REPORT, SELECT COMMITTEE ON PENSIONS (CONTINUED)

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The House resumed at 8:03 p.m.

REPORT, SELECT COMMITTEE ON PENSIONS (CONTINUED)

Resuming the adjourned debate on the motion for adoption of the recommendations contained in the final report of the select committee on pensions.

Mr. Nixon: Take it from the top, Jim. Don't leave out that part you gave us the other day.

Mr. J. A. Taylor: No, I will not.

Mr. Speaker, I rise to speak in support of my motion for adoption of the recommendations contained in the final report of the select committee on pensions. Before providing a summary of the committee's recommendations, I would like to capsulize my views on the issues and the solutions.

At this stage, the basic issues in the pension debate are clear to everyone. They include coverage, adequacy, vesting, locking-in, portability and inflation protection. There are also the special concerns of women. Everyone agrees that pension reform must provide improvements in these areas. However, there is disagreement on how improvements should be implemented. Two basic vehicles for pension reform are available. One is the private sector and the other is the government sector. Which route is preferred is largely dependent on philosophy.

Relying on the private sector for pension reform assumes belief in the individual's ability to look after himself. Private sector reform allows flexibility for individuals and employers to design retirement income programs to best suit the individual's needs. It recognizes that not all people need or want to be covered by mandated pension plans, and it ensures that money generated from private savings or employer pension plans will stay in the private sector.

Choosing a government sector approach to pension reform assumes that the individual cannot provide for his retirement alone or in combination with his employer. Expansion of the Canada pension plan could provide immediate benefits in terms of expanded coverage, adequacy, portability and inflation protection.

However, such a paternalistic approach would impose a single benefit structure on all participants and pre-empt the degree of flexibility of coverage and the variety of benefit designs permitted by the private sector. It would also necessitate significant increases in Canada pension plan contributions which would concentrate more money in the hands of government by circumventing the discipline of the competitive capital market.

Of these two fundamental philosophical approaches to pension reform, the majority of select committee members supported the private sector view and, personally, I believe individuals prefer to be self-reliant. The major social dilemma facing Canadians is clear: which avenue should pension reform follow, the government sector or the private sector?

I would like to turn to the recommendations of the select committee on pensions. In its report, the select committee followed the sequence of topics and proposals outlined by the report of the Royal Commission on the Status of Pensions in Ontario. This is the order in which I will present them this evening.

The first group of recommendations deals with government retirement income programs. Government in Canada provides retirement income benefits through federal programs such as old age security and the guaranteed income supplement and through provincial programs such as Gains, Ontario's guaranteed annual income supplement. The royal commission and the select committee recognize these programs require immediate attention to improve benefits, particularly for single pensioners.

The select committee endorsed the principle of the royal commission's proposal for a standard of retirement income adequacy, and the select committee recommended it be linked to the average industrial wage. For single retirees, the select committee recommended they receive not less than 60 per cent of the benefits couples receive.

The one area of difference between the recommendations of the select committee and those of the royal commission was that of universal programs. The royal commission proposed allocating money and services on a strict need basis. The select committee agreed that those who are most in need should receive highest priority for money and services but also saw value in continuing current universal programs.

8:10 p.m.

The second area of recommendations dealt with Ontario's relationship with the Canada pension plan. Issues concerning the Canada pension plan include the level of benefits the plan provides the persons for whom it provides pensions, the plan's cost to participants and taxpayers, because it is not fully funded, and its investment strategy. At the moment, there are those who argue for an expanded CPP which would include paid and unpaid workers.

The royal commission's proposals reflect those of another concerned group which wants to limit further expansion of the CPP in order to control its costs. On these CPP issues the select committee endorsed the royal commission's recommendations. The select committee carefully examined the CPP and proposals to expand it. The committee was persuaded that the costs of the CPP as it is currently structured will be difficult to bear in the near future.

An expansion would create costs that would be unacceptably high. As it is, premiums will have to rise, as was planned from the beginning of CPP, but if the royal commission's funding and investment proposals which the select committee endorsed are acted upon, the premium deduction should not rise above a peak level of nine per cent in the year 2030.

In the area of benefits, the select committee endorsed the royal commission's proposal to immediately institute the child-rearing dropout provision and to make survivor benefits not less than 60 per cent. The committee also endorsed proposals to limit the CPP to paid workers and not to alter the goal of providing a pension benefit greater than 25 per cent of the average industrial wage.

The third section of recommendations addressed employment pension plans. The royal commission identified a number of issues which I outlined earlier concerning employment pension plans. The main issue was that upwards of 1.5 million Ontario workers are not members of registered employment pension plans or holders of a registered retirement savings plan.

As a result of the belief that private pension coverage in Ontario is unacceptably low, and other considerations such as locking in and vesting rights and portability, the royal commission recommended the establishment of a mandatory provincial pension plan, the provincial universal retirement system. The plan was to be fully funded, provide complete portability, lock in and vest benefits fully and immediately, and allow some individual responsibility in retirement income planning.

The select committee considered this recommendation at great length and in the end did not endorse it. The committee's decision reflects some concerns about the PURS proposal itself; but more than that, it reflects the committee's considered opinion that coverage is not the problem the royal commission assumed it to be.

The 1.5 million workers who have been assumed to be outside the employment pension field include workers who are qualifying for pensions, those who have other sorts of arrangements such as deferred profit sharing and workers who for a variety of reasons do not want to be a part of a pension plan for the time being.

The select committee placed responsibility and confidence for better pensions and better pension coverage on the private system which is in place. The committee was convinced by representatives from labour and business organizations that the private sector could make the pensions it provides more equitable and generous with clear government guidelines.

The committee has recommended vesting and locking in after five years with an early review to consider the possibility of a shorter vesting period. The pension service requirement would be one year of employment and 30 years of age. Surviving spouses would be entitled to not less than 60 per cent of the pensioners' benefits. That entitlement will not be altered by a change in marital or economic status.

It was recommended that administration of pension regulations be improved by the creation of a central pension agency and the function of the Pension Commission of Ontario be expanded. Funding requirements should be re-examined by the pension commission and disclosure requirements broadened to the point that no information necessary for employees to understand the operation of a plan would be withheld. The select committee's deliberations also convinced it that multi-employer pension plans can be greatly improved and that this type of plan can be used in innovative ways to provide pensions for members of the small business and agricultural communities.

Throughout the hearings, the select committee has operated under the assumption that an employment pension is a deferred wage and that there should be no question about an employee's entitlement to that wage. The select committee's proposals are intended to enhance and strengthen the private system and should bring about important and meaningful employment pension reform. But if reforms are not forthcoming and do not take place within a reasonable time, the committee has left the door open to reconsider a mandatory approach.

A separate area of employment pension plans examined by the royal commission was Ontario's public sector employment pension plans. These essentially operate according to the same rules as private pension plans, but their size and the fact they are funded ultimately by the taxpayers of the province make public sector pension plans a special case.

The select committee endorsed the thrust of the royal commission's proposals to increase control and identification of public sector pension plan costs. Among the select committee's recommendations in this area was that inflation adjustments not be by way of indexing, but rather through the use of the excess interest approach. The select committee endorsed the royal commission's proposal that public sector plans be permitted to invest in marketable securities. Together, these recommendations should help to control costs for employees, the employer and, ultimately, the taxpayers of Ontario.

The major issue under the royal commission's heading Special Retirement Concerns was inflation adjustment. In its report, the royal commission recommended an inflation tax credit as the chief means to adjust pensions for the effects of inflation. The select committee examined the proposal and concluded that, as recommended by the royal commission, it had some serious flaws.

As I have previously mentioned, the select committee has recommended instead the excess interest approach. This method would guarantee that the inflationary earnings of pension funds would be used to adjust pension benefits. The approach is more equitable and generous than the royal commission's tax credit approach.

Other special retirement concerns were retirement age, women's issues, taxation and constitutional concerns. On retirement age, the select committee endorsed the royal commission's proposal for no changes from the current standards.

On the subject of women, the royal commission noted the special disadvantages they face. One recommendation of benefit for women is that, in the event of marriage breakdown, the committee has stated that pensions be treated as a family asset.

Regarding taxation, the select committee supported and endorsed the royal commission's proposal to use the taxation system to encourage, not discourage saving for retirement.

Finally, the select committee supported wholeheartedly the royal commission's proposals for working towards uniformity in pension legislation across Canada. Federal and provincial co-operation is a must if we are to provide the best pension arrangements possible in this country.

From these recommendations, one can see the thrust of the select committee's report is that the private sector, with the assistance of government guidelines, should be the principal vehicle for pension reform. While the select committee's recommendations are not government policy, I am delighted that the Treasurer (Mr. F. S. Miller) over the past year has taken a stance paralleling this private sector thrust.

8:20 p.m.

In a speech to the provincial ministers of finance last June, the Treasurer said: "In my view, government has the responsibility to ensure that elderly Canadians have at least a minimum standard of income. Further, government has a role to regulate employment pension plans to ensure that the promised benefits will be paid and that the terms of those plans are fair and equitable to all plan members. On the other hand, the individual has a responsibility to provide for his own retirement needs above the level provided by government programs. In addition, he should have as much flexibility as possible to arrange for his retirement income in the way he deems most appropriate."

The private sector philosophy of pension reform is not accepted by everyone. The NDP members of the select committee expressed the dissenting opinion that appears at the back of the committee's report. They recommend that, "The private pension industry be displaced from its dominant role in providing retirement income for workers by radically expanding the public pension system." The NDP advocates the creation of a national pension plan that would involve expanding the Canada pension plan and consolidating it with the old age security program.

Politically, expanding the CPP is an attractive option. It could provide immediate benefits without having to pay for their full costs, at least initially. This option was rejected by the majority of the select committee members because, besides going against the basic private sector philosophy, it is believed to be, in the long run, a more costly solution to pension reform. An expanded CPP means contributions would have to be increased significantly if the plan is to remain solvent, and higher CPP contributions mean money that would have been used in the private sector would flow into a government controlled fund. As noted in the report of the royal commission, easy access to inexpensive sources of government money can foster fiscal irresponsibility.

Monique Bégin, Minister of National Health and Welfare, has been continually advocating the route of an expanded CPP. Recognizing a mutual concern over pension issues at both the federal and Ontario government levels, I tried many times early this year to contact Madame Bégin to invite her to meet with the select committee, at her convenience and on her terms. My efforts were unsuccessful.

