Proceedings of the Standing Senate Committee on
Banking, Trade and
Commerce
Issue 23 - Evidence - June 17, 1998
OTTAWA, Wednesday, June 17, 1998
The Standing Senate Committee on Banking, Trade and Commerce, to which was referred Bill C-47, to amend the Parliament of Canada Act, the Members of Parliament Retiring Allowances Act and the Salaries Act, met this day at 12:00 noon to give consideration to the bill.
Senator David Tkachuk (Deputy Chairman) in the Chair.
[English]
The Deputy Chairman: Today we have with us the Honourable Don Boudria, P.C., M.P. We are considering the order of reference adopted by the Senate on Tuesday, June 16.
Mr. Boudria, welcome. Do you wish to explain the bill before we open for questions?
Mr. Don Boudria, P.C., M.P., Minister of State and Leader of the Government in the House of Commons: Mr. Chairman, with your agreement, I will give a brief statement for four or five minutes. Then I would be fully disposed to answer any and all questions that you might have on either the Blais commission report, the House of Commons response to the report, or the bill that is before us today.
It is a pleasure and, indeed, an honour to appear before the committee today. Bill C-47 is the product, honourable senators, of almost one year of work. First of all, the Blais commission was appointed in July of 1997. As you know, it is mandatory that after every election the Prime Minister, on the recommendation of the Leader of the Government in the House of Commons, must appoint such a commission. Serving on the commission, you will remember, is the honourable Jean-Jacques Blais, a former cabinet minister; Mr. Raymond Speaker, former speaker, as it were, of the legislative assembly of Alberta and a one-term member of the House of Commons; and Madame Monique Jérôme-Forget, who is an academic by profession but also the spouse of someone who served as a parliamentarian for many years as well. I thought that could give a different view of the MPs' compensation or the parliamentarians' compensation package.
In any case, the commission produced its report in January 1998. The report was then referred to both Houses of Parliament. In other words, both the House of Commons and the Senate could, if they wished, produce a report commenting or giving what they felt would be the view of their respective chambers on the report. In fact, the House of Commons did just that and the report of the committee of the House was tabled on June 3. You will note that the House of Commons committee made no reference to those portions in the Blais commission report that referred to the senators' compensation. However, the bill that I introduced shortly thereafter did.
I believe that the bill is nonpartisan in its approach. I believe it addresses what I would qualify as being the concerns of all parties in the House and, hopefully, of the various parties in the Senate as well.
It is never easy for parliamentarians to deal with their own salaries or benefits. We are the subject of abuse and so on in that regard. On the floor of the House of Commons, one MP said: "I have this great idea. Why do we not have a commission?" You know how many of those we have had. I thought the Blais commission report was reasonably independent, but this MP said: "We need a commission that will produce these binding reports."
I am not very much in favour of that. I, for one, am not ashamed to sit before honourable senators today and defend the bill. However, to say before you, "It is not my fault; I had to do it because it is a binding commission", I think is nonsense. I would much rather stand up and defend those things I believe in. I think it is the honourable way of doing it. That is the way I have done it. I said in the House of Commons last week that I would be in Saint-Isidore du Prescott in my riding over the weekend and I would gladly answer all questions from my constituents. There was a grand total of none.
You will probably have noticed that the bill is a mirror image of the Blais commission report in virtually all aspects except one. The one area where we do not quite do the same thing as the Blais commission report, at least in a significant way, is the salary package. According to the report, ministers should have had a very hefty salary increase. I thought that was a neat idea, personally, but backbench MPs and senators would have received nothing. Notwithstanding what I said before about ministers getting a big increase being potentially a good idea, I did not think it was fair. It was much fairer to give a small increase to everybody. In fact, that is what is in the bill.
In the case of a couple of offices on the Senate side only, there would be an adjustment. As you know, the speaker of the Senate right now has a compensation package which is less than that of his counterpart in the House of Commons. The bill serves to redress that. Also, the speaker pro tempore or your deputy speaker has no extra remuneration at the present time. That did not appear to the Blais commission to be right. The bill seeks to rectify that as well and to lend balance between the two Houses which, as far as I am concerned, is the appropriate way of doing it.
Basically then, those are some of the clauses. There is one difference which is perhaps of note between the House of Commons committee response to the Blais commission report and the bill. The House of Commons committee recommended that MPs who chose to opt back in to the pension plan be given two years to do so. I felt that that was not reasonable. I took the position that it was wrong to opt out of the pension plan. If it was wrong to opt out, it should be right to opt back in; otherwise, it would be fairly inconsistent thinking. If it is right to opt back in, then it should be done right away. In fact, MPs would have 90 days to opt back in if they choose to do so.
Two years was not reasonable. I do not think it would have received much support anyway. I think everyone thought that it was a little exaggerated in terms of the amount of time to make up one's mind in that regard. In any case, that is the component where there is a significant difference and the difference is actually stricter. In other words, we were not more generous. We were less generous in the bill than what is in the House of Commons response to the Blais commission report.
There is in the bill a component whereby MPs who, after all this and against what I would qualify as my better advice, still choose not to opt back into the pension plan would be entitled to an extra severance once they reach 55 years of age. It would be essentially the same severance that presently exists in the Ontario legislature, which is one month's salary for every year of service, up to a maximum of 12. That is the provision in question.
