions. When we have seniors living in poverty and food insecurity, with very little to no retirement savings, it is a moral imperative for the government to act. Not only is it the right thing to do, but this kind of thing if left unchecked becomes catastrophic for the economy.
If we are talking about 10 to 15 years in the future and we have millions of Canadians with little to no disposable income, then the economy tanks because they cannot afford to buy anything.
Poverty deniers on the right like to point to home ownership of seniors as proof that there is no crisis. However, we know that even with accounting for the total net worth of seniors, only 28% of seniors without employer pensions have even five years' worth of replaced income saved. Five years of savings is nowhere near the target needed for a happy and healthy retirement.
Enhancing the CPP is something that we have always fought for in the NDP, and we welcome the government's initiative for this. However, more needs to be done.
This plan would raise the CPP up to 33%. We in the NDP will continue fighting for what was passed at the Canadian Labour Congress, which is the voice of working people. We need to go to 50% benefits of the pre-retirement income if we to be serious about tackling the issues of retirement, security, and income inequality.
We also need to continue tackling the GIS and raising it. While the increase that came in budget 2016 was welcome, it has still left a lot of seniors without the adequate income they will need.
Also, if we are talking about seniors and their state today, what happened to the conversation about universal pharmacare, so we never again have a senior who has to choose between healthy food and taking their proper dosage of medication?
We need to enhance home care and palliative care, which is at crisis levels.
I hope to see that in the health care accord.
There are a lot of things we could do.
The bill is a good idea, but it only tackles one small part of what needs to be done. We will support its passage, but it is too important not to lose sight of the larger problem of seniors today. Rather than taking a piecemeal approach to pensions and retirement, we need to develop a national strategy for seniors that completely looks at all facets, a strategy that will respect aging. For seniors who have lived their lives building our country, and who continue to make great contributions, the least we can allow them is to live in dignity and with respect.
October 25th, 4:30 p.m.
Mr. Speaker, I appreciated the member's speech and I especially relate to the fact that his riding, like mine, has a lot of low-income people.
I am just hoping he could clear up a few things for me, because I know the Conservatives were in favour of having the $10,000 limit for TFSAs, but by his own admission, many of the members of his constituency would not be able to take full advantage of that $10,000 per year. I want the Conservatives to understand that we did not get rid of the TFSA. We brought it back to a simple level, and that is to look after future government revenues so that we can look after the services that many of his constituents and mine might depend on.
I understand that looking after seniors is a multi-faceted issue. The bill looks at the future, long term. It is one part of a parcel. Of course, GIS and OAS, and immediate and near-term futures are other parts. I am hoping he could explain some of the contradictions that seem to be coming from the Conservative side in that respect.
October 25th, 4:40 p.m.
Mr. Speaker, when we go back to budget 2016, the increase in the guaranteed income supplement was the specific target. Before that increase came, the number of seniors living in poverty in Canada was about 719,000 and that 10% increase was only going to address 149,000. Of course, the majority is women, so there certainly are more steps that can be taken.
The ball is going to be in the government's court. I hope to see some concrete action in budget 2017. Hope springs eternal with me and we shall see.
October 25th, 4:45 p.m.
Mr. Speaker, that is a very good point. It reminds me of some of the conversations that took place during electoral reform. The problem with our current system of electing governments is that we suffer from policy lurch.
It is very hard in this place to take a long-term view when there is a new government, on average, every 10 years that completely clears the deck of the previous government, saying it is going to go in another direction. Then in another 10 years, another new government says that it is going to go in another direction.
Bill C-26 is a very real effort. Yes, it is going to take a long time to get implemented, but it is taking that vision in several decades. Yes, it will only affect the kids of today, but I think those children will be very thankful that we had the foresight to act now before the problem went beyond this.
October 25th, 4:45 p.m.
Mr. Speaker, it is very important to underline in this debate, especially for the Conservative side, that so many provincial premiers came together, even Conservative superstar, Premier Brad Wall, who I think many Conservatives wish was running for leadership. Yes, he was a reluctant partner, but he did come on board at the end. He got the necessary delays to ensure it was implemented and that businesses did not get that shock.
It is very important to remind the Conservatives that there is provincial support, that this has satisfied the seven out of ten rule, with eight provinces coming on board. Quebec has its own pension plan, so it was automatically on the outside. However, that is a very important point to underline.