She stated in a letter to the executive director of the Family Service Association of Metropolitan Toronto last fall: "Pension reform is the highest social priority of the government of Canada in this term of office. We are working hard to achieve this goal." While I do not question her current effort to achieve pension reform, I deeply regret her strategy and her perception of the provincial role in this endeavour, especially as the pension field is fundamentally one of provincial jurisdiction, according to the Constitution. This was not changed in the recent overhaul of the Constitution.

Ontario, as a major population and industrial centre, should take a firm stand on pension reform and provide leadership in the field. However, the need for legislative harmony and the satisfaction of common goals demand that federal-provincial pension initiatives should be both co-operative and complementary. The acrimony that has characterized recent federal-provincial relations in other policy fields must be avoided.

Now that the select committee report has been tabled, the only other major paper on pensions being awaited is the federal government's green paper, an option paper due to come out this summer. With the study of pension issues soon to be exhausted and with many proposed solutions soon to be known, what is the short-term prospect of pension reform? From the viewpoint of the select committee, I can say that all political parties are anxious to see reform. The stage is set for pension reform and it is hoped the proposals and recommendations can soon be translated into action.

Members have heard the select committee's position in favour of a solution using the private sector as the principal vehicle for pension reform. This would allow individual and private sector initiative and flexibility. They have also heard that other factions support an expansion of the Canada pension plan which would provide immediate benefits. The progress of pension reform now rests on political initiatives.

On the cost side, every solution to the pension problem is expensive. It is up to policy-makers to devise workable solutions that will satisfy major pension concerns within the boundaries of the current economic constraints facing all sectors. The cost of all facets of a pension reform plan must be affordable by the government, the private sector and the individual. I think judicious implementation of the select committee's recommendations could provide an adequate solution at an acceptable cost.

On a personal note, I would like to thank every member of the select committee for the courtesy they showed me as chairman. Without exception they tackled a very difficult subject in a straightforward, conscientious way. Discussion and debate was on a high plane. Conscience, common sense and conviction took precedence over partisan politics. Honest differences of political and economic thought were acknowledged and found themselves manifest, where appropriate, in dissenting opinions.

In tabling the report and moving its adoption, I felt satisfied the select committee appointed by this assembly discharged its mandate economically and expeditiously as men and women of goodwill and understanding are wont to do.

Mr. Riddell: Mr. Speaker, while bouquets are being handed out I would like to compliment the member for Prince Edward-Lennox for his excellent job of chairing the select committee. I thought he did a masterful job. It was down to business the whole time we were in there. We covered a lot of ground and it was largely due to his efforts that we accomplished as much as we did.

This final report of the Legislature's select committee on pension reform has come down without much fanfare. That is unfortunate, because without doubt one of the most important areas that need to be reformed is that of retirement income and security. If there was ever a time when this House should be full of members it is when we are debating this issue. It is one of the major issues that is going to be facing governments from now on. I would have thought we would have seen more interest in this subject this evening.

The process of pension reform began in 1977 with the formation of a Royal Commission on the Status of Pensions in Ontario and it reported in February 1981. Subsequently the Ontario select committee on pensions was formed to study the recommendations of that royal commission with a view to advising government as to which ones should be implemented and which ones should be discarded. As politicians sitting on that committee, we were forced to deal with a retirement income system that is fraught with inequities.

8:30 p.m.

By 1979, between 463,000 and 575,000, or 32 to 39.5 per cent, of Canada's senior citizens were living below the poverty line. According to the Ontario Status of Women Council, two years earlier, in 1977, some 115,580 elderly women in this province were already living below the poverty line. On the other hand, the Ontario government owes $18.9 billion to the pension fund and is charged with a further $1.4 billion in the unfunded liabilities of the two provincial pension funds, the Public Service Superannuation Fund and the Teachers' Superannuation Fund.

These pension funds have been a source of easy money for government. The Ontario government has reacted like a cat with catnip. The Treasurer has proudly boasted about not going to the public market to finance his deficit. Why would he, when easy access to the pension fund system has been too tempting to ignore? Because successive Ontario Treasurers have succumbed to this temptation we are today handicapped by a system of funds to which we as a province must start repaying massive amounts of principal and by a Canada pension plan that is due to run dry by the year 2003 unless the contribution rate is substantially altered.

Some of the social ills arising from our current retirement income system have recently become all too apparent to us. There is the person who works for a company for 20 years and then leaves with no pension at all from his job, and the person who wants to change his job but would be unable to take any credits with him towards his new pension fund if he did so. There is also the person who leaves a job just before meeting the vesting requirement and therefore loses all of the pension fund contributions made by his employer on his behalf.

Then there is the widow who spends her life working in the home and raising a family, who finds out after her husband's death that his pension fund has no provision for a surviving spouse; and bear in mind that two thirds of private sector plans provide no widows' pensions. High levels of inflation make paupers of our elderly as they try to eke out their existence on rapidly eroding fixed incomes, while civil servants enjoy indexed benefits.

Let us not forget that an annual inflation rate of 10 per cent will halve the buying power of a retirement cheque in just seven years. Let us not forget either that while inflation plays havoc with our incomes, pension fund money has been made available to government at low interest rates only to be used, in whole or in part, for social services -- or so we are informed by the government; I believe that much of it has been spent on government extravagance. Who knows whether we are using some of the pension money to pay for this $10-million-plus jet? Who knows whether we are using some of that pension money to pay for our 25 per cent interest in Suncor? That is something we cannot get from the government.

While the social ills in this province become steadily more serious, the Ontario government continues to have very little knowledge on the subject of pensions and pension funding, notwithstanding the numerous reviews that have already been undertaken of the entire system. Moreover, the government's sole response to the issue has been a typical one: establishment of a royal commission and then a select committee to study the recommendations of that royal commission.

The politician's perspective of the whole question of pension reform is perhaps different from the perspective of people who did not have the advantage of sitting on the select committee or who really have not given pension reform a thought. I cannot think of a better forum in which to discuss the politician's perspective because, no matter what the problems and the solutions turn out to be, this question inevitably will be answered politically. As politicians, we must attempt to answer serious financial and personal questions on this issue.

We can make a list of the problems facing us. We can even get some idea of the best solutions available to us. However, we must also take into account many competing social interest groups. Our ultimate answer to the pension fund problem must be a compromise that satisfies all of those groups, from the large corporations to the women raising families in their own homes.

The question we must answer, therefore, is how we address this issue from a political point of view. In many ways, the Canada pension plan would be the neatest and cleanest vehicle for expanding the current benefit scheme. I am sure we will hear more of that from my friends to the left. But do we really want to have a public fund that is so large and powerful? Do we really want to burden our children with the intergenerational transfer of funding responsibility that will occur as a result of substantial changes to the CPP? Do we know enough about the consequences of the changes to make such all-important decisions?

Last year my leader, who at that time was the finance critic for our party, attended the National Pensions Conference. He was amazed at the lack of dialogue between people on the benefit side and people on the financing and administrative side of this issue.

Let us look at the issue from the politician's point of view and attempt to envisage the problem as it appeared to those of us on the select committee. As a member of the provincial Legislature for the past nine years, I have been particularly concerned about what promises to be one of the most crucial issues of this decade, the reform of Canada's pension system. No other issue has such potential for profound social and fiscal change.

Numerous major reviews of the system have made the inequities of our pension scheme all too apparent. Problem areas such as portability, vesting, coverage, indexation and survivor benefits have become predominant themes in discussions of pension problems. Suggested reforms for these inequities have emerged, but the politics of pension reform make it necessary to weigh the fiscal outcome of any solution to the pension problem against social needs.

The politics of pension reform fall into three general areas: the cost and feasibility of implementing such needed social reform; the extent to which the private sector pension scheme should be legislated; and the inevitable conflicts among various levels of government over who should assume responsibility for current pension inadequacies and who should undertake to correct them from the social and financial perspective.

One persistent problem in Canada has been the conflict among the various governments charged with the responsibility for administering pension benefits and for pension regulation. Problems of co-ordination and flexibility are acute owing to the dynamic and highly mobile nature of Canada's labour force.

On the other hand, the financial soundness of the Canadian pension system has been questioned in many recent studies, reflecting deep concern about the manner in which predicted economic, social and demographic changes will affect everything from pension eligibility to pension funding.

Therefore, the objective must be to develop a method of meeting the social need of adequate retirement security while maintaining fiscal responsibility in the system. Problems would be relatively easy to solve if this fine balance were achievable. Even businessmen and the bureaucrats disagree on the time and the speed of change.

Ontario adopted the first provincial Pension Benefits Act in 1963. This legislation was in response to growing criticism from workers who were experiencing difficulties with private pensions and employer-sponsored plans. Some workers had discovered that benefits were far smaller than expected or, in some instances, that they had no entitlement to benefits over and above those contributions which they had made. Sometimes, interest rates used on accumulated pension funds were far too low, thus limiting the payments that workers could reasonably expect. There were instances of plans being terminated for a variety of reasons and in many cases workers received no benefits at all because their pension funds had ceased to exist.

The Ontario legislation coincided with the development of new thinking and new attitudes towards pensions. Increasingly, pensions were regarded as deferred wages. Previously, they had been thought of as rewards for long service, but collective bargaining changed that perception. Treated as a deferred wage, pensions could be expected to include some rights such as vesting, reasonable interest, disclosure and employee participation in pension fund planning committees. Vesting was the principal point of concern for which Ontario developed the 45 and 10 rule, a rule that was later adopted in other provincial legislation.

8:40 p.m.

Ontario's act was followed by Quebec's in 1966, Alberta's in 1967 and Nova Scotia's in 1977. At the outset, most of the acts were similar, if not exactly the same. When Manitoba introduced legislation with wide disclosure requirements in 1976, provincial plans began to diverge. In 1979, Quebec expanded disclosure requirements. Investment standards were altered in some jurisdictions to take advantage of petroleum industry opportunities.

In 1980, Ontario created the guaranteed fund. On July 1, 1981, Saskatchewan's new pension benefits plan came into force, permitting earlier vesting, defining a minimum employer contribution, prescribing interest rates on employee contributions, allowing plans to be put under trusteeship and broadening disclosure requirements.

The next major set of changes should come from Ontario and when the changes come, they will be very wide-ranging indeed. None of the various governments, however, has been able to include all their residents in legislation, since only about 44 per cent of the total work force is actually covered by employer-sponsored plans.

Coverage varies from industry to industry. As expected, coverage is greater among major industries and large firms than among small businesses. Low levels of unionization, the problems of part-time employment, administration costs and the lack of available plans suitable for the needs of small businesses are some of the reasons why coverage is poor in this sector.