MPs would only get that supplementary severance provided they had previously opted out and that they did not opt back in pursuant to the present opportunity. They cannot opt out anymore. That was a one-shot deal.
That sums up what I would like to say at the present time. It might be better if I simply answered questions from honourable senators at this point on any portion of the bill, the Blais commission report and, to the extent that I can, the House of Commons committee report, although you will recognize that I had little to do with the drafting of that. As a minister, I am not a member of any committee, although my staff and I follow attentively the proceedings before the committee on this issue because it is one that is important.
The Deputy Chairman: Clause 16, the last clause of the bill, says that ministers of state who preside over a ministry of state would be entitled to the salary of a full minister. I find that confusing. I believe that they were paid three-quarters of a minister's salary before. I remember that in 1993, the Prime Minister went to a smaller cabinet compared to the larger cabinet that the former government had. Who would the ministers of state be? How many of them are there?
Mr. Boudria: Could it be that you are talking about secretaries of state and not ministers of state?
The Deputy Chairman: Yes, the secretaries of state.
Mr. Boudria: A secretary of state is a different entity from a minister of state. A minister of state means a minister without portfolio. I am one of those. I am a so-called, full-blown cabinet minister. I am not a secretary of state. Andy Mitchell is the Secretary of State for Parks. He is a junior minister. He does not make the same salary as I do, and the difference between the two will remain as it is at the present time. Another example of a secretary of state is Dr. Ron Duhamel from Manitoba. Mr. Gray, who is the Deputy Prime Minister, is the only other minister of state in the present parliament.
The Deputy Chairman: Previous to this, were you getting paid less than a minister was?
Mr. Boudria: No. A secretary of state and a minister of state are not the same thing. A secretary of state does not attend cabinet unless by invitation. I am a minister of state, which means minister without portfolio.
The Deputy Chairman: My understanding is that no legislation created the secretaries of state; they are all really, in law, ministers of state, even though they are called secretaries of state. Last year, they were paid three-quarters of the salary of a full minister. Would that mean that those you call secretaries of state but who are really ministers of state, since there is no legislation to create secretaries of state, would be paid a full minister's salary?
Mr. Boudria: No. The secretaries of state would continue to receive the same proportion they did before, although they would make 2 per cent more. A minister of state and a minister with a portfolio, who both make the same salary, would also make 2 per cent more.
I think I heard an honourable senator refer to a parliamentary secretary. That is a different category altogether together. A parliamentary secretary is not a minister at all and does not go to cabinet, even by invitation.
Just to review the hierarchy, on the House of Commons side we have members of Parliament, parliamentary secretaries, secretaries of state who can attend cabinet meetings upon invitation, and ministers, either with a portfolio or ministers of state like myself and the honourable Herb Gray. Of course, we are invited to every cabinet meeting. One can hardly imagine a cabinet without the house leader or the Deputy Prime Minister present.
The secretaries of state make three-quarters of the salary of a full minister. There is a whole raft of benefits which they do not have, for example, a car and driver. Their benefits are roughly the same as those of a parliamentary secretary.
The Deputy Chairman: Clause 16 of the bill reads:
Subject to section 66.1 of the Parliament of Canada Act, the salary of each minister of State, being a member of the Queen's Privy Council for Canada, who presides over a ministry of State is $46,645 per annum.
Why is that in there if they do not have cabinet ministers' salaries?
Mr. Boudria: Perhaps I could ask the expert with me from Privy Council to explain it.
The Deputy Chairman: Surely. We are here to study this clause-by-clause.
Mr. Ron Wall, Parliamentary Liaison Officer, Office of the Minister of State and Leader of the Government in the House of Commons: Section 5 of the Salaries Act now says that a minister of state is paid $46,645. Bill C-47 is amended to include reference to proposed section 66.1 which has changed. Therefore, all that is happening in Bill C-47 is that there is a consequential amendment to the existing section 5 of the Salaries Act adding the words "section 66.1".
The existing salary for a minister of state remains the same. That part of the Salaries Act is not affected. We have just inserted a clause into the bill to address the other change in the bill which adds proposed section 66.1.
The Deputy Chairman: Maybe some of the lawyers in the room will get to that. I am still not quite clear on why it is in there. I am asking these questions using the same prerogative as the chairman.
There is something called the motor car allowance which is paid to ministers and the leader of the opposition. I understand it is $2,000. It is an old motor pool allowance which has been around since 1931. I understand that the motor pool allowance exists at the present time, despite the fact that ministers and the leader of the opposition are provided with a car. Is this information correct?
Mr. Boudria: There is a reference to salaries and allowances during the 36th Parliament in proposed section 66.1, under clause 5 of the bill.
The Deputy Chairman: It went up by 2 per cent.
Mr. Boudria: Except for the housing allowance, all benefits would increase by 2 per cent. On the House of Commons side, there was a $6,000 housing allowance. The Blais commission recommended doubling it to $12,000. That is outside of a legislative framework, but for your own information, that benefit was doubled at a meeting of the Board of Internal Economy of the House of Commons approximately a week ago. All other benefits would increase everywhere by 2 per cent, even in those areas where Mr. Blais recommended increasing them by 25 per cent or 30 per cent. We did not do any of that. It was 2-per-cent increase on everything that everyone received, except the housing part. In the case of senators, there is a recommendation to have a housing allowance but I do not think there is one yet.