About 98 per cent of the work force outside the home participates in the Canada pension plan or the Quebec pension plan. But for those working in the home, who are usually women, CPP coverage is not available and, as previously mentioned, employer-sponsored plan coverage is far less complete than Canada pension plan coverage.

People can also be excluded from plan coverage because they do not meet service or age requirements or because they are unpaid family workers. Other uncovered workers include the self-employed, people who opt out of voluntary plans and people who make alternative arrangements such as deferred profit sharing.

How adequate will proposed pension reforms be to our system if we still cannot reach everyone? Uncovered or inadequately covered groups include low-income earners, women in the home, employees of small businesses and non-unionized workers. Because many members of these groups have limited savings, it follows that their retirement income needs will have to be met through some part of the public system.

At this point, I would like to make reference to some of the other desperately needed social reforms.

Portability is an idea whose time is long overdue. It is hard to believe that in the 1980s we do not have a mechanism in place for portability among pension funds, at least not in the private sector. There is provision generally among public sector plans and a plan that has been put into effect by the Canadian Life Insurance Association after a two-year study period, whereby currently more than 20 major life insurance companies are participating in a scheme that allows an employee to move to a new employer and take with him pension credits for a specified number of years of service. So there is a glimmer of hope in this regard in the private sector also.

However, if an employee of a chemical company wants to change his job and work for a steel company, he cannot transfer his previous credit to his new employer. When pensions are not portable, people who change jobs end up with bits and pieces of pensions scattered among various employers. The total of these small pensions is often less than the pension they could have collected if they had stayed with one employer.

The difficulty in establishing portability in the private sector arises mainly from the many differences in pension plan designs. Lack of portability not only is a deterrent to the much- needed mobility of labour but also is grossly unfair to employees.

What is needed is a scheme to enable employees to carry periods of service from employer to employer. The basic problem that had to be addressed was that some plans were more generous than others. To date, pension plan portability has been viewed as prohibitively costly, mainly because it had been considered solely in terms of some kind of bilateral agreement between two pension plan sponsors.

The life insurance association proposal does not solve the problem of cost, because participating sponsors and their portability schemes do have to work out a pension service transfer value. What the plan does is lay down a series of guidelines for the participating members. These will ensure a basic degree of consistency while providing for plans of different generosity.

Portability is not only an advantage for the employee; from the employer's point of view, the lack of portability means former employees must be kept track of, together with the credits owing to them, long after they have left the company.

A substantial segment of the life insurance industry will be adopting this portability scheme over the next five years, and it is anticipated that other pension plan sponsors in different sectors will follow this lead and eventually will create the possibility for portability among private plans.

The insurance companies were obviously motivated by the growing demand for portability which, if not met by the private sector, eventually might be satisfied by government regulation.

Vesting and portability provisions should be addressed simultaneously. When an employee's pension benefit becomes vested, he is entitled to his employer's contributions made on his behalf. But under current Ontario legislation, full vesting is required only after age 45 plus 10 years of service. Should an employee leave before these two qualifications are met, he receives back his own contributions, plus interest, but not the company's contributions.

A company's contributions to a pension plan on behalf of its employees should be considered part of the wage package, and the contributions should go with the employee.

The Haley commission, the Ontario Legislature's select committee, and now the Treasurer, have come out in favour of vesting and locking in after five years of service. With our country's highly mobile labour force, this is more appropriate than Ontario's current 45 plus 10 rule, which is not generating enough years of pensionable service.

Inflation added another dimension to the problem of protecting incomes of the elderly. In 1978, 39 per cent of elderly persons lived on incomes below the poverty line. In fact, there is probably no element of our modern society in greater need of the revision of the current inequities of our pension scheme than elderly Canadians trying to exist on rapidly eroding fixed incomes. Statistics suggest that the goal of preventing poverty among elderly Canadians is not being met by the country's retirement income scheme.

If inflation had not hit Canada so dramatically in the 1970s, most workers and their employers probably would have been quite satisfied with the benefits provided by their pension plans. But the cost of indexing is high. In some cases, ad hoc catch-up increases have been made by private companies from time to time, particularly over the past 10 years.

Indexing represents an open-ended and expensive commitment. The challenge to private sector plans is that of making the money in the pension fund work for you. Wise investment of these funds in well-diversified portfolios would best protect the purchasing power of the pension benefits; and, coincidentally, the proper investment of these funds would help to stimulate our economy.

Probably one of the grossest inequities in the pension scheme is the indexing of public sector plans at the expense of the private sector. Two thirds of public sector retirees had an indexing provision in 1978, yet only five per cent of private sector employees enjoyed such a provision. Even when such a provision was made, the increase was limited to two or three per cent.

The lack of indexing among private plans means that real income for those who depend on such plans decreases steadily over time, and in recent years those decreases have been dramatic. As I have stated previously, an annual inflation rate of 10 per cent will reduce to half the buying power of retirement cheques in just seven years.

While a requirement that all pension plan benefits should be indexed to increases in the consumer price index would be politically impossible, some interest is being shown by the pension industry in the excess interest approach. As most members will know, this is the concept whereby any interest earned on the funds investment in excess of a predetermined base level will be applied to benefits to increase them accordingly.

Whatever the solution, it is an example of the caution with which government must enter the domain of pension funds in the private sector lest the financial capacity of a private company be jeopardized.

8:50 p.m.

Vital pension reforms are needed for the surviving spouse. Our current pension system by its very nature effectively discriminates against females because they earn less. It also ensures that a substantial portion of females will spend their retirement years in poverty.

In 1976, of all participants in private sector plans, two thirds were in plans that provided no widow's pension. Even when both private and public sector plans were considered, fewer than 60 per cent provided widows' pensions.

When one considers another basic problem, that pension plans cover only about half of the labour force in Canada, living beyond the age of 65 drastically increases the odds that a woman will live in poverty. Even if a woman has been in the labour force herself, she is not going to benefit equally with a man. A Statistics Canada table showing pensioners of private plans by annual income and sex revealed that females in every income level received an average pension less than the male.

For example, in the lowest income bracket, less than $1,000 annually, a male received an average pension of $412 but a female received $262. In the income bracket of $5,000 to $6,000, while a male received an average pension of $2,514, a female's pension was $1,964 -- and it goes on and on.

Since women's earnings in Canada are now 60 per cent of men's earnings and the Canada pension plan and private plans are based on earnings, women's pensions are always lower. Women who take time off to raise a family earn fewer pension credits. Women who work part-time generally earn no pension credits at all. As a group, women are almost certainly worse off in terms of pension.

While these problems and their solutions in some cases have become all too apparent, the politics of resolving them remains the predominant concern. How far does any level of government enter into the private sector with legislation? Pension costs have increased from 1.5 per cent of payroll in 1969 to between five and seven per cent of payroll in 1977. And there are no signs of letup in the rise of public or private pension costs. How much further should a government go in imposing extra costs on businesses to control the adequacy of the benefits provided in their privately sponsored plans?

Many members of the committee reviewing our pension system have looked at alternatives to the regulation of private sector plans by government. Obviously one of those alternatives is to replace our current system, consisting of thousands of different public and private plans, with one universal mandatory plan. Employers themselves could be made responsible for such a scheme, or it could be operated by the province alone or in conjunction with the federal government.

A second option is a very much expanded role for CPP which could all but replace private employer-sponsored parts of our retirement income system. This option overcomes some of the difficulties such as vesting and portability which are inherent in various employer-sponsored plans. However, the financing requirements for an expanded public pension plan approach would be tremendous and might very well create enormous economic problems.

Ontario's royal commission, on the other hand, has suggested the provincial universal retirement system, a provincially based universal pension plan. Whether the preferred plan should be provincially or nationally based, the fact that it would be mandatory implies certain consequences that ultimately would flow from requiring workers to become involved in a universal pension system. Costs would increase for workers and employers. Current incomes would fall as a result. The cost also would adversely affect small businesses and marginally competitive firms. Investment capital could become limited. Intergovernmental co-operation would be a necessity because of the tangled jurisdictional responsibilities in the area.

Of course, a mandatory system does have advantages. It would extend and integrate current programs, and within the context of such a system it would be possible to address equity consideration such as vesting and portability.

The ultimate decisions on changing Canada's pension system will be difficult to make and, above all, they will be of a political nature. We are not just dealing with reforms to benefit society in general; we are dealing with various groups, each with a special interest to protect -- groups ranging from trade unions and large corporations to small businesses and women working in the home. All these groups must be satisfied under one unique pension system.

While there is general recognition of the need for pension reform, there is little agreement on the manner in which this may best be achieved. Should the option of expanding the Canada pension plan be chosen, this would commit future generations of workers to a level of financial undertaking they might be unwilling or unable to bear. It would also not provide the flexible, diversified approach to pension reform which I believe most politicians in Ontario are seeking, and it would increase dependence on government for benefits it might not be in a position to guarantee.

Whatever decisions are made on future changes to our pension system, it should be noted that any substantial alterations in the retirement income system will create huge new funds of money. Such funds pose some potential difficulties, because they could drain off money that otherwise would go to finance investment opportunities in the private sector.

There are other questions as well. For example, where will the funds be located and for whom will any excess capital in the funds be used? Will the funds be kept in the provinces where the contributions are made? If they are not, massive capital transfers could occur similar to those that have resulted from oil pricing. Will the funds be lent to government? If so, there is the question of repayment and the responsibility of government when such large amounts of money are available. The issues raised by these considerations are extremely important, not only for the wellbeing of Canadian society in the near future but also for the health of Canadian capital markets.

The select committee released its interim report last fall with some specific recommendations. We recommended vesting of employees' pension benefits after five years of service. We recommended that employees should be allowed to sit on the board that manages their private pension plan. We dealt with portability by suggesting employees should be allowed to transfer at least 50 per cent of their locked-in benefits to a noncommutable registered retirement savings plan or to a new employer pension plan.

We suggested the indexation of benefits to gain some protection against inflation by utilizing the excess interest approach. We recommended that in the event of termination of employment, contributions of employees not yet vested should be credited interest at a rate of at least one per cent below the annual rate on banks' nonchequing accounts.

Finally, we tackled the immediate problem of Ontario's elderly who are struggling to survive on fixed incomes, recommending an increase in guaranteed annual income system payments to bring the monthly income of a single pensioner up to $550 from its current $493.

You will have noted, Mr. Speaker, as you perused the interim report, as I am sure you did, that one vital aspect of pension reform had not been dealt with by the select committee and that was coverage, the trickiest aspect of all. Once the committee had decided on the necessary reform, it had to find a method of applying this to the total work force in view of the fact that only 40 per cent belonged to pension plans.

Our biggest problem seemed to be, how do we extend the coverage? Even the Treasurer avoided this issue in his speech to the conference of Financial Executives Institute Canada. In that speech, he expressed his preference for achieving pension reform through the private pension plan system as opposed to any extension of the public system. That would be a splendid idea except that less than half of the labour force would be covered in that way, and the Treasurer made no suggestions in that speech as to how this weakness could be overcome.

Probably the most controversial recommendation the committee had to deal with was the one involving a mandatory retirement income scheme referred to by the royal commission as the provincial universal retirement system.

The committee was well aware of the advantages of a scheme such as PURS in overcoming the difficulties associated with portability, vesting, locking in and, probably most important, expanded coverage. However, the committee also saw many disadvantages to PURS, including the time it would take to mature, which is something in the neighbourhood of 47 years; the increased cost to small businesses; the effect of PURS on existing pension plans; the additional savings that would be required from some people whose current income would not be adequate enough to support such savings; it could discourage interprovincial labour mobility if only implemented in Ontario; and finally, it would duplicate many features of the Canada pension plan, adding one more layer of bureaucracy to the provision of pensions.

9 p.m.

In addition to these criticisms, the committee was given evidence of portability features being introduced by the life insurance companies for their private pension plans, and the concept appeared to be a workable one. The committee decided, therefore, to allow the existing employment pension systems the opportunity to absorb the reforms proposed in the report to provide better coverage and better pensions. Only if the private sector failed to do this would such a scheme as the provincial universal retirement system be reconsidered.

In conclusion, there is an ethical question here. Should we be forcing everyone to save for retirement? If the answer to that is no, the present optional qualities of the employer-sponsored pension plan system will prove to be quite adequate. If the answer is yes, then we need to determine immediately how we may extend the coverage of a system that is not adequately serving this purpose.

It is to be hoped the final report of the Ontario select committee on pensions will serve as the working document for federal-provincial negotiations as well as for public discussion. The question, as I see it, is how do we build a financially responsible and credible income system for our elderly without financially crippling our children and without a massive intergenerational transfer of wealth. Let us not forget that time is ticking away. Every day we delay makes it more difficult to evolve a responsible approach to a new retirement income system. How much longer can we afford to postpone the solutions to this complex and vital question?

The Deputy Speaker: It is not ordinarily done from the chair, but we do have some guests in the gallery. I would like to bring to their attention that we are resuming the adjourned debate on the motion for adoption of the recommendations contained in the final report of the select committee on pensions.

Mr. Mackenzie: Mr. Speaker, I am pleased to participate in the debate on the final report of the select committee on pensions. I wish to pay tribute briefly to the chairman of the committee, the member for Prince Edward-Lennox, who certainly gave everyone on the committee a fair shake and was most co-operative at all times.

Our key staff, Mr. Rick Jennings initially and then Dr. James O'Mara of the legislative library research services, did all that was asked of them and were ably assisted by their support staff. Dr. Graham White, clerk of the committee, was always able and always willing to assist, and a number of civil servants gave freely of their time and advice to the committee as well. Finally, all the committee members owe a debt to Wells Bentley, Ontario's recently retired superintendent of insurance, who provided a wealth of valuable information. Time and again Mr. Bentley helped me to understand in some measure the intricacies of the pension field so that the problem we were trying to deal with could make some sense to a layman like myself.

My colleagues of the Ontario Legislature were not hard to work with, and I appreciated the general absence of rancour from the hearings themselves. But beyond the ability at least to work together there was an obvious divergence in our paths. While I do not reject the many recommendations we were able to agree upon, and indeed some may be of considerable benefit in the private pension field, I am sorry to say our committee missed the boat entirely in dealing with the real problem of assuring that all Canadians have a decent income at retirement.

It seems to me the members of the committee, with the exception of the member for Bellwoods (Mr. McClellan), did the people of Ontario a real disservice by copping out totally when it came to facing the issue of adequate universal and portable pension coverage. There was an obvious need to improve and extend pension coverage, a need that was recognized and acknowledged by the Royal Commission on the Status of Pensions in Ontario and which led to the appointment of this select committee. But apparently it was not enough to encourage the members of this committee to grasp the nettle and to address the problem we know we face in the province.

I would ask the Conservative and Liberal members of the committee a question. The insurance industry, the financial institutions and the representatives of management all had an interest in who got and who controlled the premiums involved. Why were their arguments allowed, once again, to outweigh the legitimate needs, hopes and aspirations of the thousands of Ontario residents who are retired or facing retirement? Why also did they outweigh the briefs of almost every citizens' and union group that appeared before us?

When will the needs of the people of Ontario who are ready and willing to pay for some security and dignity in retirement take priority over the financial self-interest of an industry? Or is it possible the members of both the old parties are too ideologically straitjacketed to accept that notion because the answer appears to lie in the public field?

Even if the evidence is overwhelming that the public approach is the one that makes sense; even if it is proved that it is able to provide decent pensions; even if it is the most efficient and businesslike and acceptable way, the simplest and quickest way and the most socially acceptable way, why can they not agree simply because it is not private? Is the rigidity so great in the members of the two old parties?

If the members of the Liberal and Conservative parties who served on the committee were responding strictly to instructions from above in their rejection of improved public pensions they and their parties are going to have to answer to those who are going to retire in this province over the next several years.

I and my colleague, as New Democratic Party members of the select committee on pensions, argued for, almost pleaded for, recommendations dealing with adequacy, portability and additional coverage. All of these are clearly possible through the expansion of the Canada pension plan and the current old age security system. There was not a shred of hard evidence before our committee that this could be accomplished in the manner necessary through any of the reforms suggested by the private pension sector.

Indeed, this fact was clearly recognized in the Royal Commission on the Status of Pensions in Ontario, in their rather curious promotion of a bastardized provincial equivalent of the CPP, the provincial universal retirement system program. Fortunately the deficiencies of such an approach were obvious to almost everyone who appeared before the committee and to almost all of the members of the committee itself. The recommendation died an early and a well-deserved death.

In spite of our efforts to really tackle the problem of an adequate pension, we were unable to convince a single Liberal or Conservative member to adopt the position we took. We set out our arguments, as clearly as we could, in the dissent that is part of this report. It is set out on pages 153 through 162, and I commend it to all members of the House in the eternal hope that it may revive some small spark of common sense and concern among the members of this House. They should be concerned with the future of the people who have helped to build our province and who have made Ontario work.

Having failed to move our fellow committee members on the road to reform, we feel it is legitimate to put on record what the members of the other two parties were prepared to do in response to an obvious problem that most of them admitted existed. In my view the answer would have been funny if it had not been so tragic.

With the young progressive member for Brantford (Mr. Gillies) leading the way -- and I wish he were here tonight -- and laying down the line, a line that was accepted almost totally by the Liberal and Conservative members, one after the other, we were answered in the following manner in response to our plea for improvements:

9:10 p.m.

First, we were assured that we had done some fine work and that our recommendations for improvement in the private pension industry were important and would bring about some needed changes. I am not really arguing with that, but we are dealing with a proportionately very small number.

Second, we were told that even though the arguments we heard were rather meagre, the situation in terms of pension adequacy really was not so bad. I am a little surprised to hear the chairman of the committee use that as one of the arguments which convinced the committee there was really no hurry to reform, the royal commission report and recommendations notwithstanding.

Third, we were told we should recognize the Canada pension plan was really just coming of age and would show a future performance which would be much more adequate. Finally, and this is where I personally was floored, we should monitor the situation for another five years and, if necessary, we could crank up the whole procedure once again.

It was just unbelievable. The members of the committee, with the member for Brantford leading off in this kind of an approach to reject the reforms needed in the public pension field, were clearly staking out a position that is far to the right of Attila the Hun. One got the impression as well that the five-year review was thrown in only for insurance and as a way to open the door if the public ever really grasped the extent to which the Con-Lib party of this province had copped out.

It would clearly not be just a case of the five-year hiatus they are talking about. Any action we do take in the terms of pensions, as all of us know, takes years to have full effect. What we have done with this cop-out is really an act of treachery for almost an entire generation of pensioners in Ontario.

The editorial in the Toronto Star of April 6, 1982, speaks eloquently to what I see as the shame of this committee and the deeds I have been attempting to outline. While the Star probably is not very often a supporter of our party, it clearly breaks with the position of both the old-line parties on this issue and I am pleased to see it. The break is clear enough that I think the editorial is worth reading into the record. It is the April 6, 1982, editorial in the Toronto Star headlined, "Expand Canada Pension." It reads as follows:

"The 13 Ontario MPPs who, since last July, have been sitting as a select committee of the Legislature to discuss pension reform certainly pinpointed the problems in our pension system." We did that.

"The majority of them, unfortunately, do not support the solution that holds the best promise of assuring that all Canadians have a decent income in retirement: The expansion of the Canada pension plan. Only the two New Democratic Party members of the committee, Bob Mackenzie and Ross McClellan, who wrote a dissenting opinion to the select committee's final report -- made public recently -- support expansion of the Canada pension.

"The remaining committee members -- seven Conservatives and five Liberals -- prefer to rely on employer-sponsored pensions, even though these have been deficient in the past and show few signs of improving."

Mr. Riddell: Five Liberals?

Mr. Mackenzie: I did not want to be inaccurate in terms of quoting the editorial. "In encouraging more and better company pension plans while rejecting expansion of the Canada pension, the committee displays a curious lack of logic. The Canada pension should remain as it is, the majority report says, because to expand it would be too costly for employers and employees whose premiums would be increased to pay for the higher level of benefits.

"But," as they say, and they point it out so well, "most company pensions require both employers and employees to contribute, so costs would surely go up anyway." This is true whether this approach is used in the private field or whether we went to the PURS approach.

"There's a good deal of evidence that most ordinary Canadians would prefer to pay higher contributions to the Canada pension and be guaranteed benefits on retirement rather than pay into private plans that may, or may not, yield a pension."

There were some of us in that committee who have worked at five different jobs in our lifetime and have not met the requirements for any of them so have nothing in the way of pensions, even though a good many years were spent in the private sector.