Senator Simard: The exception is those two positions.
Mr. Boudria: Except for the two officers of the Senate, that is absolutely correct.
The Deputy Chairman: The leader of the opposition would get a car. He also gets the motor pool allowance. Is that right?
Mr. Boudria: Yes. There is a $2,000 allowance which has been offered since time immemorial, but it has not changed.
The Deputy Chairman: It just stays on there. It has been around since 1931, off and on.
Senator Stewart: For the sake of our record, Mr. Chairman, we were referring earlier to clause 16 which would change section 5 of the act. As the minister said, the effect of the clause is simply to take into account proposed section 66.1. That section is referred to also in the clause immediately above. For the sake of clarity, it would be helpful to have a very brief explanation of what section 66.1 of the Parliament of Canada Act is. Why is it important to have the provisions in this clause read subject to that section?
Mr. Boudria: I brought a copy of the act. I will refer to the general title and some description of it. In bill C-47, there is proposed section 66.1. However, I believe the honourable senator was asking about section 66 of the existing Parliament of Canada Act, which says the following:
The Governor in Council may make regulations providing for the payment to a Parliamentary Secretary of reasonable travel and other expenses
(a) incurred by, and in the discharge of the duties of, the Parliamentary Secretary during a session of Parliament while away from Ottawa; or
(b) incurred by the Parliamentary Secretary in the discharge of the duties, while away from the ordinary place of residence, of the Parliamentary Secretary during a period when Parliament is not in session.
After this section 66, there would now be a new section 66.1, on salaries and allowances during the 36th Parliament. It would read:
Despite subsection 67(1), the salaries and allowances payable...
It goes on to describe what they would be. Subsection 67(1) refers to how salaries increase automatically with the cost of living.
As you know, in the bill we are increasing salaries by 2 per cent. The salaries and everything that is in there now had already automatically increased by 0.75 per cent under the formula in subsection 67(1) of the existing act.
Senator Stewart: Do you mean 66.1?
Mr. Boudria: Subsection 67(1). Proposed section 66.1 refers to subsection 67(1), which had a formula to identify the cost of living. The cost of living was reduced by 1 per cent and that is the amount that parliamentarians' salaries increased. This year, their salaries were increased by 0.75 per cent. Proposed section 66.1(1) would remove subsection 67(1) for the duration of this Parliament and replace it with a 2-per-cent salary increase. Some people might mistakenly think that we would get an extra 2 per cent with this bill. That is wrong. We would get 1.25 per cent. We would have received the other 0.75 per cent anyway. As a matter of fact, we had started to collect it. This is instead of, not in addition to, what we were getting already.
Many people here will recognize the unfairness of subsection 67(1). I will illustrate using the House of Commons side as an example, because I am most familiar with it. In 1980, a backbench MP made 120 per cent of the salary of an average high school principal in Canada. Today an average backbench MP makes 75 per cent of that same principal's salary. We did not vote ourselves too many salary decreases. In large measure, the culprit there is section 67.1, which takes the cost of living and reduces from it every single time. It just keeps getting worse.
Now we would give a straight 2 per cent, notwithstanding what it says in 67(1), for four consecutive years. After the next election, we go back to that 67(1), unless it is replaced by something else. I hope I did not make a mistake in describing this.
Senator Lawson: The teachers obviously have a better union.
Mr. Boudria: That is a good point, senator. We know you have experience in that regard. Perhaps we can ask for your help next time.
[Translation]
Senator Simard: Thank you, Mr. Minister, for coming here today. I appreciated your comments, particularly what you said about rejecting the recommendations of the Blais commission, a supposedly independent body. You stated that the government was prepared to assume its responsibilities and that is what it did. You even said this morning that you were prepared to defend your actions before your constituents in St-Isidore.
Yesterday, at the second reading stage of this bill, I indicated that I was in favour of increasing the salaries and non-taxable allowances of members and senators by 2 per cent.
Would the government to be willing to consider an amendment to this bill? I realize that the House has already recessed for the summer. In the fall, we could follow up on the first recommendation of the Blais commission report which proposes that the expense allowance be eliminated and that MP and senator salaries be increased by an equivalent taxable amount.
The House standing committee on procedural affairs gave its reasons for rejecting this recommendation.
[English]
The Blais commission recommended that the incidental expense allowance for members of Parliament be elevated and their sessional increment be increased by an equivalent taxable amount. There is a certain logic in this proposal: It would be unfair to members living in provinces with a high income tax rate, members from remote ridings and members who have extra-large constituencies; therefore, we cannot support it.
[Translation]
Your party's caucus chairman revealed the real reason: members were afraid of the taxes they would have to pay on a salary equivalent to $106,000.
Is the government prepared to consider an amendment to this bill, to follow up on the commission's first recommendation?
Mr. Boudria: First of all, you quoted a member who allegedly said that the adjustment would mean a less than genuine salary increase. Quite possibly there are some parliamentarians who share this view. However, and more important, the fact is that many parliamentarians would actually see their salaries decline under the proposed formula.