"That, as the committee acknowledges, is one of the major problems in the pension system. Only about 40 per cent of workers in Canada have access to company pensions. Of those who do, some never collect benefits because they changed jobs frequently. In Ontario at present, workers must stay with a company for 10 years and be 45 years old before their company plans will actually pay them a pension on retirement. If they leave before that time, they receive a lump sum equivalent to their own contribution plus interest, which they may, or may not, invest in a personal retirement savings plan.

"In addition, few private pensions are indexed to inflation and few provide survivors' benefits. Lack of the latter often means that widows, especially those who have no pension of their own because they have not been in the labour force, are relegated to poverty in their old age.

"The Canada pension plan avoids these pitfalls. It is indexed to inflation; it is universally available everywhere in Canada for everyone in the labour force, whether full or part time; it stays with individual workers no matter how often they change jobs, and it provides survivor benefits."

As an aside, I might also say the evidence is that only between 15 and 20 per cent of the money put into private pension plans is ever taken out because so few people qualify.

"The committee is on sounder ground when it urges the government to improve the supplement for the needy single elderly who have no income other than the federal old-age pension and the federal and provincial supplements. A single person, the committee says, should receive no less than 60 per cent of the amount paid to an elderly couple.

"Were this proposal now in effect the single person age 65 or over would be receiving $583 a month instead of the current $515.

"The committee also wisely rejects a recommendation of the Ontario royal commission on pensions which would, if implemented, require all Ontario workers to buy their own retirement savings plans through payroll deductions to which their employers contribute. The most serious disadvantage of such a plan is that it severely restricts workers' mobility outside Ontario.

"But the failure of the majority of the committee to acknowledge that an expanded Canada pension is the best vehicle for reform of the pension system makes the entire report much less useful than it could and should have been."

On the report itself: We were able to agree on some 70 or 80 recommendations -- I may be a little out on the numbers there. The New Democrats dissented on another 18 recommendations. There was unanimity on the part of the Liberal and Conservative members. One would wonder where the official opposition was in this House. On this issue, they were as alike as two peas in a pod.

Mr. Riddell: We believe in private enterprise.

Mr. Mackenzie: Some of the recommendations were of real value. The lowering of the time for vesting to five years -- when and if we see the legislation, I might remind this House -- and a further reduction possible in three years' time, may be possibly the most valuable recommendation among two or three that I think are going to have some effect and help people in the province; once again a limited number of people.

I personally felt vindicated that this recommendation was in line with a resolution that I moved in this House on October 30, 1979, which was debated on November 15, 1979, and which received support of members of all parties at that time.

The resolution said: "That, in the opinion of this House, the government of Ontario should take immediate action to provide for the full portability and protection of pension benefit credits and, specifically, the government of Ontario should introduce legislation that would (a) reduce the vesting period for pension benefits to five years of service, (b) ensure full portability for terminated employees through the establishment of a government administered central pension agency to which all vested employer contributions and locked-in employee contributions could be transferred and which would maintain records, invest the funds and pay accrued benefits on retirement, and (c) establish a mandatory system of pension plan termination guarantees that would protect the pension benefit credits where private pension plans are terminated and particularly as a result of a plant closure or relocation."

We got one or two of the three recommendations -- one totally, one partially, I guess -- in that resolution that went through this House almost three years ago in this report.

It is not my intention to deal with more of the recommendations for I have little doubt the other members will praise them adequately in an effort to gain some credibility for the committee's work and perhaps, even more, in an attempt to throw a smokescreen before the glaring deficiencies in the report of the committee and its failure to deal with the real problem.

It was not necessary for us to deal with some of the recommendations of the report from the royal commission and there were a few that all three parties rejected.

9:20 p.m.

Foremost among these was the previously mentioned provincial universal retirement system proposal, the province-wide equivalent of the CPP and only organized through the private insurance carriers. One or two of the Tories as well as one of the Liberal members were intrigued with the idea, but with the industry itself skeptical and with the Treasurer clearly opposed, the rejection was a practical necessity even if the idea was philosophically appealing to some of the members.

I erred when I said there was not a recommendation in the report on which the Liberals and the Conservatives differed. There was a second dissent entered in the original interim report by three Conservative members -- the member for Oriole (Mr. Williams), the member for Mississauga North (Mr. Jones) and the member for Sarnia (Mr. Brandt). They could not accept even the interim report recommendation that Ontario should immediately increase Gains programs to bring relief to elderly single women to give them an adequate income level for the basic necessities of life, a need that stood out above all other problems we faced.

These three members wanted us to reach an agreement with the federal government before we acted. I suggest the position was akin to a refusal to put a ladder up to a second- or third-storey window of a blazing house to save the women and children because the ladder was jointly owned by the region and the province and the region wanted first to find out if the province had paid its share of the cost of renting the ladder. Mercifully the Liberal members of the committee as well as some of the Conservatives could not quite stomach that dissent.

Why does a note of bitterness or anger show in some of my remarks? Let me try to explain as best I can. We have a stigma that I think shames us all here in Ontario. That stigma is the inability to translate the wealth and resources of the richest province in the land into an adequate level of income for those who have helped us to produce the wealth and who are now retiring or are retired and are no longer a part of the work force.

Fully 53 per cent of retired citizens in Ontario depend on assistance or welfare. Our pensioners, particularly single women, share a higher than average portion of the poverty burden in Ontario. In 1979 there were 208,000 senior citizens in Ontario living in poverty, more than 25 per cent of the total population in the country over the age of 65. Surely this highlights the urgency of the situation.

The Ontario Economic Council report on health care costs for the elderly in Ontario, 1976 to 2026, has some telling excerpts in the chapters dealing with the demographics of the elderly in Ontario. The main points are that at present Ontario has a population of 750,000 elderly who are 65 or over, or 8.9 per cent of the population. But that elderly population is escalating rapidly. It was only 8.4 per cent in 1971. At the present time 41 per cent of Ontario's elderly are male and 59 are female, which again underlines the increased plight of women and the fact they bear more of the burden of an inadequate income as pensioners.

The projections should scare all of us. By 1986, a little better than four years down the road, there will be more than one million elderly in Ontario, more than one in 10 of the population. By 2001 there will be well over one million. The proportion will have increased to more than 12 per cent of the population. In 39 years' time, by 2026, there will be more than two million elderly and they will constitute 18 per cent of the population of Ontario.

If that in itself is not enough I would suggest that some of the members of the House take a look at their own areas. I guess those from Peel can be smug; in 1976, the elderly over 65 constituted only four per cent of the population there. But somebody from Haliburton should take a good look at the situation because in 1976 it had already reached 15.6 per cent -- four times as many over 65. Many of them show an interesting picture.

I urge all members of this House to recognize we are looking at more than 10 per cent of Ontario's population, more than one million people as pensioners in another four years. That will be before some members of this committee would have us take another look at the adequacy of pension benefits and, if it looks bad enough, crank up the system again. We are only 39 years from having 18 per cent of Ontario's population, more than two million people, as pensioners and we already have a gross inadequacy in pension coverage.

Is there a single shred of evidence in anything in this report pertaining to the private pension industry being capable of meeting this challenge? There is not. There is clear evidence that an improvement in public pension plans can meet the challenge. Further, to meet such a challenge will be expensive. It will cost us all more as a percentage of earnings needed to pay for security upon retirement.

Another thing that angered me in the committee was that cost was used as a scare tactic over and over again by some of the groups that appeared before the committee and by members of the other two parties. But while it was repeatedly used as a scare tactic, those advocating improvements in public pension plans always clearly enunciated up front that what we are asking for would cost more. I give credit to the Ontario Federation of Labour which came out with one of the highest percentages of what it might eventually cost. Most other citizens' groups, social service groups and union groups did the same thing.

Those who used the scare tactics usually referred to the total percentage needed. Rarely, until we pressed them in committee, were they honest enough to point out that we were talking about that kind of an increase over a period of years and that there were some variables that could help to lower slightly the costs of the increase. Nevertheless, that was the kind of approach we faced.

It is also pertinent to the entire argument to point out the total inadequacy of the private pension industry in initiating the most obvious reforms in current plans and coverage, let alone tackling, in the most minute way, the adequacy and portability of pensions on any universal basis.

I asked the question more than once: "Why haven't you moved? Everybody agrees -- the groups before us, the industry itself and the financial interests -- that there should be earlier vesting and they need more portability." All kinds of things that were causing problems were agreed to even by the industry itself, but they had not been able to move even to initiate the barest reforms within their own industry. They told us, "We argue against it all the rest of the time, but we need some kind of pressure or intervention by government to do it."

Even there, we are talking about reforms that really are rather small in terms of the current private pension coverage in industry and have nothing to do with this broader need for coverage for people in Ontario.

We do not have any legislation yet. We have almost unanimous agreement, even from the insurance industry, that at least the modest changes in the private plans are long overdue. These changes, if they happen, may result from the pressure of public opinion, or maybe public disgust might be a better word. The clear threat of government intervention was required to get the ball rolling to make recommendations. God knows what we are really going to see in the way of legislation from this Tory party.

Is anyone simple enough to believe the quantum leap forward for the minimum improvements necessary in pensions can be achieved by the private industry with its record to date and what we have seen of its future planning? My anger is justified but, more germane to the problem, surely the people of Ontario need and deserve more from this select committee than the apologetic cop-out it presents in terms of the real pension needs of Ontario. Surely the case for improvements in the public pension system is both overwhelming and long overdue.

9:30 p.m.

I have to ask the members of this House as well as the members of the committee who served with me, when will simple economic justice for people become important to the politicians in Ontario and outweigh the voice of the business and financial institutions when people's lives and future income are at stake? That is the question we are failing to answer in the cop-out we have delivered in this report.

Mr. Jones: Mr. Speaker, I do not propose to review at the same length as the two previous speakers did. I believe the member for Huron- Middlesex outlined rather accurately the work of the select committee on pensions that culminated in this final report. I sense that the member for Hamilton East -- I do not so much sense it as hear it reverberating in my ears -- is echoing much of what we rather expected he would be echoing here again in this debate, as he did so often in the committee.

Before beginning my brief remarks I would like to add, as others did before me, my appreciation of the excellent Wells Bentley, who was an adviser to all of us on the committee. He is a superb man who gave unstintingly of his immense knowledge of this very complex subject. We had Graham White as clerk, and Dr. Jim O'Mara, and Richard Jennings before him, both in research capacities. It was touched upon by one of the previous speakers that civil servants also aided us in the process and, in fact, are going forward with this pension review and its implementation by taking and working, in turn, with the recommendations in the report. David Stouffer is one of the names that comes to mind. He came to the committee on many occasions and helped and guided us considerably. John Ilkiw was with us many a time, and continues in that work, as does Sherry Malloy who was with us on occasion.

I would like to say at the outset, as has been mentioned by some other speakers on this and at the time of the introduction of the interim report, that I enjoyed the experience of the pensions committee. I enjoyed the work with members of all parties. Basic to the work of that committee was the fact that we sensed here in Ontario that we have very much of a central participation and a big stake in pension reform.

I believe the member for Huron-Middlesex mentioned that it was in 1963 the Pension Benefits Act came in. That might be -- I have 1965 in my mind -- but in any event Ontario has been a pioneer in the regulating of employment pension plans. Today, we have some 40 per cent of all pension plan participants resident right here in Ontario. Fully 50 per cent of all Canada pension plan contributors live in Ontario, and 32 per cent of Canada's retired live here.

So Ontario has a responsibility. This government, contrary to the remarks of the New Democratic Party speaker, has a high sense of responsibility about senior citizens, especially, as was pointed out in this report, as to the immediate need, as identified, of the single elderly. So I will, in a moment, take issue with this claim that members of the Conservative government, which has served the seniors of this province so very well and continues to do so and will do so in the future, are somehow the only ones lacking social conscience; that only the NDP comes equipped with that.

Mr. McClellan: Tell us why.

Mr. Jones: I will come to that in a moment. As backdrop, Ontario knows its responsibility. It has a responsibility, as you know, Mr. Speaker, to lead the debate on the reform in the interprovincial negotiations that are taking place under the able leadership of the Treasurer; and of course in the federal-provincial discussions yet another important step will take place next Tuesday at a conference in Ottawa. This government recognizes both the individual and the social needs that are touched upon in this massive, important subject of pensions, particularly pension reforms, as we address ourselves to that tonight.

The member for Hamilton East tended to dwell on one section, as he has on other occasions: CPP forever, CPP the only way to go. He tends to do a very large disservice when he talks about being angered and he talks about the stigma and the disservice this committee did. That just is not fair to the members of that committee or the ongoing work in that reform, the role of this government in its work with the other provinces and with the federal government.

What he tends to forget is that this report clearly reflected the basic concept that we recognize an immediate need of our single elderly. We have a rather complex mixture of retirement income vehicles. We have old age security, we have guaranteed income supplement, we have Canada pension plan, we have employment plans --

Mr. McClellan: But you dissented.

Mr. Jones: About one issue. We have deferred profit sharing plans, and we have individual registered retirement savings plans; we have group RRSPs, personal savings, and real assets. We have many different vehicles that people use by choice in this province to provide for their senior years and they make conscious decisions about how they are going to do that rather than relying totally on a Procrustean, single universal program which seems to be the single major difference, as I understood my friend the member for Hamilton East in his comments a moment ago, between the members of that party and the government and the Liberal Party.

What was said in this report of the select committee was that the single seniors should be guaranteed 60 per cent of a couple's guarantee. We talked also about the responsibility of the federal government, and it was acknowledged by the federal government. Mr. MacEachen on the eve of the pension conference identified it as a major priority. So we were quite appropriate when we said the two governments should do their appropriate things to deal with the need of the single elderly.

The only difference between those of us the member tries to make out to be hard-hearted villains and the member for Bellwoods (Mr. McClellan), is that his people, as in so many of their proposals, tend to chuck out the window and make fun of anything to do with cost factors having to be considered, any of that responsibility that the government has to have in mind. They ignore somehow or other the progress the government is making to bring about those needs --

Mr. McClellan: You are saying we should pay the cost --

Mr. Jones: No, that is not so. The member pretended that cost factor was the only issue. His colleague just said it. He used it as a scare tactic. This is what he said over and over again in the committee. That simply was not so. We were prepared to recognize the increased cost that would be needed in this pension reform.

The member for Hamilton East made a great to-do about us rejecting CPP. That is not so either. The record should be corrected, as it must. We said basically there were three major highlights. The single elderly was one to be sure; the improvement of the employment pension plans, the private sector plans; and the private sector and others acknowledged where those improvements could be made.

We had representations from boards of trade. There was one, for example, from the Ottawa- Carleton board, the members' retirement plan, where they are bringing about that reform. They are bringing plans in for some of those people who did not have them in the past. We called upon, we urged, and I suppose we said, "Industry, respond to those needs."

9:40 p.m.

We also suggested some major changes which will be expensive for employer and employee alike; such things as earlier vesting, which was talked about in the debate earlier. Let us not kid ourselves, these things will take time in their implementation even though we urged that they should be got on with immediately. Such things as excess interest, which our colleague from Huron-Middlesex mentioned as an option to indexing, will also be expensive to implement. Some of those calls for major reform in the private sector involve things that will improve pensions dramatically.

I should add that there is a third step if the changes we have recommended in the private sector do not work in the reform that is needed. That would be the time to go back to look at something such as the massive expansion of the Canada pension plan that our colleagues of the New Democratic Party have as their battle cry.

As I listen to the NDP talk about raising the CPP benefits and the contribution rates, there is a lot of talk about the willingness, but not too much about the ability, of certain sectors to handle that. They forget to consider that this means more savings would bypass the competitive capital market and flow directly into the government sector. I would not say they forget it; they know it full well. That is their stated intention and that is the way they want it; all things flowing into the control of government and the quicker we can do it the better.

It simply is not true to say that we set up some kind of smokescreen about CPP. Our comments are recorded in the report. We called for reform in the private sector. We also called for changes in the universal plan, but with the caution not to take that approach until we saw if the other suggestions worked. We talked at great length about the horrendous cost of the proposals the people opposite made as they proposed a shift to CPP alone.

They know full well their proposal means that the CPP would become a mechanism for the redistribution of funds rather than an employment based program. We can understand their philosophy there. The problem I have with it is when they allude, as they did again in tonight's debate, to the number of people who supported that.

They referred to representatives of the labour movement who appeared before the committee, but they forgot completely about small businessmen. It is only when election time comes and when it suits them, that they pretend to be their friends. They did not talk about what their thoughts are about the impact a contribution of, for example, 20 per cent would have on small business.

Mr. McClellan: Aren't the employees of small business entitled to a pension?

Mr. Jones: Indeed they are. That is what we are calling on the private sector for and, indeed, demanding of it: that it implement a plan such as this one that I am holding up, which the private sector explained to us.

What we are talking about is the level of affordability and that is what my friend from Hamilton East takes offence at. He does not think the cost factor should be considered. They have one philosophical bent in that party and that is that their dogma shall prevail.

As I think back to the work of the committee and join with others in complimenting the chairman for a superb job of helping us with this subject, I look forward to seeing the implementation of these recommendations.

I know part of it was the heat of the debate but I am sorry the member for Hamilton East talked of acts of treachery and cop-out and shame of the committee. That really is not fair to the work, the proposals and the 163 recommendations which covered public plans and private plans and mentioned the complexities of the whole pension reform discussion as it touches the economic life of this province and this country at what is probably one of its most fragile times ever.

It touches upon one of the admittedly most socially sensitive groups of our society; the one group, as with our young people, on which we are judged as a society in terms of how we serve it. I understand the debate and the philosophical pounding of that one thing, that CPP is the only answer to pensions. But I ask the member to think with us, as some of us learned when we went to some of the conferences in addition to the work of the committee -- they were running parallel to the work of the committee -- where they said: "Canada is a young nation. There are lessons to be learned; look to the European experience where they have aged some 15 years or are a little ahead of us. See what their experience has been in France and Germany."

We did the reading and we had evidence of their experience. It was not to rush holus-bolus and totally into only a government universal plan. That is not true of France, for example, or Germany. They did not do that. They have a mixture with a very high component of private sector.

Mr. McClellan: You do not know what you are talking about.

Mr. Jones: That is not so at all. If the member had been to the conference, as some of the Liberal members were, for example, at the Skyline, he would have heard that outlined by speaker after speaker and they would have shared some of the booklets with him too. He continues to have that one-track line. Do not ask us to pretend that somehow or other we are not going to answer this nonsense he put out about acts of treachery and all of that. That just simply is not so.

Rather, the work of this committee has been heralded by many different sectors, by people who had input to the report, people who are experts in the field, people who have a responsibility for that reform. They have said the work of that committee is important and will play a very key role in the reform we have been talking about tonight, and one that is an urgent priority of this government and indeed of the other provinces.

I could take step by step some of the specific issues that we had debate on and go back and open up the one the member for Bellwoods has been alluding to in his interjections, which is the fact that three of the members did dissent. That is true, but let the record be true. We were not voting, as I am sure he would like to show, against the senior citizens having an increase; quite the contrary. We voted for that particular recommendation. It was the one that said do it and never mind the feds and them accepting their appropriate part of that; that was the point. We did so in the context of knowing that the federal-provincial discussion was going forward.

As the member well knows, there is a green paper and a white paper coming forward on this and reform is well under way, not something miles down the road. I am grateful that this committee did go forward and work with dispatch.

I thank again the people who worked in so many different ways on the select committee. I thank my colleagues on the committee for the experience I shared with them. I look forward in the near future to rather considerable pension reform. I know we can all share in having had a part in forwarding those recommendations out of the Haley report into the hands of government, where they can go forward.

9:50 p.m.

Mr. Mackenzie: Do you think you are going to survive when we take over?

Mr. Jones: Those fellows are confident, I have to tell them.

Mr. McClellan: We'll see what happens next Thursday.

Mr. Jones: Okay, we will.

Mr. McClellan: I'll bet nothing happens next Thursday.

Mr. Mackenzie: See how many of those reforms are in the budget next Thursday.

Mr. Jones: Sure; you bet. Mr. Speaker, I thank you for the opportunity to be able to speak. I am grateful for that, and I look forward to the comments of other members of the committee who served so ably.

Mr. Van Horne: Mr. Speaker, it is a pleasure for me to be able to join in the debate on this report -- as much of a pleasure as it was to be part of this committee.

Along with the member for Erie (Mr. Haggerty), I became part of this committee part way through its work. My leader, the member for London Centre (Mr. Peterson), and the gentleman sitting directly behind me, the member for Waterloo North (Mr. Epp), were original members of this committee. As it finished the first leg of its work and presented its interim report last December in this Legislature, some changes had to be made. The committee assignments were changed and it was my pleasure to fill in.