The Blais commission maintained that salaries would be more or less equivalent if everything was taxable. How do we determine this? The commission starts out with the assumption that everyone lives in Ontario. It looks at how many members there are in a typical family and calculates how much money would be required to end up with a net salary equivalent to what that person earned before the changes. However, that is not how things work. We are not talking about an industry here, but about a country. Members of the House of Commons and Senate come from all regions of the country. They pay provincial taxes and these amounts can vary substantially from one province to another. For example, the tax rate in British Columbia is higher than it is in Alberta. As a result, many members would have seen their salaries decline substantially, not increase, if this formula were adopted. That is what would have happened. And that was unacceptable to the parliamentary committee.
Currently, MPs representing remote regions, for instance, the member for the Yukon, the two members representing the Northwest Territories, the member for Abitibi and one or two members from northern British Columbia, receive a non-taxable supplementary allowance of between $10,000 and $15,000 a year. These parliamentarians would have had to pay tax on an additional $10,000, compared to their colleagues. Their salaries would have actually decreased under the proposed formula. Therefore, for all of these reasons, no one recommended that we follow up on this recommendation. I have not seen the Senate committee's response to the Blais commission's report. I do not even know if the Senate committee has looked at it. However, MPs were not interested in a formula which would have meant that many MPs would have actually ended up with less money, despite an apparent increase in salary.
Senator Simard: I totally disagree with your reasons for rejecting the Blais commission's first recommendation.
The base salary is the same for everyone. I understand that members representing remote and northern regions of the country receive an additional non-taxable allowance. However, that is not a good enough reason. Members should be subject to the same tax rate as the residents of their respective provinces, even if they earn a salary of $106,000. Are members of Parliament some kind of privileged individuals? For taxation purposes, they should be treated the same way as all other taxpayers in their perspective provinces. Or am I wrong about this?
Mr. Boudria: I am just a regular person. However, there is nothing ordinary about the job I do. I may not be important, but my job is. My job is to serve my constituents. There are costs tied to being parliamentarians, whether an MP or a senator, which are quite different from anything else. Of course, we could have a system whereby everything is taxable and members must provide receipts for expenses, as people in business do. We could do that if we wanted to. Would it be practical? In my opinion, it would not. Indeed, it would be an incredible waste of time. A formula has been adopted at the federal, municipal and provincial levels, with the exception of Ontario. A portion of the salaries paid to all mayors in Canada is tax-free, for the same reason. Don Boudria is not important, but the job he holds is. The voters understand that. Having an expense allowance is simpler than having to submit a receipt for every little expenditure. We have chosen to go with a system whereby a portion of the salary of members of Parliament is tax-free.
If we were in business, we would be entitled to all kinds of deductions. However, that is not a case. Neither I nor anyone seated at this table can claim certain deductions for tax purposes. The system is not set up that way. This is not to say that we are above our constituents.
[English]
Senator Kolber: I wonder if we could get a clarification. I do not understand Senator Simard's question. As far as I know, we all pay taxes on our salaries in the jurisdictions in which we live. I do not see how we are being treated differently. We pay the same as our constituents pay. I spend a lot more than the tax-free part gives me. I cannot deduct anything. A business person coming here can deduct and we cannot.
Senator Simard: Mr. Boudria explained today that he refused the first recommendation made by the Blais commission. He refused to globalize. He used the argument that it is because senators and members of Parliament would be treated differently by the provincial rates. That is my point. Of course, you are right, Senator Kolber, when you say that we are all taxed equally on the $64,000, according to the various provinces' rates. Why not be taxed on $164,000? We all know that the members of Parliament, including senators, are reimbursed for their travel expenditures in all of Canada. Certainly, they are reimbursed in their ridings. It comes out of the budget.
Senator Kolber: You are not reimbursed when you stay in Ottawa.
Senator Simard: That is right.
Senator Kolber: It costs you more to stay here.
Senator Simard: That is why I said I was in favour of the reimbursement of members in 1993 and in 1998.
Senator Stratton: The issue that we are not clear on at all is this question of opting in and opting out. I believe Senator Lawson gave an explanation of this in the chamber yesterday. Can you explain to this committee in real terms, that is, in dollar terms, what a member of Parliament who opts out would get as a maximum?
Mr. Boudria: No new person can opt out, senator.
Senator Stratton: I understand that. Those currently opting out would be affected by this legislation with an increase in the allowance for leave taking, or severance.
Mr. Boudria: There are two or three points: One, only those who have already opted out can be opted out. They opted out in 1994. I do not know how many there were originally, but I am told there are 48 of them left. Thirty-eight of them are members of the Reform Party caucus. As far as I know, five of them are Liberals and five are members of the Bloc Québécois. I hope that information is accurate. Those members would be permitted to opt back in. They would have 90 days in order to opt back into the pension plan.
In order to opt back in, members would have to pay retroactively all of the premiums since the day they were elected. It is the only way they can opt back in. There are not going to be four or five different ways of doing it.
I do not know how many will do that. As I said, my counsel to everybody is that they should all go back in. Those of you who have been involved in the effort of collective bargaining or anything like that know that when you have a scheme where people can opt out, there is always a tendency to have the lower-risk cases opted out and the higher-risk cases opted in. It makes for an inequitable system. It is just not right. Everybody should contribute so long as the plan exists. It should cover everybody.
If some of those 48 members of Parliament decide not to opt back in after all of this, those members would be entitled, upon leaving, to a supplementary severance of one month's salary per year of service. That would mean that a member with eight years of service who is defeated at age 53 would have an extra eight months of severance. However, please remember that the supplementary severance could not be collected until the person reaches 55 years of age.