It was no mean task reading through the documents that had been presented to the committee last summer and all the elements that went into the royal commission report the committee was studying. I had to carry two cartons of materials with me to and from the committee and struggle beyond that through the late hours of the evening and the early hours of the morning to try to read and understand all that had gone on before me.

Mr. Eakins: You should be a cabinet minister and get somebody to do it for you.

Mr. Van Horne: I look forward to that too.

The only other comment I will make in that regard is that the staff and the chairman, along with the members of all three parties who made up the committee, were very kind and understanding in assisting me with some background material that was missing from the written material. Everyone pitched in to help, and I want to thank the chairman, the staff and the other members of the committee for their indulgence and assistance.

My colleague the member for Huron-Middlesex (Mr. Riddell) has said many of the things I wanted to say in so far as this report is concerned. It is fair to say he has spoken words that reflect the attitude of our party and certainly of our leader in this very serious concern we all have for pensions.

We all agree, in simple terms, that the objective of the governments of Ontario and Canada in pension reform has to be to find the best way of fulfilling both the concrete financial needs and the reasonable income replacement expectations of Canadians in retirement. All of us who have been involved in this debate have come to realize that this goal can only be accomplished if certain challenges are met.

The challenges generally accepted by both provincial and federal levels of government are as follows:

First, we must ensure all workers in the labour force have access to adequate pension protection. At present, only slightly more than half of the full-time and part-time labour force has access to protection under a private plan.

Second, workers must be able to change jobs without fear of losing pension rights from a plan to which they have contributed. Job mobility is a fact of life in today's labour force, and pension plans must respond to that reality.

Third, the real value of pension benefits must be protected against inflation. A pension, in and of itself, is scant comfort if its purchasing power has been eroded 10 or 20 years down the retirement road.

Meeting these crucial challenges will go a long way to ensuring that all members of the labour force, both men and women, will be able to look forward to retirement without fear of poverty. However, reform on these fronts alone will not resolve the particular pension problems facing women. That brings me to the fourth challenge we must meet.

Not only must women be assured greater pension protection in the event of divorce or the death of their husband, but they must be assured also of greater access to pension protection in their own right. This applies to women working in the home as well as to those in the paid labour force.

As has been referred to in both general and specific terms by all preceding speakers, our committee's hearings were done rather expediently and seriously. It is interesting to note that our committee hearings were concluded during the winter break of this year, before the Legislature reconvened for this year's current session. Yet, after all of this study, the session opened with a throne speech that was very unique in that it was one of the few in the past six or seven years that did not even mention the subject of pensions. In fact, what was most noticeable to a lot of us about this throne speech was the absence of any governmental notice of intention in the field of pensions. I guess we had to assume or read between the lines that they thought this committee of itself was doing all that had to be done.

Before addressing some of the committee's specific recommendations, let me comment briefly on the reasons we are so badly in need of vital reforms in this area. Again, many of these comments have been alluded to by previous speakers, but I think they bear repeating.

Governments have not been able to include all of their residents in legislation. That is one of the keys of the concern. We have already heard that as a result of this inability, only about 40 or 41 per cent of the total work force is covered by employer-sponsored plans. About 98 per cent of the work force outside the home participates in the Canada pension plan or the Quebec pension plan, but for those working in the home, who are usually women, CPP coverage is just not available.

Portability is another major concern in the private sector. Generally, there is a provision for portability among public sector plans, and a plan has been put into effect by the Canadian Life and Health Insurance Association for life insurance companies. But the difficulty in establishing full portability in the private sector arises from the many differences in pension plan designs. Lack of portability is not only a deterrent to the much-needed mobility of labour; it is also grossly unfair.

Vesting and portability provisions should be addressed simultaneously. Under current Ontario legislation, full vesting is required only after age 45 plus 10 years of service. The Haley commission, our select committee and now even the Treasurer have come out in favour of vesting and locking in after five years of service. With Canada's highly mobile work force, this is most appropriate.

As an aside, members will note that I am using the words "Canada's work force," not simply and solely Ontario's. Again, it bears repeating that our work force is mobile not only within Ontario but also within the boundaries of Canada.

Inflation has added another dimension to the problem of protecting incomes of the elderly. In 1978, 39 per cent of the elderly lived with incomes below the poverty line. The cost of indexing is high and represents an open-ended and expensive commitment. Wise investment of pension funds into well-diversified portfolios would best protect the purchasing power of pension benefits while at the same time helping to stimulate the economy.

Vital pension reforms are needed for the surviving spouse. In 1976, of all participants in private sector plans, two thirds were in plans that provided no widow's pension. The current pension system also discriminates against females because they earn less, and CPP and private pension plans are based on earnings.

10 p.m.

Whatever decisions are made on future changes to Canada's pension system, our main concern is that any substantial alterations in the retirement income system will create huge new funds of money. Such funds pose some potential difficulties, because they could drain off money that otherwise would go to finance investment in the private sector.

Our calculations indicate that, as of March 31, 1982, the Ontario government had an outstanding debt to the various pension funds of $18.9 billion, of which $9.9 billion was owed to the CPP. The pursuit of such a historical policy raises the question of repayment and the responsibility of government when such large amounts of money are available. The issue is important not only for the state of Canada's capital markets but also for the wellbeing of Canadian society in the future.

At this point, I will stop and point out that this theme, which is one of grave concern to all our caucus, was a theme that was expounded on, I think rather eloquently, by the committee member I replaced. I am referring to my leader, the member for London Centre (Mr. Peterson). I know his comments and his views at times were held up to ridicule by members opposite, because they felt, and I think in all their sincerity this was a proper view, that the government was meeting its obligations to repayment.

What was lost sight of from time to time as we did digress -- and I submit that in the course of the committee hearings there was not much of this, but we did on occasion get a little bit off the track -- was the theme my leader had, and still has, that if we are going to borrow, somewhere along the way repayment has to be made, not just in part, but in total. The argument from the other side, again made in all sincerity, is one that could be argued for a very long time. The point is that there is a little bit of right on both sides and a little bit of concern for whoever studies pensions in the future.

By the way, as a secondary digression, I have to point out that simply because we are reporting and discussing the report tonight, that does not mean the pensions issue has been resolved. Rather, this is just the beginning of resolving it. So the right that members opposite feel they have in their argument has to be lined up against what we feel is the right in our argument. I offer that to those people who will be considering pension reform and what action has to be taken over the next few months or the next few years.

We feel the committee has dealt within the provincial jurisdiction with the immediate problem of the currently retired, particularly single retired persons. We recommended that the Ontario guaranteed annual income system for the single elderly should be increased to 60 per cent of the income of an elderly couple. This would bring the monthly income of such persons up to $550 a month, based on the total of Gains, old age security and guaranteed income supplement payments, from $493.

Probably the most controversial recommendation the committee had to deal with was the one involving a mandatory retirement scheme referred to by the royal commission as the provincial universal retirement system.

The committee was well aware of the advantages of a scheme such as PURS in overcoming the difficulties associated with portability, vesting, locking in and, probably most important, expanded coverage. However, the committee also saw many disadvantages to PURS, including the time it would take to mature, 47 years; the increased cost to small business; the effect of PURS on existing pension plans; the additional savings that would be required for some people whose current income would not be adequate enough to support such savings; and that it could discourage interprovincial labour mobility if this plan were implemented only in Ontario.

I think it is fair to say that I expressed a minority view during the course of the debate on this particular theme. I did not put this in as a point in the report to which I wanted to draw any attention, but I did make the point in committee and I want to repeat it here. It disappointed me that the committee did not decide to recommend an ongoing review or a pursuit of the PURS theme, although it may well come back for study at some time in the future. It struck me that the committee had an opportunity, as it was making its recommendations, to speak out a little more firmly on examining the PURS theme.

There was one final disadvantage of PURS, and that was that it would duplicate many of the features of the existing Canada pension plan and therefore would simply add another level of bureaucracy to the whole pension provision theme.

In addition to these criticisms, the committee was given evidence of portability features being introduced by the life insurance companies for their private pension plans, and the concept appeared to be a workable one. The committee therefore decided to allow the existing employment pension system the opportunity to absorb the reforms proposed in the report to provide better coverage and better pensions. Only if the private sector failed to do this would such a scheme as PURS be reconsidered.

At this point, I think it is worth noting that there was some discussion about retirement age. Some of us on the committee were able to draw upon the debate that was held in the Legislature a few years ago on a private member's bill that was brought to us by the member for York West (Mr. Leluk), the present Minister of Correctional Services. The determination at that time was that perhaps there was merit in suggesting that age 65, of itself, did not necessarily dictate that one should retire.

In speaking to that particular theme and adding a little bit of additional fuel to the whole fire of pension debate, one has to weigh what feelings the New Democrats have had on this theme -- certainly they spoke out against it -- but I have to remind the members that there are many people in our society who, if they were forced to retire at age 65, might not be able to survive.

Going back to that earlier debate, I was able to draw on a quote from an article in a May 1979 issue of the Financial Post, headed, "Surprisingly, There is No Law Stating that Workers must Retire at Age 65." In this report, a worker at the Boeing Canada plant was quoted as saying: "When I am 65, I may not be able to retire. If inflation keeps eroding my insurance and pension, then I will have to carry on working. What I really want at age 65 is to have that choice."

I am not sure the committee really came to grips with that theme. I think we were inclined to say that it was dealt with in this Legislature earlier, there were obvious differing views and therefore we should not comment on it too much more. But I submit that when pension reform is reviewed and discussed further, retirement age is one item that will have to be reconsidered.

I see the member for Wentworth (Mr. Dean) is the acting speaker. Does he want to get hooked up? While he gets hooked up I'll have a little sip of water.

Mr. Bradley: The next thing you know, we'll have René as Speaker.

Mr. Piché: I'm in line waiting.

Mr. Bradley: He also serves who only stands and waits.

10:10 p.m.

Mr. Van Horne: And waits and waits and waits. Let me finish off Mr. Speaker, and give the member for Bellwoods (Mr. McClellan) an opportunity to say a few words. I know he is anxious to get a few words in here.

I think it has been noted by many people that this whole theme of pension reform has been slow in coming along. I would like to make reference to an article by Leonard Shifrin, a gentleman whose name I brought up in committee on more than one occasion because he has an ongoing interest in this whole theme of pension reform. He is one of the more informed people in Canada on pension reform. He makes this observation:

"Government making haste slowly in moving toward pension reform. The chairman of the federal government's pension committee has gone fishing. After last year's National Pensions Conference, Ottawa promised a green paper on pension reform. An interdepartmental committee representing the departments of welfare, finance and social development was set up under the cabinet's federal-provincial relations secretary, Michael Kirby, and a target date of last October was announced for release of that paper." That was October, 1981.