We made it that way in order to be consistent. The members of Parliament who did not have six years of service at the time that the pension change was made in 1994 cannot get a pension until they are 55 years old. If someone who has opted in cannot get a pension until age 55, why should someone who has opted out get the supplementary severance before age 55?
Just as interest accrues on an income tax refund, the supplementary severance funds would earn a nominal rate of interest which would be paid, along with the supplementary severance, on one's fifty-fifth birthday.
Senator Stratton: If members opt out, as you have said, they get to a maximum of 12 years.
Mr. Boudria: Yes, if they have opted out.
Senator Stratton: They have opted out. I understand that. If they opted out 12 years ago, they would get 12 months at age 55.
Mr. Boudria: Yes.
Senator Stratton: Plus, no amounts for pension are deducted from their cheques as happens to everyone who has opted in or stayed in the pension plan.
Mr. Boudria: You mean they did not pay premiums.
Senator Stratton: Instead of going for your pension plan, they took the money, as Senator Lawson said yesterday, and put it in RRSPs. Correct? That is what they do. If a person had opted out for 12 years of service and instead invested in an RRSP for 12 years, what would that amount to in real dollars as compared to what an MP who stayed in the pension plan is receiving? That is what I should like to know.
Senator Simard: That would amount to $260,000.
Mr. Boudria: There are two elements to the question you are asking, senator. Members who have opted out would have to evaluate how much they would make investing that money privately. They could have invested in an RRSP. However, if they have used up all of their allowed RRSP contribution in every year, they obviously will not be able to use the carry-back provision when they receive their supplementary retirement allowance. The whole thing will be taxed because their allowed RRSP amount will have been used up previously. I suppose you could argue that if they do not make any more money in the future, they could carry some of it forward, but that is true of anybody who has employment income. Moreover, depending on where they live and how much money they made in that year, they would lose maybe 50 per cent or 55 per cent of that amount right off the top through various taxes. They would not have it all.
The other point is that, assuming equal pension contributions by the employee and the employer, the amount that the government would have paid in premiums would be roughly equal to the severance which a person would get.
Senator Stratton: I would suggest that Senator Lawson give you his explanation because I think that the numbers are rather interesting.
Senator Lawson: Mr. Minister, let me make it as simple as I can. Take someone who opted out in 1994 and stayed opted out. Now it is 12 years later, the year 2006. That person is entitled to the one month per year or 12 months additional severance.
Mr. Boudria: That is correct.
Senator Lawson: In addition to that 12 months, there is also six months severance that applies to everybody. Is that correct?
Mr. Boudria: There is an extra six months that everyone who does not get a pension gets. If one gets a pension, one does not get the severance.
Senator Lawson: Then it would apply to these people.
Mr. Boudria: Yes.
Senator Lawson: Now it is 2006. He has 12 years in. He opted out; he stayed out; and he is 55. Therefore, he gets 12 months plus the six months, or a total of 18 months severance. Assuming the salary is about $70,000, that is about $105,000.
Mr. Boudria: Say $100,000.
Senator Lawson: In round figures it is $105,000. The people who opted out said they could manage their financial affairs better than the pension plan or the government could, because they believed in RRSPs. Assuming that they meant what they said, from the first day, while their counterparts had 9 per cent of their salary contributed to the pension plan, they had the equivalent on their pay cheques, totalling approximately $6,000 a year, give or take $100 or $200.
Mr. Boudria: Net, it is about $300.
Senator Lawson: I am talking in gross dollars. It is approximately $6,000 a year. Now, if that were invested into an RRSP, after 12 years they would have a gross amount of $72,000 invested. The Royal Bank tells me that investing in an RRSP at a simple 4.5-per-cent rate would produce approximately $110,000 dollars. This MP who opted out and stayed opted out would have a minimum of, pile number one, $105,000 in severance and, pile number two, the results of his RRSP of about $110,000 or $115,000. If he managed his affairs a little better, perhaps investing that RRSP portion in a mutual fund, he would probably get 10 per cent or 12 per cent, which would be another $50,000 or $60,000.
In all of the debates that I followed, there was no mention of this. They only talked about what was happening with the severance. Nobody made a comparison with those MPs who opted out and who stayed opted out. Is that a fair assessment, applying the gross amount?
Mr. Boudria: Yes, applying the gross amount, but remember that one of the two has to be taxable. In other words, if you contributed to an RRSP what you would have put in premiums and used up your entire RRSP amount, you would achieve that which the senator just said. However, had you done that, once you received your retirement allowance, it would have been entirely taxable because you had used up all your previous RRSP contribution. It has to be one or the other. Both of them are not non-taxable, which means that of the amount you would get as severance, let us say $100,000 or $105,000, half would be gone. One of the two has to be qualified as being off by 50 per cent.
Senator Lawson: That is the assumption as of today, but in 2006, you may have a larger RRSP allowance.
The employer's contribution to the pension plan is given to those employees not in the pension plan by way of the severance. What percentage does someone in the pension receive as an employer contribution? Is it not more than 9 per cent?
Mr. Boudria: I will have to let someone who is an expert on the pension side respond to that question.
Senator Lawson: My guess is that it is probably closer to 40 per cent.
Ms Joan M. Arnold, Acting Director, Pensions Legislation Development Group, Pensions and Benefits Division, Treasury Board Secretariat: It is 37 per cent.
Senator Lawson: The point is that those who stay opted out will get the severance equivalent to the employer contribution. However, it is only a portion of the employer contribution, about 9 per cent. Had they stayed in the pension, they would have a far better pension and a far better return because the employer contribution was actually about 35 per cent. Anybody who did not take advantage of the option the government would give them to go back in the pension would be cheating their families and cheating their spouses out of a far better return that they are entitled to by being in the pension plan. I rest my case.
Mr. Boudria: As I said before, I criticize those people who opted out. I could hardly criticize them now for opting back in. I would encourage people to do so.
In 1993, when it was fashionable to say, "Vote for me, I will reduce my salary. I will cut my pension. I will self-flagellate in public", I told my constituents, "No. If you do not think I am worth the salary, hire someone who is. Do not debase the currency. That does not make our country better." That is the position that I took then and that I still take. When all is said and done, when the administrator of a small hospital in this city makes twice the salary of the Prime Minister, then I do not think that all of my colleagues in either House are getting more than they deserve. As a matter of fact, even if you count pensions and everything else, members of Parliament are certainly not in public office to get rich; they could find other employment which would do that far better.
Senator Lawson: I have a supplementary question. Take the example of someone like the leader of the opposition or a whip who gets additional money. The leader of the official opposition gets $49,100 more. All of these calculations would be based not on the approximately $70,000, but on the $110,000 or $120,000; would they not?
Mr. Boudria: That is correct. Everything is pensionable except the tax-free provision, because otherwise I would be pretty well reversing the argument that I made before -- the argument being that we spend virtually all of it anyway. Some of us maybe spend quite a lot more. Everything that is salary per se is pensionable. The portion that is non-taxable and therefore non-pensionable, with no premiums or benefits on it, is the $21,000 tax-free allowance. In the case of people who have larger or remote ridings, it is $26,000. In the case of the members from the Northwest Territories, the amount is $28,200. That is the non-taxable part.
Senator Lawson: To finish my point, the leader of the opposition, who has a combined salary of $120,000, would have 18 months severance pay totalling roughly $180,000. Is that correct?
Ms Arnold: That is about right.
Senator Lawson: The other calculation would be higher as well.
Ms Arnold: Yes.
Mr. Boudria: That is correct. I have just been told that the amounts presented to us by the honourable Senator Lawson are correct, or at least as close to it as possible for the purposes of our conversation.
Senator Phillips: I asked this question in the Senate yesterday. Senator Carstairs suggested I raise it with the minister this morning. Will the public receive information about who has opted back into the scheme and who has not?
Mr. Boudria: I am told that that information is protected under the Privacy Act. That information was not made public when members opted out of the plan before, at least not by government. Within political parties, some saw fit last time to make a public display of themselves for having done so. I did not agree with this course of action. It will be up to us individually and up to the media and anyone else to ask those same people whether they will make a similar public demonstration for opting back in.
Senator Phillips: My colleague says grovel back in. I think that is probably more appropriate.
I find quite a discrepancy between the Freedom of Information Act and the Privacy Act. It is public money that is being contributed. I think the public is entitled to know this information, but we are not going to change the Freedom of Information Act and the Privacy Act here. I have confirmed that my view is correct then.
Mr. Boudria: Indeed, if I may respond further to that, it has always been confidential information. It would be a discussion to have. Of course, the bill could not be amended to do that. It would be beyond the scope of the bill to determine who is in and who is out of the pension plan. At the time when we were all in, of course, this debate would have been rather academic.
Senator Stewart: These days, when there are financial crises around the world, we hear the word "transparency" used again and again. It is one of the virtues of western banking and western politics. That is the theme of my questioning.
I wanted to ask first about the answer just now given in which we were told that it would be contrary to the provisions of the Privacy Act for this information, which relates to the performance of candidates for public office, to be made public. Has there been a ruling on that? Has that ever been tested in a court or is that a bureaucratic understanding?
Mr. Boudria: My understanding is that the amount that any one of us or, indeed, any civil servant or anyone else would get as a benefit from a pension historically has been judged that way. Even if that amount is zero, it is still an amount. Perhaps some of the officials who are here could respond. Has anyone specifically requested and been refused this information regarding a member of Parliament? Maybe that is really what is meant by the question.
Senator Stewart: I would argue that the question of remuneration, whatever form it takes, is relevant to candidacy and to performance in office. In view of that, the voter has a right to know what the candidate is doing relative to her or his remuneration. It seems to me it is pretty obvious. This may not be relevant in private employment. In public employment, where the question of what is done arises, remuneration becomes a political topic. In the name of transparency, the voter has a right to know what this candidate is doing as compared with his or her opponent. So I ask the question: What is the basis for what you just now told us, or did the question take you by surprise?
Mr. Boudria: Yes, it did, frankly, but that does not matter. The whole system works on the premise that we all receive the benefits to which we are entitled. That is probably the origin of it all. In other words, if my salary is "x", it is assumed that I am collecting "x". If I am not collecting part of it, I may be leaving it there or giving it back to the Crown or not claiming part of it. In the case of someone who opted out of the pension plan, that person is not getting part of the salary package. I suppose it is the same as if it were donated back to the consolidated revenue fund. Traditionally, those kinds of things have not been made public for anybody.