"October as you may have noticed, has come and gone and so has December, which came next as a promised release date. The current word when this article was written was February. But it is a safer bet that it will not happen until perhaps May or June." I would point out we are still waiting. That is the federal committee.

Another article by Diane Francis of the Toronto Star, on February 14, 1982, starts off in this fashion: "To many people on the short side of 65 the issue of pension reform is about as exciting as watching fingernails grow, but that certainly shouldn't be the case. Besides being an issue that will reflect the lifestyle of us all in our golden years, pension reform is destined to become the next major federal-provincial controversy. It is a political poker game with exceedingly high stakes and one in which we are all players."

Mr. Bradley: And an opportunity to bash.

Mr. Van Horne: I do not think I can stress too strongly the importance of this issue. The press has referred to it. Earlier speakers in this chamber have referred to it, but I would hazard a guess that if one picks up the paper tomorrow, or Saturday for that matter, there will be hardly a word about the debate this evening. That is a shame. Here we have potentially one of the biggest issues that will face us and will face the federal government and will face the other Legislatures across Canada, one of the biggest issues we will see in the decade of the 1980s, and it is getting precious little attention.

For the handful of people who are in the gallery I am delighted they are here to pick up a few words about this very important theme. I only wish that each one of them, along with members present in the House, could go out and scream from the rooftops: "Listen people, this is a big issue."

In conclusion, I would suggest that we are going to have to see a lot of co-operation between ourselves and the federal government. As my colleague the member for St. Catharines said a few moments ago, it could well provide the opportunity for a lot of fed-bashing. If that is the attitude that comes out of this chamber I would submit we are not going to do a service to the people in Ontario, or for that matter to anyone in Canada.

I would conclude by saying I sincerely hope this debate on pensions continues in the truest sense of co-operation and working together for the betterment of all Canadians.

Mr. McClellan: Mr. Speaker, I wish to say a few words in the debate that is taking place this evening. I want to start as all of my colleagues have by expressing my personal appreciation for the work of the chairman, the member for Prince Edward-Lennox (Mr. J. A. Taylor), who ran a totally impartial and fair committee. Those of us who are in a minority position, expressing a minority viewpoint both in the committee and in the House, appreciate that enormously. I sincerely want to thank him for the impartial way in which he chaired the work of this select committee.

Mr. Bradley: After being mugged in the hallways of power.

Mr. McClellan: After being bumped in the corridors of power.

Mr. J. A. Taylor: You better get that straight. It was not the corridors of power; it was the back alleys of bureaucracy.

Interjections.

Mr. McClellan: It was in the back alleys of bureaucracy; that is right. I also want to give special thanks to Mr. O'Mara and to Wells Bentley for the first-class work they did as resource people for the committee.

The member for Mississauga North (Mr. Jones) has forced me to add an additional page to my speech. We in the New Democratic Party are not sounding one note. I simply must remind the member the issues of vesting, portability and locking in are all issues my colleague from Hamilton East (Mr. Mackenzie) has been raising in this Legislature since 1975 when he was elected.

He has put resolution after resolution on the Order Paper, and private bill after private bill, in the course of the past seven years. Many of the major reforms in the interim report of the select committee are identical to resolutions and bills the member for Hamilton East has been putting forward in this House since 1975.

Mr. Jones: To his credit to be sure, but tonight he was saying the CPP was the only thing.

Mr. McClellan: We will be coming to that too.

I point out that the proposal with respect to raising the Gains single rates above the poverty line to a level of 60 per cent of the married rate was a proposal I raised initially. It was passed on the motion of the member for Brantford (Mr. Gillies).

It is really regrettable that three members of the governing party found it necessary to dissent from a recommendation that called upon the government of Ontario not to permit tens of thousands of senior citizens to stay in a condition below the poverty line.

They found it necessary to add the hedging condition that this problem will not be addressed unless and until there is some kind of dialogue, liaison or some blah, blah, blah between the federal and provincial governments. I have to remind the members who put their names to that dissent that there are approximately 208,000 senior citizens in Ontario according to Statistics Canada who live below the poverty line.

Hon. Mr. Ashe: Hogwash.

Mr. McClellan: For the benefit of the Minister of Revenue (Mr. Ashe) who does not seem to understand, there are 208,000 senior citizens according to the report of Statistics Canada of November 1981 who are living below the Statistics Canada poverty line.

Hon. Mr. Ashe: Not in Ontario.

Mr. Mackenzie: That is in Ontario, exactly.

Hon. Mr. Ashe: Inaccurate.

Mr. McClellan: The minister can take up his cause with Statistics Canada. I am simply telling him what it reported in November 1981. Yet the members of the governing party, who had the evidence of the royal commission itself dealing with the injustice dealt out to Gains singles in Ontario, found it necessary to hedge and compromise. The regrettable thing is it blunted the recommendation of the select committee. We could have had a recommendation to this government, a consensus recommendation, a unanimous recommendation, on which the government could take action.

Mr. Brandt: What would it cost?

Mr. McClellan: I point out to the member for Sarnia that it would cost about $110 million, which is one sixth of the cost of the Suncor deal. It would cost about 10 government jets.

10:20 p.m.

Let us not forget what we are talking about. We are talking about bringing single senior citizens in Ontario above the poverty line. If that is too expensive for the government of Ontario, well that is too bad for them. It is their shame and their disgrace.

In a week from today, we will see how much senior citizens are worth in the view of this government. We will see whether the Treasurer will raise the guaranteed annual income system rates to bring single senior citizens above the poverty line in Ontario or whether he intends to argue that it is too costly, too much for our society to afford to bring senior citizens above the poverty line. Let us wait one week and see where this government's heart is and where its priorities are.

It is difficult to deal with the issue I wish to in 10 minutes, but I will try. It was ignored by the majority of the select committee, but my colleague the member for Hamilton East (Mr. Mackenzie) tried to deal with it in his remarks. It is the issue that was identified by the royal commission itself as the central issue: coverage.

The reforms with respect to vesting, portability, etc., which my colleague and I supported, have to do with those who are lucky enough already to be covered by employer-sponsored, private sector pensions. So the principal recommendation in the select committee report deals with a privileged minority which already has private sector pensions. The reforms are significant for that minority, because the reforms will make some sense and bring some rationality to employer-sponsored, private sector pension plans. But the recommendations of the majority of the members of the committee do absolutely nothing for those who are not already covered by private sector pension plans.

We should remind ourselves that only 39.1 per cent of Ontario's private sector workers are enrolled in private pension plans, according to the findings of the royal commission itself. I am reading that from volume 8 of the royal commission, pages 96 to 120, where the royal commission detailed its finding that 60 per cent of the workers in the private sector do not have any kind of pension coverage. Despite that, all the reforms of the majority report deal with improvements to plans which do not cover the majority of the work force in the private sector. Well, thank you very much. What about the other 60 per cent?

The figures are further skewed by the discrimination in pension coverage between men and women. Only 22 per cent of women workers in the private sector of our economy are enrolled in any kind of pension plan. All the reforms in the report are limited to the privileged few who are lucky enough to be in jobs where there is a company-sponsored plan. What about everybody else? What about the critical problem the royal commission itself identified; that is, the lack of coverage?

In the majority report there is nothing for people who are not already covered by private plans. It is this critical issue of coverage that led the royal commission to come up with a proposal for a universal, mandatory, legislated pension plan. That is why it came up with the PURS proposal in the first place, because the commissioners realized the lack of coverage of our work force in any kind of a pension plan was the critical issue. It is the reason why 53 per cent of retired Canadians in this country are living on welfare programs. Fifty-three per cent of retired Canadians are dependent on income-tested programs to prevent them from starving to death, because they do not have any pension coverage. Yet the majority report ignores this reality completely.

It is the issue of coverage that has led the New Democratic Party to say, I think as loudly and clearly as we can, that if we want to have a pension plan in this country and in this province that covers everybody, the only route to go is a universal mandatory program so that the only choice is whether the universal plan is in the public sector or in the private sector --

Mr. Jones: No choice is what you are saying.

Mr. McClellan: The choice is between not having any money when you are over 65 or having a decent pension. It is not a question of wishing.

Mr. Jones: We spoke to the small firms. We spoke to the part-time workers.

Mr. McClellan: Of course. The member spoke to the small businessman who said: "Look, I am a small businessman. I am running a business close to the line. I can't bring in a pension plan. What about my competitors? Will the guy I am competing with bring in a pension plan? If I bring in a pension plan for my employees, can you guarantee to me that my competitors will bring in a pension plan?"

Of course you cannot. He is immediately at a competitive disadvantage. He cannot bring in a pension plan for his employees. What the member is saying is, "Too bad for people who work for a small businessman because they are locked out of the pension market." They are going to be kept out of the pension market in perpetuity. That is the issue.

Mr. Jones: We heard how the plans are coming in for those small employees more and more.

Mr. Mackenzie: You know better than that, Terry.

Mr. Ruston: Go on home, Terry. It's late for you.

Mr. McClellan: I know my colleagues in the Liberal Party do not believe all this.

An hon. member: They're listening.

Mr. McClellan: They may be listening, but in committee they expressed ambiguity about these issues and they took the same view as the members of the governing party on the issue of coverage.

Mr. Riddell: It is just that we have more faith in the private sector.

Mr. Ruston: You fellows want to buy up all the private sector.

Mr. Mackenzie: That's why only 40 per cent of the people are covered.

Mr. Riddell: You cannot even head for Saskatchewan now because the NDP got knocked out of there.

Mr. McClellan: Manitoba, Mr. Speaker, is closer than Saskatchewan. I seem to be suffering my usual fate of being shouted down. I don't know why that is.

The Deputy Speaker: You are so provocative.

Mr. McClellan: I am not being provocative at all. I am simply trying to raise the issue.

I will say, before I adjourn the debate, that by ignoring the issue of coverage the majority report has ignored completely those who are now excluded from any kind of participation in private sector pension plans. They are saying that exclusion will continue in perpetuity; that they will reform and improve pension plans for those who are lucky enough and privileged enough to be working in the right place at the right time, in a company which sponsors a private pension plan. But those who work in small businesses, those who are in low-paying jobs, those who are marginally employed, those who do not have the opportunity, will be forever excluded.

On motion by Mr. McClellan, the debate was adjourned.

The House adjourned at 10:30 p.m.