Perhaps there is another reason which the officials of Privy Council could describe to us.
Ms Arnold: About three years ago, there was a court challenge in the Federal Court. I am sorry, but I cannot remember the name of the case. The ruling was that we could not release the names of the individuals who had opted out of the plan.
Senator Stewart: Did this involve a member of Parliament?
Ms Arnold: Yes. As I recall, the request was for information about who is not in the plan, who is in the plan, and how much pension they are paid.
Senator Stewart: It would be interesting if we could be provided with the reference later.
Staying with the general topic of transparency, I am a bit confused. I hope that by receiving your answers to the questions, my confusion will be removed. When I was a member of the House of Commons, we received an indemnity. We did not call it a salary. I gather that language has been changed in the act. Is that correct?
Ms Arnold: Yes, it is.
Senator Stewart: There is a salary. Earlier today, Mr. Chairman, the minister referred to the non-taxable allowance which is part of the salary. Was that a slip or is the non-taxable allowance now regarded as part of the salary of a member of Parliament?
Mr. Boudria: It is collected at the same time by a member of Parliament but it is, of course, not part of the salary. One, it is non-taxable; two, it is non-pensionable; three, and probably more important, most of us spend that amount, and likely even more, in the exercise of our functions.
Senator Stewart: One of the reasons I asked that question is that in the Senate we get a non-taxable allowance, and certainly you are correct about the expenses exceeding the amount of the allowance. I do not know what it would be in the House of Commons.
In the interests of transparency, let me ask, are there other payments? You referred to travel allowance, living allowance and so on. What goes under those headings now?
Mr. Boudria: As the honourable senators know, and it is referred to in the Blais commission report, a member of Parliament who comes from outside of the area surrounding the national capital region -- I believe the distance is 100 kilometres from Parliament Hill -- can claim lodging in Ottawa and provide receipts for it. I understand that Mr. Blais recommends that senators be able to do the same thing. At the present time, or until approximately a week ago, MPs could claim up to $6,000 per year for hotel room expenses for every night that they are in Ottawa. That amount has been changed to $12,000.
That amount is not given to the MPs. They file an expense at the end of the month and are actually reimbursed for the invoices. I read a text over the last weekend in which it was alleged that everyone was getting this amount. I certainly do not get this amount. I do not live that far away and I do not qualify for it. That amount is not given even if the member lives a considerable distance away. It is an actual reimbursement. Receipts have to be provided in order to qualify.
Senator Stewart: Under the present proposed legislation, the allowance for lodging is up to $12,000?
Mr. Boudria: It is not legislation and is not in this bill, honourable senator. It was a decision of the Board of Internal Economy of the House of Commons.
Senator Stewart: Is there anything else that ought to be mentioned in order to respect transparency?
Mr. Boudria: I referred to the 2-per-cent increase for everyone. I referred to the provision of opting back in. I referred to the supplementary increase in addition to that for the two senators, because their salaries were at odds with the exercise of their function. On the negative side, I referred to the fact that the amount that members of Parliament and senators would have received this year or any other year as a result of this so-called modified COLA formula is abolished. In other words, one is reduced from the other in the current year and not collected at all for the subsequent years. In other words, this year's salary increase is not 2 per cent; it is 1.25 per cent. Again, this is not something that has been publicized much. I made reference to the supplementary severance. I am trying not to forget anything here. We talked about the speaker pro tempore. I do not think that we have forgotten anything in that regard.
Please remember that two elements of the compensation package, one for each House, were in the Blais commission report but they require remedy, if that is the word, outside of legislation. I am referring to the housing allowance increase for members of Parliament and to the establishment of a housing allowance for senators should the Senate decide to do so. That is not a statutory instrument at all. That is a dictate of the Board of Internal Economy in the case of the House of Commons. I am told it is a dictate of the Senate Standing Committee of Internal Economy in the case of the Senate.
Senator Stewart: You mentioned earlier that members of Parliament could charge amounts for travel against their office budgets. Would you repeat that so that we can pull it all together?
Mr. Boudria: Two things are referred to as travel. One is the cost of airline tickets to travel back and forth between Ottawa and the constituency. Those, of course, are paid by Parliament. I say "of course" because for an MP who lives far away, the cost of returning home would be greater than the salary. That is not what is referred to in the Blais commission report as the travel allowance.
The Blais commission report does refer to the travel status allowance. Euphemistically, that is called a housing allowance for most people on Parliament Hill. For the purpose of the conversation here, we can call it the housing allowance. Actually, I think everyone on the Hill calls it the housing allowance. It is that provision whereby MPs can claim for the cost of their hotel rooms.
The cost of the airline tickets is not addressed at all in this report, by me, or by this bill, or by anything else. There is no change there.
Senator Meighen: You will be relieved to know that Senator Stewart has asked the questions I wanted to ask, so I will dispense with them. I thank the minister for coming and congratulate him, even though he had no choice, on being the sponsor of this bill. It is a thankless job.
Somehow, for people who are in the business of communication, we have all, over the years, managed to do a terrible job of communicating with the Canadian public regarding all facets of the question of our remuneration. There is very little to be ashamed of, as you say. In fact, there is nothing to be ashamed of. I think perhaps from time to time we have given the false impression that we are getting remuneration in some way that most Canadians do not enjoy in their own lives and that there is some special privilege being given to us.
On the contrary, we are getting a heck of a lot less than most Canadians get when they must travel for their employer and are able to submit expenses, but that is another question. I think you have made progress with this legislation.
Senator Simard: I would like to follow up Senator Stewart's question involving transparency. I know that it was not your intention to mislead this committee or mislead the population. I know that there is a slush fund for members of Parliament of $1,000 which has been in existence for two or three years. The Procedure and House Affairs Committee raised this amount from $1,000 to $3,000 to accommodate expenses of elected members of Parliament to treat taxpayers. Would you confirm the existence of the fund and the increase to $3,000?
Mr. Boudria: The Board of Internal Economy of the House of Commons voted some years ago that there was $1,000 from within the constituency office budget to buy everything from pencils to wreaths for November 11, flowers, things of that nature. When I was a member of the Ontario legislature several years ago, that was chargeable against one's constituency budget. When I came here as a federal MP, it was not. Some years ago, perhaps three or five years ago, the House changed that rule to allow up to $1,000 worth of such expenditures to be covered.
I will use my constituency as an example since I know it best. I have a rural riding. I attend perhaps five ceremonies on November 11. The cost of buying a wreath is chargeable against my constituency budget. I do not get an extra amount. If I do not use all of the money to buy a wreath, I do not get more money to pay for salary, rents, and everything else. Approximately one-and-a-half to two months ago, that amount was changed from $1,000 to $3,000. I am not sure that I would call that a slush fund.
Senator Simard: Would you confirm that some members of Parliament can charge extra expenses to the slush fund?
Mr. Boudria: I do not know if I would call that a slush fund, but the label does not matter to me at this point. If you think that is a slush fund, I am not bothered by that too much.
One can charge for renting a room, yes. For instance, I had a public meeting in my constituency for the ice storm. I can rent the hall to have the public meeting for my constituents and claim that expense from that amount. I can buy coffee, or juice, or what we have in this room, for the meeting in my constituency. It is called the miscellaneous account.
Senator Simard: To keep it short, I read the manual of allowances and services for the House of Commons. With regard to travelling, it says that elected members of Parliament can charge travel expenses, including travel expenses while in Ottawa.
The Deputy Chairman: Senator Simard, I do not mind your questioning. I am big on transparency, too. As you know, I am not a member of the government so there is no favouritism here, but when we are drifting off the subject of the bill and into matters of internal economy, that seems to me to be out of order. We have a bill here. These matters are not in this bill.
Senator Simard: I have a very important matter referring to Bill C-47.
The Deputy Chairman: If it is a matter dealing with the bill, Senator Simard, you can proceed.
Senator Simard: I asked the question earlier in the first round. I asked the minister if he would entertain amendments to this bill.
I am not sure I received a direct answer to my second question.
I have a further question. Would the government entertain a motion passed in the Senate to give Bill C-47 the six-month hoist so that members of Parliament, including elected members and senators, can give due consideration to these implications and consider the first recommendation by the Blais commission? Please answer "yes" or "no".
Mr. Boudria: With respect, senator, I will give more than a "yes" or "no" answer. I believe I am entitled to answer in a more complete way than that for the benefit of all of us.
I think the Senate should pass the bill that is before you. Senator Simard asks if we should delay it for six months. To me this suggests that this was done in a somewhat hasty way. The Blais commission heard witnesses from all over the country. It had a web site. People contributed from everywhere. The commission was composed of three members: an academic; a person who was known to have been a former supporter of the government; and a former supporter of the opposition. There were six months of that, then reference to two committees. It was referred to a Senate committee and a House committee. I do not know what the Senate side did with the Blais commission report. The House side studied it, produced a report, tabled a report in the House of Commons, and the House of Commons unanimously concurred in the report.
Senator Simard: No, no, no; that is wrong. You did not accept all of the recommendations of the Blais commission.
Senator Carstairs: He did not say that, Senator Simard.
Mr. Boudria: I do not believe, senator, that I said that everyone agreed with every recommendation. I said that the House unanimously concurred on the report on June 3. I think if one verifies that, one will find out that the information I have given to you is correct, to the best of my knowledge and my conscience.
It has been the subject of almost a year of work. I do not see what another six months of hoist would contribute to making the process any better than it has been.
Inequities exist. The fact is that we have members of Parliament presently outside of the pension system. I think that they should be in the pension system, notwithstanding the fact that they opted out when I think they should not have. We are making an effort to make Parliament better, honourable senators. To have these people out of the system does not make Parliament better. I do not believe that any of us came here to get rich, but to see some of our colleagues leave here in the state that some of them might will not make the institution any better. I do not believe that the delay which is offered to us now will contribute to that process.
I urge you, honourable senators, to consider giving favourable support to this bill and to adopt it. I believe it to be a good bill. It is not excessive. I think it is most reasonable in its approach. I recommend it to you.
The Deputy Chairman: Minister, thank you very much. As you know, minister, we often have trouble getting ministers before a committee in the Senate. This is a very contentious matter. We appreciate it very much. You have explained the bill, which is quite complicated at times, extremely well.
I am going to ask for leave to report the bill without amendment. Is leave granted?
Hon. Senators: Agreed.
The committee adjourned.